Investor Presentaiton
222
The dairy industry in Tasmania
Table 9: 250 cow farm
Income
Milk sales
Stock trading
Total income
Expenses
A guide for investors
Total Per effective
Per cow
ha
Per kg
milk
($'000)
($/ha)
($/cow)
($/kgMS)
515
4 478
2 060
5.15
50
238
110
0.27
565
4910
2 259
5.65
Shed and cow costs
43
374
Feed costs
155
| 350
621
ཁཊྚ
172
0.43
1.55
Tractor and plant operating
25
215
99
0.25
Repairs to structures and improvements
23
196
General overheads
15
130
860
90
0.23
60
0.15
Wages (including owner/manager)
157
1,369
630
1.57
Capital replacement (depreciation)
20
170
78
0.20
Total expenses
438
3 804
| 749
4.38
Profit
Earnings before interest and tax (EBIT)
Return on capital (ROC)
3.8
127
per cent
| 107
509
1.27
Source: Macquarie Franklin, April 2017
Table 10: 500 cow farm
Milk price
The assumed milk price of $5.20
per kg milk solids is conservative and is
well below the longer-term trend
of approximately $6.00 per kg
milk solids.
Over time, the real (adjusted for
inflation) milk price in Tasmania has
been relatively stable, but there
has been considerable year-to-year
variation.
Tasmania's pasture-based farming
systems, that have a reasonable stocking
rate and typically feed up to one tonne
of supplementary grain or pellets per
cow, can generally respond well to
annual milk price variations.
Farms with a heavy dependence on
grain feeding can have more trouble
coping when milk prices are low and/
or grain prices are high. The indicative
budgets below allow for around 0.9
tonnes of grain fed per cow.
Farm profit
Indicative profit budgets are outlined
for the four farms described.
Farm profit has been calculated as
earnings before interest and tax (EBIT)
and as a return on total capital invested.
Depending on the amount of borrowed
capital, there will be an interest cost
to be deducted from the EBIT figure
to arrive at a net profit estimate for a
specific business. Also some operators
may choose to pay themselves less than
the commercial wages included in the
EBIT calculation shown here.
Income
Milk sales
Stock trading
Total income
Expenses
Total Per effective
Per cow
($'000)
ha
($/ha)
($/cow)
Per kg
milk solids
($/kgMS)
1 014
4 409
2 028
5.20
99
432
199
0.51
1113
4 841
2 227
5.71
Shed and cow costs
85
371
171
0.44
Feed costs
303
1,317
606
1.55
Tractor and plant operating
36
158
73
0.19
Repairs to structures and improvements
40
174
80
0.21
General overheads
27
120
0.14
Wages (including owner/manager)
258
1 122
516
1.32
Capital replacement (depreciation)
Total expenses
23
98
45
0.12
772
3 360
1 546
3.97
Profit
Earnings before interest and tax (EBIT)
Return on capital (ROC)
Source: Macquarie Franklin, April 2017
341
1,481
681
1.75
5
per cent
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