Jono Bavin expects to spend more time in his office in the coming months dissecting accounts, quotes and budgets, looking for savings.
The 50:50 sharemilker from Tussock Creek in Southland said the key to managing the squeezed margin between the milk price and cost of production is to be realistic with proposed cuts, and to constantly review budgets.
Bavin said successive high milk prices and fixed priced contracts have delayed the impact of rising costs, but that has changed in recent months as contracts have lapsed and inflation soured.
“Agriculture contractors, fertiliser, winter grazing, young stock grazing – it’s all gone up.”
He had palm kernel prices locked in last year at $300/tonne, but they are now $400/tonne, and animal breeding costs have gone up $3/cow.
Proposed cost cuts need to be managed so there is not a ripple effect impacting other parts of the business.
Bavin said cash flows in the coming year will be under pressure and meeting tax liabilities will need to be managed.
A dry autumn cost him up to 1000kg/MS in milk production last season and also means supplement feed stocks need to be replenished, but Bavin said that will reduce his reliance on bought-in feed.
Bavin intends to be more strategic with his fertiliser application by soil-testing every paddock.