Donald Anderson, farms in Taranaki in New Zealand, explains how his low-cost system simplifies decision-making. Donald owns four farms and uses contract milkers or share milkers to run them. This de-risks his business as labour costs are linked to milk prices and farm profits.
Donald says that he needs to be extremely disciplined with expenditure in the high milk price
years so as not to drift into higher-cost systems.
He said the key to achieving this is to formulate a budget and stick to it.
In good years he spends extra money on repairs and maintenance, so these expenses can
be spared when milk prices are low, and cash is tight. He says the core system shouldn’t
change due to either low or high prices, and short-term changes to the system to chase
extra production should never be entertained as this can be unsustainable.