En esta oportunidad tuvimos la oportunidad de entrevistar a DAVID BECA.

David has been developing and managing agricultural businesses from a young age and was always analysing these businesses to try to understand the economic drivers for success. He states that “if you don’t understand the numbers then you can’t understand the business”.
• He also says that milk has a bright long-term future due to its irreplaceable nutritional value, and that it’s an essential component for successfully feeding the world’s growing population.
• Indoor or feedlot farming and pasture-based farming are entirely different enterprises with different economic drivers, so simple comparisons are like comparing sheep and pig farming.
• Pasture-based dairy farming is almost uniquely difficult to understand economically as the land is purchased to produce pasture, whereas the product sold is milk.  This results in all the economic drivers of profit being unrelated to the biological efficiencies of producing milk.
• So…milk production per cow does not positively correlate with profit, whereas pasture harvest is the dominant factor that positively correlates with profit.
• For dairy farmers to build economically sustainable businesses over time, they need to retain a comparative advantage to other local land uses and ensure they remain internationally competitive.  This can only be done by ensuring the business has a low cost of production.
• The dominant factor that determines cost of production is the total cost of feed per litre, and the dominant factor that determines the cost of feed per litre is the percentage of low-cost pasture in the cows’ diet versus higher-cost supplements.
• Due to the high level of variable costs that relate to cow numbers or farm size, there are almost no economies of scale.  So farms of most sizes have an equal opportunity to be profitable.
• Although pasture-based farming is quite a complex business to understand economically, if the drivers of profit and cost of production are understood, then it can be a simple business to operate given the central focus is on pasture production.