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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Farm working expenses (FWE)

What are farm working expenses, and why are they quoted per kgMS?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Farm working expenses are a farm's cash operating costs, such as wages, feed, fertiliser, animal health, repairs and electricity, before interest, rent, depreciation, tax and the owners' drawings. The term is mainly New Zealand's, where dairy farms divide them by the kilograms of milk solids produced so farms of different sizes can be compared, and set them against milk revenue: in a composite case, working expenses that take 55% of the milk cheque leave 45% for interest, rent, drawings and everything else. A lender reads the figure against similar farms and the farm's own history, because working expenses are more within the farmer's control than the milk price.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WHAT IT IS NOT

A breakeven milk price adds interest, loan repayments and drawings to the working expenses and asks what payout covers them all; farm working expenses stop before those.

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