| 59 Stocking rates are another area that should be coming under close scrutiny, says Waipari Station’s Mark Warren. It’s a lot easier to control expenses than to control income, Mark says. RURAL PEOPLE » Waipari Station Controlling expenses key in tough times Kim Newth Seasoned hill country farmer Mark Warren can still vividly remember how challenging it was to be a young New Zealand farmer in the mid1980s navigating the years of Rogernomics when interest rates were pushing past 20%. The hard lessons he learned in those early years, managing Waipari Station in Central Hawke’s Bay, have never been forgotten. He worries about today’s younger farmers who have never experienced fast rising interest rates and an inflationary environment, but he has good sound advice for those who may be struggling. “The first thing I’d say is that it’s a lot easier to control expenses than to control income,” says Mark. “Try and minimise the amount of running around you do and those trips into town, make things last longer, and question every cost. At the same time, it’s important to hold onto your good suppliers and treat them fairly so you’ll both still be in business at the end of the year. It’s a case of ‘be ruthless with money but gracious with people’ because a lot of suppliers are struggling too. Paying your bills two or three days before the twentieth of the month means they get to pay their bills on time too and it doesn’t cost you much.” Mark recommends becoming familiar with the Rule of 72, used by investors as a simple way to calculate compounding interest. It can also be used to calculate compounding debt. It works like this: divide 72 by the interest rate to work out how many years it will take before your debt money doubles. “If you’re paying interest of 7.5% on your overdraft, that money you have spent – that debt – will double in less than 10 years. Many who have come from a low interest environment may not appreciate how debt can really snowball now that rates are higher. Talk to your bank – question everything.” Double checking bills and accounts may seem like something best left to the accountant but Mark says farmers can save a lot of money by doing some of this work themselves. “I’m often worth ten times more per hour working in the office than I am out on the farm.” For farmers with equipment sitting around that is no longer being used, now is a good time for a clear-out. Mark says selling unwanted gear can help generate funds for a cash account. Stocking rates are another area that should be coming under close scrutiny, he suggests. As he points out, genetic gain in performance means a standard ewe on today’s farm is heavier and more fertile than a standard ewe in the past. It leaves room for manoeuvre on stocking. Rather than pushing to maximise production, Mark recommends optimising production and being more strategic. “Just think of the cropping you need to do to finish stock – it may be better to be selling into the store market. “Farmers need to understand the production cost curve: the marginal profit you make as you keep adding stock units will eventually start tailing off, the more and more you add.” Mark says finding a good business mentor can go a long way towards getting through difficult times. In his case, he’s thankful for guidance he’s had over the years from farm accountant Pita Alexander. TE WHANGAI Contact Hamish de Lautour 027 447 2815 | 06 261 3826 hamish@tewhangai.co.nz Contact James Brennan 027 635 4567 manager@tewhangai.co.nz www.tewhangai.co.nz The power of resilience Good science Common sense Supplying the maternal genetics which allows Waipari to achieve... Over 50 years of intensive selection with scale and grazing pressure using... Total integrity ... Try them, you won't regret it! ROMNEYS
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