Why a piggery's cashflow is different
Pigs go on the truck most weeks, so the income looks steady beside a grain cheque. The risk sits on the cost side.
Australian Pork Limited has put feed grain at about 60% of production costs. It says grain can make up 80% of the diet. Industry reporting in 2018 put feed at 60% to 70% of costs. So the grain market sets most of your margin, and the abattoir won't pay more for dearer barley.
Timing matters too. If you buy grain at harvest and store it, much of the feed bill goes out between November and January. Herd changes are slow to reach the bank account. A sow mated this month won't have pigs on the truck for most of a year.
Power has moved as well. NSW DPIRD reported NSW wholesale electricity averaging $147/MWh in 2022-23, against $78/MWh over the previous five years. Fans, lights and heat pads all run on it, so power gets its own budget line.
What the bank looks at in a piggery
Credit teams treat a piggery as intensive livestock, and they ask different questions from a cattle file. These are the questions that come up most.
- Grain exposure. They want to know how many months of feed you've stored or contracted. Then they ask what a $50 a tonne rise does.
- Herd performance. Pigs weaned per sow, feed conversion, mortality and carcase weights, ideally three years of each so they can see the trend.
- Who buys your pigs. Selling everything to one abattoir with no written contract worries a credit team.
- Licences. In NSW, a piggery built for more than 2,000 pigs or 200 breeding sows needs an EPA licence. The bank will check it's current.
- Biosecurity. A disease outbreak can stop sales while the feed bills keep coming.
- Security. Sheds are worth little to a buyer who doesn't run pigs, so the bank leans harder on the land and the cashflow.
Nick knows pigs from the shed floor as well as the bank file. He worked as a farm hand for four years and prepared stud pigs for show. For the past five years he has announced the pig section and competitions at the Sydney Royal Easter Show.
What goes in a Bank Review Pack for a piggery
Our Bank Review Pack costs $1,850 plus GST ($2,035 incl. GST). For a piggery it includes these pages.
- A herd budget built from sow numbers, pigs weaned, mortality, carcase weight and your buyer's grid.
- A feed budget in tonnes by ration and month, priced from your contracts and mill quotes.
- A monthly cashflow through to the next grain harvest, with the grain purchases shown when they're actually paid.
- What happens to the cash if grain rises $50 a tonne, if the pig price drops 15%, or in a poor season.
- A debt schedule and a statement of what you own and owe.
- A two-page covering note written the way a credit team reads.
If you'd like to see where you stand first, the Farm Health Check is $850 plus GST. It turns three years of your financials into the ratios a credit team checks.
How we work with your vet, nutritionist and accountant
We don't give animal health or nutrition advice, so your vet and nutritionist keep doing that. We put dollar figures against what they recommend. That lets you weigh a new diet or vaccine against what it costs.
We don't do tax returns, BAS or tax advice either, so your accountant stays your accountant. We work from the same Xero file, and tax questions go back to them.
A year with Farm CFO in a piggery
On the Farm CFO retainer at $800 a month plus GST, a year runs like this.
- February to April. We get last year's numbers into shape and the pack goes to the bank before the review.
- May to July. We check the feed budget against actual use and start the grain buying plan for the coming harvest.
- August to October. We run the cashflow against the grain prices on offer, so you can decide how much to contract before harvest.
- November to January. The big grain payments go out, and we watch the overdraft through its low point.
Each month you get management accounts, budget against actual and a rolling 12-month cashflow. To build the numbers yourself, read our guide on how to budget for a piggery.
