Don't abandon the budget just yet!

The sun's shining, the grass is finally growing, most of the herd is pregnant again and the milk payout's rising.  Most farms will be looking at a good cash surplus this year (unless production is hit by drought). How to spend it is on everyone's mind reports The Taranaki Daily.  Thirty farmers camped in a hayshed, attracted by bad weather and a shift in focus, from Tight Management to consulting officer Stephen Canton's new title, Capture the Cash. He asked the 30 to list considerations and issues in high- and low-surplus scenarios. "The feedback I got was that most are designating this cash surplus to debt reduction, especially the highly indebted farmers paying $2 a kilo as interest in their budgets," Mr Canton said. "The Werders are not increasing expenditure from their original budget done at $4.55 per kilogram of milk solids expected payout. They are just allowing the extra payout to fall out the bottom to be used in the future. "Generally, farmers are not spending this money until they have physically received it, due to the difficulty for Fonterra to make predictions in this volatile world market." In the big payout rise two years ago, he noted that suddenly covering feed supply risks became a big issue for farmers, particularly by using palm kernel expeller, which they ordered by the hundreds of tonnes. "The scientist on the research farm says you'll probably get a 50 gram dry matter response from PKE fed out in December-January, but 100 grams in March-May. "We do know from Dairybase that the average response for New Zealand dairy farms for the whole year is 50 grams.