BUSINESS DBOY
Living frugally pays dividends Why are a highly indebted Waikato couple “excited” about paying down debt? Elaine Fisher has the answer.
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aying off debt may sound mundane and boring but for dairy farmers Karla and Gavin Coxon of Putaruru it is exciting. “Normally you get excited about buying machinery, or maybe a runoff, but now we are focused on paying down debt which is exciting because by doing so we can increase the resilience of our business,” says Karla. The couple, who were finalists in the 2020 Dairy Business of the Year awards, say the world economy and environmental legislation creates uncertainty around future dairy returns and land values. Opening their business up to the scrutiny of the awards system revealed that while they were doing well in most aspects of their business, they were also among the 28
most indebted per kilo of milksolids (MS) of the finalists. “Reducing our debt and having a good cashflow will mean more tax and GST to pay but we do believe we have to get to a safe level of debt because there is a lot of uncertainty around future payouts and the volatile land prices. I feel our capital land values may be at risk.” Gavin and Karla also have concerns that legislative changes may limit how much milk they can produce, impacting debt repayment. “It’s quite scary. We have been focused on increasing production and if we have to cut back intensity that will have an effect on how we run the farm and most certainly return on assets. I am not keen on going back into the cowshed,” says Karla.
Without taking on significant debt Gavin and Karla could not have bought the first 79ha of their current 157ha farm in 1998. To do so, they borrowed 100% of the price for the former rehab farm on Old Taupo Road. They describe it as an ideal first farm in need of care and attention from owner operators. They brought with them the 230 strong herd Gavin had been sharemilking with, which included some of his father’s pedigree Holstein Friesian cows. “When Dad sold his herd they went for above average prices and I could only afford to buy two, but it was a start.” Karla, who grew up on a farm at Eureka in the Waikato, began a horticultural apprenticeship with the Hamilton City Council soon after she left school working
Dairy Exporter | www.nzfarmlife.co.nz | December 2020
