One of the barriers was the rising cost of cattle, upwards of $2000 per head, which he said for a 600-cow herd (“the right scale” in the present dairy farming climate) made for a significant initial outlay.
In the heart of the Waikato, Tatua Co-operative Dairy Company farms continue to fetch upwards of $100,000 per hectare, with an average of $70,000/ha in other parts of the region.
While the Fonterra forecast was for a payout exceeding $9 per kilogram of milk solids, from around $7 five years ago, Bartleet said $5 of this was eaten up by ongoing farm costs.
They include labour, fertiliser and compliance (such as effluent disposal and milk cooling), plus any required replacement or purchase of farm equipment and technology.
Another $2 of the payout may go to service interest payments on outstanding loans, with the balance covering the cost of living.
Bartleet said dairy farmers also must weigh up the costs of changes to their farm management systems — buying in extra feed — to capitalise on the bumper milk price compared to sticking with current operations.
More milk
Bartleet said there had been a “big shift” away from all-grass dairy farming to incorporating feed supplements, such as maize, for greater milk production.
“The business model is more profitable, but you are exposed to greater risk with any change in milk price.”
Economies of scale mean “you need to be bigger to succeed”, he said.
“The stepping stones are gone.”
Bartleet said the expectation/requirement for more money to live on meant a smaller farm that could only generate, say, $70,000 a year, may not be attractive.
The price of new infrastructure on expensive land also makes it a difficult financial proposition to buy neighbouring farms and start “fresh”.
Added to this are fixed costs that need to be spread across the total farm management system which prove a greater burden to smaller farms than large holdings.
Bartleet said the smaller farms become “islands”, with staff hard to recruit and the cost of infrastructure to be considered.
Other land use such as horticulture, or a move to grazing/beef cattle, is also being pursued, while farmland has been “lost to urban sprawl”.
Bartleet said some of the best land was drifting out of dairy production, while far more marginal land (that was converted to dairying much later) had the right-sized farms now.
Milk supply “exploded” in New Zealand in the 1990s and early 2000s, but he said a recent drop in the number of dairy farms — an estimated 100 in Waikato and Taranaki over the last five years — meant milk production was a “real issue” for processors.
Reality check
Bartleet said dairy farmers are having to make some tough decisions.
“It’s a reality check.”
Coupled with this, he said young people had left the dairy industry in “decent numbers” in the last five years.
Corporate farming was “becoming a reality” in New Zealand, he said.
“They are well-run businesses.”
Bartleet said this form of farm ownership was inevitable and the “pathway of the future” for young people entering the dairy sector.
His best advice for individuals looking to buy a dairy farm was to speak to a mentor along the way.
“Don’t get caught up with distractions such as the latest technology or new systems,” he said.
“Run through the books [accounts/budgets] carefully and properly.”
Bartleet said there were opportunities to be had in the dairy sector “if you make the sacrifices”.
While dairy farming has its challenges, he said there were “success stories” among those aspiring to property ownership.
“It’s all about passion and belief, you have to forge ahead and get through the dark days.
“There is a great ending [farm ownership] and a great lifestyle … if you get it right.
“Go in with a plan and there is a better chance of success.”
Bartleet believed a good farmer needed to review their business and their life goals every five years, asking themselves some key questions.
These included: “Am I enjoying what I do? Is this sustainable?” and “what do I see as an alternative?”
