Starting your budget
3 min read
Budgeting provides clarity and control over your finances, helping you make confident decisions and achieve your business goals. Budgeting for your dairy farm involves forecasting income and expenses, including milk and stock sales, farm costs, loan repayments, and taxes. Keeping accurate records is essential for reliable forecasts, and involving key partners and rural professionals can help maximize productivity and profitability.
To get you started you will need to forecast the following items:
Reviewing historical data is a great start. Some aspects of your business will remain the same and won’t require changes to the amount of money you need to spend making forecasting an amount easier.
Talk to your banker or Chartered Accountant to gather your historical data or have a look back on past DairyBase reports.
If it is your first season operating your business reach out to your accountant, bank manager, or local DairyNZ regional team member. They can help guide your budgeting process and ensure you're considering all relevant factors.
Throughout the year you need to prepare, review and update your budgets: monthly, before your financial year starts or season begins, at season end and when change occurs.
Monthly
Update and monitor actual income and expenses against what was forecast.
Two or three months before your financial year or season begins
Create annual and monthly cash flow budgets for the upcoming season. Identify potential capital expenses and assess their financial impact. Compare these options to determine which offers the best return on investment (ROI) and prioritize purchases by their importance to the business e.g. are they required for compliance.
Season end
Compare actual to forecast figures for the season finishing, use these to inform your forecast budgets and farm management plans for the next season. This is also a good time to review key performance indicators.
When change occurs
Engage your staff and other key stakeholders in relevant parts of your budgeting process. Be transparent about expenditure levels and ask for ideas on how to make cost-effective decisions.
Working in a business inevitably means working with other people who will have direct and indirect influences on how your business performs and how well (or poorly) you are able to stick to your budget and achieve business goals.
It may be useful to develop a farm finance policy staff have access to and ensure they understand spending decisions, delegated authority and desired outcomes.
Sensitivity analyses are also an important stakeholder communication tool.
Take advantage of the rural professionals who support your business (banker, Chartered Accountant, farm management consultant, veterinarian, supply store staff, and company representatives). They can provide you with a range of valuable information on market trends, input costs, and general advice on how to fine-tune your business to be productive and profitable.