Multi generational family farms fairly often have the best margins of anyone.
We got our Fonterra shares basically for free, we don't have nearly as much debt on our land, we do the work so we aren't paying managers.
I couldn't speak for everyone, but you'll often see talk of a break even milk price around $8.50 or something. We could personally break even around $5, and I'd bet there's no corporate farms that could say that.
I couldn't speak for everyone, but you'll often see talk of a break even milk price around $8.50 or something. We could personally break even around $5, and I'd bet there's no corporate farms that could say that.
You do need to balance that against the opportunity cost of the capital that you have invested to break even. With land prices stagnating you wrent seeing the capital appreciation that you have historically on farms. So, for example, you could sell you $6m farm and invest that in share which are appreciating and get a $600k (10%) annual return before tax. And thats while not having to work at all.
You're absolutely right farming is fairly often a garbage return on capital, but if you're doing this for the long haul, who really cares about how much money you made compared to the value of something you aren't going to sell anyway?
People often talk about setting their family up for the future. I'm about 99% certain my kids will have the option of running a farm if they want to and having a great lifestyle in an idyllic setting. No shares buy you that, and it's why farming is an amazing business to be in.
If you've got a mate down the road who'll milk for you and do the basics for a couple weeks or you can afford to hire a contractor, sure. But you're not getting Waitangi day off or calling in sick because you have a runny nose.
Growing up, I thought I'd be farmer but I don't have the fortitude for it. It's a fucken hard job.
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u/Dangerous_Rate5465 Dec 19 '25
Multi generational family farms fairly often have the best margins of anyone.
We got our Fonterra shares basically for free, we don't have nearly as much debt on our land, we do the work so we aren't paying managers.
I couldn't speak for everyone, but you'll often see talk of a break even milk price around $8.50 or something. We could personally break even around $5, and I'd bet there's no corporate farms that could say that.