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Supporting the Australian Grains Industry through the

2013 Farm Business Update for Growers

Dookie Campus – The University of Melbourne

Tuesday 10th September Major Sponsor

Local sponsor

Associates

Farm Business Update for Growers

Program management

Matt McCarthy

Proceedings edited and compiled by Kathryn Toomey

35 Wills Street Bendigo

ph 03 5441 6176 fax 03 54444299 Email [email protected]

CAUTION: RESEARCH ON UNREGISTERED PESTICIDE USE

Any research with unregistered pesticides or of unregistered products reported in this document does not constitute a recommendation for that particular use by the authors, the authors’ organisations or the management committee. All pesticide applications must accord with the currently registered label for that particular pesticide, crop, pest and region.

DISCLAIMER This publication is prepared in good faith by ORM on the basis of the information available to us at the date of publication, without any independent verification. Neither ORM nor any contributor to this publication represents that the contents of this publication are accurate or complete, nor do we accept any responsibility for any errors or omissions in the contents however they may arise. Readers who act on information from this advice do so at their own risk. The GRDC and other contributors may identify products by proprietary or trade names to help readers identify particular types of products. The GRDC and the other contributors do not endorse or recommend the products of any manufacturers referred to. Other products may perform as well as or better than those specifically referred to. Information in this book may be used provided the author(s) and the Grains Research and Development Corporation (where it is a contributor) are acknowledged.

Program management

Matt McCarthy







Program management

Matt McCarthy







Program management:Gavin Beever

Proceedings edited and compiled by: Kathryn Toomey and Jane Crane

www.orm.com.au

46 Edward Street T 03 5441 6176PO Box 189 F 03 5444 4299Bendigo, Vic 3552 E [email protected]

2013 Dookie GRDC Farm Business Update for Growers 2

Welcome to the GRDC’s Farm Business Update program for the Southern Region.

This is the second year of operation for the Farm Business Updates across the Southern Region. Feedback from the events, both grower and adviser updates, has been very positive. Most significantly, they provide a unique opportunity to cover business management issues and hear from presenters not covered elsewhere.

Business management skills and knowledge are critical to running a successful farm business. The decision making process are becoming increasingly complex as farm businesses strive to meet the key challenges of increasing costs, declining ‘real’ prices and often erratic climatic conditions.

GRDC will continue to bring new topics and presenters relevant to growers and advisers through the Farm Business Updates. In doing so, the Update Planning Committees play a critical role in ‘keeping an ear to the ground’ for topical issues and are also actively developing a network of presenters skilled in farm business management. If you are interested in contributing to the planning of the Updates, I encourage you to get in touch with the team at ORM.

Our aim is to ensure that the Farm Business Update is both informative and thought provoking. Adding to this aim, the Update is designed to allow you to strengthen your professional network, putting you in touch with other likeminded advisers focused on farm business management.

ANDREW RICEManger Regional Grower Services - South

GRDC Farm Business Update Program


For Further inFormation on GrDC supporteD proFit anD risk manaGement publiCations anD aCtivities visit

www.grdc.com.au/farmbusinessmanagement

¢ Farm business management factsheets to help farmers, advisers and accountants.

¢ Farm business and risk management columns featured in Ground Cover newspaper.

¢ training for agronomists in farm business management skills.

¢ Farm business essentials workshop for growers (1-day Workshop).

¢ specialist Farm business management updates for growers and advisers.

¢ one day workshops on farm business essentials for growers and advisers.

¢ Farm business management support workshops for farming systems coordinators.

Throughout 2013, in the Southern Region the GRDC is working on a number of fronts to increase grower and

adviser capacity in farm business management.

GRDC.Gross Margin.Farm Business_BW.indd 1 14/12/12 2:00 PM

Agenda 7

Major sponsor Agrimaster 8

Local Sponsor Profarmer & Clear Grain Exchange 10

Supported by Nuffield Australia 12

Australian Rural Leadership Foundation 13

Ag Institute 14

Farm Business Update ProgramGrain market update and insights Malcolm Bartholomaeus 17 – expectations for 2013 Bartholomaeus Consulting

How to make good farm expansion decisions John Francis 31 Holmes Sackett

Financing your farm Alan Blackburn 49 – how has the business of farm financing changed over Alan Blackburn & Associates current state of play including new opportunities?

Crop rotations and farming systems Roger Lawes 55 – what are the key issues to making profitable and CSIRO sustainable crop Sequencing decisions

Agricultural robotics Robert Fitch and 61 – what could future broadacre farming mechanisation Salah Sukkarieh look like? The University of Sydney

Getting your act together Dennis Hoiberg 67 – three tips to get an effective ‘head plan’ Lessons Learnt Consulting

GRDC Southern Region Panel 73

Evaluation form 75

C o n t e n t s


RESEARCH PARTNER TO THE AUSTRALIAN GRAINS INDUSTRY

The GRDC plans, invests in and oversees research and development to benefit Australian graingrowers.

Find us at www.grdc.com.au

Notes:


GRDC Farm Business Update for Growers Dookie Campus –

The University of Melbourne Tuesday 10th September 2013

9.00 am Welcome

9.20 Grain market update and insights Malcolm Bartholomaeus

10.05 How to make good farm expansion decisions John Francis

10.50 Morning tea

11.20 Financing your farm Alan Blackburn

12.05 Crop rotations and farming systems Roger Lawes

12.50 Lunch

1.35 Agricultural robotics Robert Fitch – what could future broadacre farming mechanisation look like?

2.20 Getting your act together Dennis Hoiberg – three tips to get an effective ‘head plan’

3.10 Summary and evaluation

P r o g r a m


For more information about Agrimaster go to www.agrimaster.com.au or phone 1800 110 000.

Now – Where – HowYou should always know where you are now financially, be able to decide where you want to be and then have the ability to plan how you are going to get there.

Use the financial implications of production decisions as the backbone to successful change and volatility management.

At Agrimaster, we use a set of powerful business tools to breakthrough barriers so you can see where you are ‘now’, ‘where’ you want to go and ‘how’ you are going to get there.

A recent report from Australian Bureau of Agricultural and Resource Economics (ABARE) noted that, “farmers will require information to make cost-effective adaptation decisions.”

Good operators invariably use systems that provide timely and accurate information, and form part of their monthly operational review.

Plans change with seasonThey say that most people don’t plan to fail they fail to plan. Seeding is a good time for you to begin thinking about where you see the future of your business and how you are going to plan for this. The Agrimaster cashbook and budgeting software is used by the majority of West Australian farmers; this program provides the framework for solid planning which is key to getting the best out of your business..

Your historical financial data is applied not only to show what you have achieved in the past but also to help clear a path forward – to plan where you are going.

Good financial management provides you with a strong base on which to plan future direction in the event of sudden change.

It is constant and timely feedback that helps you go forward.

Agrimaster may have been considered a radical tool when it was developed in Western Australia nearly 30 years ago but farmers across Australia have adopted the technology at an exponential rate, and now it is considered the software package that is a pivotal driver of profit in farming businesses.

Integrating good planning and decisions

Having accurate up to date financials can help you confront the brutal facts about your business.

This is very important as it helps you feel the pulse of your business and identify any current or potential problems that are causing pain.

This provides you with a solid reference point from which to make changes.

Positive steps to help manage change:

Do your own books for 1. business management not just compliance needs – FEEL your numbers.

Develop a strong financial 2. frame of reference by getting close to your numbers on a regular basis.

Confront the brutal facts – 3. stay resilient and use your facts and planning tools to NOW, WHERE, HOW

Plan, Do, Check, Act – 4. constantly

Get a good Business Adviser, 5. Coach, Mentor

Embrace change as an 6. opportunity

CheckCheck

JAZ-

#56

46

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- Geoff Nalder, Eastern Mallee producer

“If a bid matches your offer you get paid within 7 business days. There’s no paperwork and the title of your grain is only transferred once you’re paid. Clear inform you of price fluctuations or competitive bids

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PO Box 586, Moama, NSW 2731 Ph: 03 5480 0755 Fax: 03 5480 0233

Email: [email protected] Website: www.nuffield.com.au

ABN: 33 092 327 396

PATRON: HER EXCELLENCY MS QUENTIN BRYCE AC GOVERNOR-GENERAL OF THE COMMONWEALTH OF AUSTRALIA

Tuesday, 16 July 2013

Nuffield Australia – Backgrounder for GRDC Proceedings (Tasmania)

Nuffield Australia awards Scholarships each year to those in the agricultural and fishery industries in Australia. It provides an opportunity for Scholars to travel overseas on a research scholarship relating to primary production. It is a 16-week program consisting of both group and individual travel. The objectives of a Scholarship are to increase production knowledge, personal and management skills. It is a unique opportunity to stand back from day-to-day business management and study a relevant primary industry subject of interest. Applicants do not need academic qualifications but need to persuade selectors they have qualities to make best use of an opportunity given to a few. Professional Development

Nuffield’s strategic approach is also to position itself as the catalyst for further, post-Scholarship professional development. It has an agreement with the Australian Institute of Management (AIM) to provide support for Scholars to participate in AIM’s training courses. Additional opportunities include participation in the Rabobank Executive Development Program (EDP) and media training courses. Further post-Scholarship professional development is also available overseas through Nuffield. This includes the Executive Program for Agricultural Producers (TEPAP), which is run by Texas A & M University, a ‘Farm Business Management Course’ at Royal College Cirencester UK and the ‘Challenge of Rural Leadership Course’ at Duchy College in the UK. These opportunities to continue enhancing knowledge, understanding practical management are at the forefront of Nuffield’s strategic approach and highlight the opportunities given to Scholars to leverage off their Scholarship for life. How can I apply?

Scholarships are open to men and women, who are between 28-40 years of age, who must ordinarily be a resident of Australia and engaged in farming or fishing as an owner or manager or an active member of a farming business. The Scholar must also intend to remain involved in primary production in Australia. Applications open on 1, April and close on 30, June annually. How else can I get involved?

Nuffield Australia Farming Scholarships hosts a National Conference annually, for Scholars, sponsors, stakeholders and potential applicants. In 2013, it will be held in Perth, from 19-21 September. More information about this conference can be found via the Nuffield Australia website. Go to: http://nuffield.com.au/nuffield-australia-2013-national-conference/ Join us for the Nuffield Australia major event of the year.

More information: Contact Jim Geltch: Ph: 03 5480 0755 or Email: [email protected] Website: www.nuffield.com.au

1st Floor 24 Napier Close Deakin ACT 2600 T 026281 0680 www.rural-leaders.com.au

Australian Rural Leadership Foundation

Developing leaders who can work effectively in a complex world: The Australian Rural Leadership Foundation’s leadership and education models

The Australian Rural Leadership Foundation was established in 1992 to respond to a backdrop of emerging challenges for rural, regional and remote Australia. It exists to create a network of leaders with compassion and commitment, strategic thinking and negotiating skills, and the foresight to influence communities, industries, businesses and policy makers. The Foundation develops and supports leaders to advance the viability and sustainability of rural Australia. Graduates of its programs are equipped to address the problems and opportunities presented by rapidly changing social, environmental, business and structural factors in rural, regional and remote Australia. An independent evaluation of the Australian Rural Leadership Program’s first 10 years has shown that, post-graduation, almost 20 per cent of participants occupied company board positions, and other senior roles on a national and international level.

The need for the Foundation’s work has become more urgent over the last decade. Australia's problems with water, drought and farm sustainability have intensified. Combined with the onset of global warming and the likelihood of climate change, hard thinking and visionary leadership is required to assist rural Australia to meet the challenges that threaten the viability of rural communities and industries.

Applications are now open for Course 21 of the Australian Rural Leadership Program.

Are you passionate about the future of your industry? Are you a leader committed to the prosperity of rural Australia? Why not take the next step and further your leadership skills by taking part in the next Australian Rural Leadership Program?

The ARLP is a Program designed for individuals who will lead rural, regional and remote Australia into the future. Applications can be lodged on the Australian Rural Leadership Foundation’s website: http://www.rural-leaders.com.au/programs/arlp/applications-for-course-21-may-2014-sept-2015 The closing date for applications is 31 July 2013.


W H Y J O I N A G I N S T I T U T E A U S T R A L I A ?

Our members enjoy a wide range of benefits:

AccreditationDevelop your skills base and become recognised through the AIA professional accreditation program. The AgCredited program provides a benchmark of quality assurance standards which the professional has to satisfy through independent assessment.

Events and NetworkingWith over 1200 members working across all sectors of the industry Australia-wide, membership of Ag Institute will expand your professional networking, enhance knowledge sharing through workshops and State Division events and provides social contact opportunities to geographically dispersed members.

CommunicationsAIA produces a range of publications and communicates with its members regularly so as they are informed of the latest industry news and events.• Weekly Alerts providing a snap shot for members on industry issues and events

• Agricultural Science Journal showcasing peer review papers, event reports, book reviews, science news and science based opinion pieces

• Website allowing access to the Members Only section providing a wealth of information

Ag Institute National Office Suite 5, 250 Gore Street, Fitzroy, VIC 3065 P 03 9416 2277 | F 03 9416 0636 E [email protected] | W www.aginstitute.com.au

Ag Institute Australia is the peak body representing the interests of Agricultural and Natural Resource Management professionals working in the Private, Government, Education, Consulting and Agribusiness sectors.

The Institute is committed to advancing the interests of its members and their application of rural science and technology for a sustainable future.

AIA membership is open to those who hold an appropriate qualification in agriculture and/or natural resource management or individuals who have achieved a professional status and a position of responsibility through a combination of post-secondary education and practical experience.

Students who are pursuing a career in agriculture or natural resource management can apply for free student membership of AIA. We welcome Ag students to our professional community.

Ag Institute AustraliaTrading name of the Australian Institute of Agricultural Science and Technology

A B O U T A G I N S T I T U T E A U S T R A L I A


Risk ManagementMinimise your consulting risk through the Group Professional Indemnity Insurance Scheme and receive competitive and discounted rates.

AdvocacyAg Institute continues to make important contributions to public policy and to the debate on key issues.

AwardsThe Institute recognises outstanding achievements by giving awards to members who have made outstanding, specific contributions to the advancement of Agriculture. AIA member awards include:• Medal of Agriculture • Fellow Award• Young Professional in Agriculture Award • National Student Award

Ag Institute National Office Suite 5, 250 Gore Street, Fitzroy, VIC 3065 P 03 9416 2277 | F 03 9416 0636 E [email protected] | W www.aginstitute.com.au www.aginstitute.com.au

With over 1200 members and almost a century of history behind us, Ag Institute Australia is the body to grow the agriculture and natural resource management professions.

Make your contribution to the Industry through membership of Ag Institute Australia.

Visit the AIA website at www.aginstitute.com.au to join online or to download a membership application form.

B E C O M E A M E M B E R K N O W Y O U R I N D U S T R Y A N D K E E P Y O U R F I N G E R O N T H E P U L S E


Notes:


Grain�market�update�and�

insights-�expectations��

for�2013��Malcolm Bartholomaeus, Bartholomaeus Consulting Keywords:�grain�marketing,�grain�prices�

Take�home�messages�

• 2013 has a degree of optimism about it, both in terms of production potential, and prices for the major crops like wheat and canola.

• Global wheat stocks are not likely to lift this year despite a record crop, and although prices will be down year on year, the prices are not likely to dip to levels predicted early in 2012.

• Wheat should hold above $250 per tonne, but that may push feed barley close to $200 per tonne and malt barley to $220 - $230 per tonne.

• Pea and faba bean prices should hold above average levels. Lentil prices should lift year on year but remain below average.

Wheat�

Wheat is a key crop in grain production systems in Australia, and drives the profitability of most grain farms. In global markets it is a key grain for both human consumption and animal feed.

Last year two factors were at play: 1. A�drought�in�Russia�and�other�Black�Sea�countries. This pulled global output

back and reduced the flow of cheap exports from that region once their exportable surplus had been exhausted. With production issues in the US and parts of the EU as well, global wheat production fell 42 mill t in 2012/13 versus 2011/12.

2. A�sharp�rundown�in�US�corn�stocks, lifting global corn prices and pushing feed consumers back to wheat. This kept wheat consumption higher than we might normally see when production is constrained. (For example a small Russian crop would normally put pressure on the volume of wheat consumed for feed in that region).

There has been a residual flow on from both of those factors well into 2013, and wheat prices are still being driven by the corn market as the market tries to assess just how much US and global corn stocks will be rebuilt. We have also seen wheat feed use remain high until we get those corn stocks hitting the market in September.


So, 2013 has seen a number of things unfold: • Production has lifted in a range of countries, including the Black Sea region, the US, and

the EU. Overall we are facing a 50 mill t increase in global production compared to 2012/13, to a new all- time record output of 705 mill t.

• However, with wheat still being used for feed well into 2013, and with a rebound in output in the Black Sea and increased use for feed in that part of the world, global consumption will also surge to a new record level of 707 mill t.

• The net outcome is that despite a move to record world wheat output, global stocks are unlikely to lift at all, and are projected to fall 1.43 mill t at this stage. This has driven the projected stocks to use ratio to below 25 percent, down from 30 percent in 2009/10.

Figure 1. Wheat fundamentals tightening.

China has also emerged as an ongoing importer of wheat, and projected at levels not seen since before 2003/04. Imports are projected to reach 9.5 mill t, or 8.5 mill t net imports. In 2007/08 China was a net exporter of 2.8 mill t of wheat.

Figure 2. Actual and projected levels of Chinese wheat imports (mill t)


So why are wheat prices showing a year on year decline?: • Basically because across the major wheat producing countries, it is only China, India and

the US where wheat supply after allowing for domestic consumption, is going to be lower than it was in 2012/13.

• Of the major wheat producing countries there will be 7.53 mill t more wheat available this year than last year.

• Increased supplies available for export from the Black Sea countries (Russia, Kazakhstan and Ukraine), and from the EU, total 15.6 mill t, and are putting pressure on international wheat prices as we come into the end of the northern hemisphere harvest. Table 1. Wheat supplies available for export from the major wheat producing countries.

Change�in�Surplus�(mill�t)�

2012/13 2013/14 Change US 43.63 41.39 -2.24 -5.13% Argentina 4.74 6.69 1.95 41.14% Australia 22.59 22.15 -0.44 -1.95% Canada 23.23 24.71 1.48 6.37% EU 25.87 28.04 2.17 8.39% China 51.95 48.44 -3.51 -6.76% India 30.99 25.69 -5.3 -17.10% Russia 15.07 22.68 7.61 50.50% Kazakhstan 9.72 12.63 2.91 29.94% Ukraine 9.32 12.22 2.9 31.12% Total 237.11 244.64 7.53 3.18%

Why are wheat prices not likely to fall as far as we were expecting early in the year?: • Global stocks are not going to rebuild this year on current expectations • While we are currently seeing pressure on global prices from aggressive exports from

the Black Sea region, Russia in particular, is seen as having limited supplies in the second half of the marketing year post Christmas.

• India is not likely to be as aggressive this year with a 17 percent decline in available wheat supplies this year compared to last year.

• Chinese imports will put some demand pressure on the global market, and may increase basis levels (ie the premium we can achieve over US futures in global markets)

• The weaker Australian dollar is shielding us from most of the downside in prices as well.

In fact US wheat futures have been falling sharply all year, but the drop in the Australian dollar, and the lift in basis, has seen our cash prices hold at much higher levels than we would have expected.


Figure 3. 13/14 December US wheat futures and 2013 APW MG cash prices.

Despite an US$54.23 per tonne drop in CBOT December futures since January 3rd this year (A$51.67 per tonne at January exchange rates), cash prices have lifted by $1 per tonne, on the back of a $34.63 per tonne boost from the currency, and an $18.04 per tonne lift in basis levels.

Table 2. Change in wheat prices since January 3rd 2013.

3/01/2013 20/08/2013 Change % Change Ex Rate US cents 104.95 91.14 -13.81 -13.16% Dec Futures US c/bu 801.25 653.50 -147.75 -18.44% Dec Futures US$/t $294.06 $239.83 -$54.23 -18.44% Dec Futures A$/t $280.19 $263.15 -$17.04 -6.08% APW MG Cash Price A$/t $275.00 $276.00 $1.00 0.36% Basis A$/t -$5.19 $12.85 $18.04

Figure 4. Changes in wheat price components, 3/1/2013 to 20/8/2013.


August 20th forward prices were around $277 per tonne delivered Geelong/Melbourne. The downside risk going into harvest will come from:

• A rally in our currency. • A drop in basis. • A drop in underlying US futures.

The Australian dollar could do anything. It remains unpredictable, but the overall view is that it will either go sideways, or continue to lose value. Either the current gains will be retained or we could get further benefit from the currency.

Basis levels are high at the moment, and higher than we would expect in the absence of drought or a wet harvest (eg . 2010). We think basis is being driven by the improved demand for our wheat into China. However, we are likely to see basis levels come under pressure during harvest as growers sell off the header for harvest cashflow, and as exporters get coverage for their early shipping programmes.

Figure 4. Basis levels November 29th

US wheat futures are likely to continue their downward price trend, unless we see something happen to the US corn and soybean crops pre harvest. The spread between wheat and corn has opened up as much as the market is comfortable with, so if corn comes under pressure as their big crop begins to come in, it is likely that wheat prices will be dragged lower as well. If corn holds, it will be supportive of wheat futures.


Figure 5. Wheat corn spread (USc/bu).

Wheat Summary Wheat prices are unlikely to go into our peak harvest period holding current values of around $276 per tonne. However, the downside should be limited to something close to $250 per tonne delivered port basis for APW.

Post harvest we should see Black Sea exporters stepping back from the market as their stocks diminish. We should also see the full impact of the Chinese import programme. We will also be in a period where the market will be concerned about production potential for 2014, and questioning whether global stocks can begin rebuilding or remain under pressure.

The post harvest market may get some support, particularly if basis levels in Australia improve once the peak of grower selling has passed.

Canola�

The canola market in 2012 was driven by shortages of all oilseeds in North America. This saw Winnipeg canola futures hold a significant premium over EU values.

We also had reasonable demand into Europe, with the EU crop falling short of demand again, and a small crop in the Ukraine limiting exports from there. Australian canola was exported to the EU again, helping to underpin demand for our big crop.

Late in the marketing year exports to China were re-opened, and this allowed the rest of the crop to be cleared to export destinations.

In 2013/14 the market is changing: • Tight stocks of soybeans in the US are expected to be relieved. • The Canadian canola crop looks like being up on last year and at new record levels. • The EU crop is bigger, and the growth in demand for biofuels has stopped, with

biofuel production settling just below its 2010/11 peak. • The Ukrainian crop is larger and should see more flow to the EU • Demand for Australian canola into Europe is expected to be down on the last two

seasons. • Exports to China should pick up, but will it cover the gap left by Europe?


• We are expecting a drop in canola prices from last year’s harvest average price of $550 per tonne.

Forward prices of $540 per tonne on August 20th are above expected harvest levels. We may see canola prices average below $500 per tonne during our harvest for the first time since 2009.

In�the�absence�of�a�drought�or�wet�harvest�it�is�hard�for�harvest�average�prices�to�be�

above�the�August�to�October�average. Prices tend to be falling during the August October period as well, as the US and Canadian oilseed crops are harvested and pressure global prices. If canola prices average less than $530 per tonne during August to October, we could easily see a harvest average of less than $500 per tonne based on average price moves in non drought or wet harvest years.

Table 3. Pre harvest versus harvest canola prices across a number of years.

Aug Oct Av

Nov Dec Av Change

2003 $403.00 $389.00 -$14.00 2004 $362.54 $324.33 -$38.21 2005 $329.44 $315.00 -$14.44 2006 $439.46 $521.88 $82.42 2007 $560.69 $594.43 $33.74 2008 $599.38 $558.22 -$41.16 2009 $447.89 $407.39 -$40.50 2010 $509.52 $569.24 $59.72 2011 $567.70 $514.33 -$53.37 2012 $587.05 $553.06 -$33.99 Average -$5.98 Av Excl 2006, 2007 and 2010 -$33.67

The correlation between the A$ value of Winnipeg futures and our cash prices is high at 93.1 percent and this is likely to continue into the harvest period. Consequently, if Winnipeg futures do come under pressure from the soybean harvest in the US and canola harvest in Canada, we can expect our prices to ease as well.

The most likely source of higher prices for our harvest period will come from a hot dry finish to the soybean season in the US and/or an early freeze for the late Canadian canola crop. This would lift prices during the October period and leave our harvest prices at a higher price base as a result. Often a price gain seen during October persists into our own harvest period.


Figure 6. 2013 A$ November canola versus Port Adelaide forward price.

Prices in the January to March post harvest period average lower than harvest prices, although in recent years prices in the April to July period have been strong, coinciding with lower Australian stocks and risk premiums in the market ahead of the North American canola and soy crop establishment phase.

Barley�

Barley prices are highly correlated with wheat prices. For the 2013/14 season to date, daily feed barley prices have shown a 91 percent correlation with daily APW prices.

Figure 7. New season wheat and barley prices.

Since deregulation of the wheat market, feed barley has traded at a larger discount to APW wheat. With the exception of 2011, the discount to feed barley has been in the range of $50 to $85 per tonne at harvest time.

The current forward market is showing a $45 per tonne discount to APW wheat as well. There is no reason to expect that to change as we approach harvest this year, with global demand shifting back to grains for human consumption rather than grains for feed.


Figure 8. APW F1 harvest spread.

So the outlook for feed barley will be driven by the outlook for wheat. If wheat trades down to around $250 per tonne at harvest, we can expect feed barley to be priced around $205 per tonne or a little lower.

In terms of the best time of year to sell feed barley, there is no strong seasonal trend. This makes feed barley an ideal grain to sell at harvest and also to store on farm for sale into the domestic market during the year, or for diversion to bulk export markets if need be.

We tend to see the available supply reduced by bulk exports, leaving the domestic market to soak up the residual. If wheat is priced out of the feed market we tend to see a lift in demand for feed barley. If the growing season gets off to a late start or is relatively poor, demand for feed barley can be strong during the year.

Malt barley premiums have been under pressure in the last two years, and with lifting production in Europe and Canada expected this year, the average harvest malting premium is unlikely to change a lot.

Figure 9. Average harvest malting premiums.

If the malt premium stays close to recent levels, then we would expect, on average, malt barley to be priced close to $20 per tonne above feed barley at harvest time and some $30 per tonne under APW wheat.


In terms of timing of sales, there is a strong pattern which shows that the premium over feed grades peak during the harvest period. Basically when supplies are at their highest, the malt traders and maltsters secure their supplies for the next 12 months, and then stand aside.

A good way of converting malt barley into feed barley is to store it for sale during the year!

�Pulses�

A major grower survey conducted by the Australian Crop Forecasters has shown that the area planted to pulses nationally has increased, particularly for peas and faba beans, but also for lentils.

Figure 10. Year on year percentage change in national planted areas.

This is in response to recent price trends. The lift in faba bean area is being driven by average or above average prices for 6 out of the last 7 years, and above average for the last two years. Current forward prices are continuing the trend of above average values at this stage. Harvest and early post harvest prices are normally above August to October prices, so the odds are in favour of another year of strong prices.

The wet early start to the season in the UK and a wet finish in France has probably reduced planted areas and increased disease burdens, limiting production from the EU. On the negative side though, unrest in Egypt and the Middle East may interrupt trade into that key market.


Figure 11. Faba bean prices by harvest year (January – March average).

Pea prices have been increasing over the last 3 seasons and have moved to above average levels for the most recent harvest.

Figure 12. Pea prices by harvest year (January – March average).

Current pea prices remain above average. Pea prices have been driven by shortages of chickpeas in international markets, and substitution between desi chickpeas and peas in the Indian market based on price. Global output of chickpeas is now rising because of the recent run of strong prices, and this will pressure pea prices this year. However, there is a slight lift in prices from pre harvest levels into harvest and the early post-harvest period, so the current price is a good indicator of what we might expect for this year’s crop.

Lentil prices have been low in recent years after four years of exceptionally strong prices in the 2007 to 2010 period. That period of high prices saw global output surge, and we are only just getting production back in line with consumption.


Figure 13. Lentil prices by harvest year (January – March average).

We should see another year on year lift in average prices for lentils, but they will remain below the 2007 to 2010 price levels, but may get to levels seen consistently in the period from 2000 to 2006.

Contact�details��

Malcolm�Bartholomaeus�

Callum Downs, PO Box 54, Clare SA 5453 Ph 0411 430 609 [email protected] www.bartholomaeusconsulting.com.au


Notes


How�to�make�good�farm�

expansion�decisions?�John�Francis,��

Holmes Sackett Keywords:�farm�expansion,�area,�productivity�

�

Take�home�messages • An increase in land area can lead to improvements in profit but it requires significant

capital investment which can increase risk. • Expanding the farm area is often seen as the only way of increasing farm profitability.

However, this is not the case, as there are usually countless opportunities for improving profitability from the existing area of land.

• Expansion decisions require an understanding of farm business performance and investment analysis. Like any investment decision weighted on profit, expansion decisions should account for the risks and rewards.

• Comparisons with returns of other on farm investments will help to add objectivity in decision making.

�

The�method�of�expansion�–�how�to�expand?�

There are two categories of farm expansion and there are a number of methods for expanding within each category.

1. Expansion by increasing the area under management. This can occur by; purchasing, leasing or share-farming additional land.

2. Expansion by increasing the amount of production from the existing area. This usually occurs by identifying the optimum level of production, establishing how far below the optimum production is currently and implementing a strategy for increasing production.

The choice of expansion method, assuming a profit motive is driving the decision, will depend on the limitations and the goals of the business and the returns and risk of the investment. Both categories and all methods of expansion usually have a common goal, which is to improve profitability. There may also be a number of other goals which are specific to the expansion method and help to weigh a decision in the favour of one method over another. Similarly, there may be limitations to pursuing one method of expansion over another.


Why�expand?�

Some motivations or reasons for expansion follow: �

Increased operating returns These come from additional area under management. Increased operating returns from expansion occur by:

• Generating some level of scale advantage relative to the existing business. This means that the marginal overhead costs, or costs of doing business, increase by less than in the existing business per unit of additional area managed.

• Creating more income from the same or lower enterprise costs in the existing business. This means that the marginal production or price is higher than the existing business with a similar or lower cost structure.

• Creating the same level of income from a lower enterprise cost structure in the existing business.

• Creating the same level of income and expenses in the existing business from a lower land value.

The most likely of these is the generation of scale advantages relative to the existing business. Increase labour efficiency As in many other businesses, the highest overhead cost in farming is labour. High levels of labour efficiency lower the cost of production. A labour unit is 240 days per year for 8 hours per day. A labour unit consists of all labour utilized on farm including family, contractors, salary earners or casual employees. Labour efficiency can be improved through expansion where existing levels of labour are not matched to optimum levels. Benchmark levels of labour efficiency are greater than:

• 1,500 hectares per labour unit for crop enterprises. • 15,000 DSE per labour unit for beef enterprises. • 7,500 DSE per labour unit for wool enterprises. • 8,500 DSE per labour unit for lamb enterprises.

These levels of labour efficiency don’t mean that you must have the scale to match a labour unit. If the scale of the business is insufficient for one labour unit spend only that portion of time necessary to manage the business efficiently. For example if 750 hectares of crop is managed it should require no more than half a labour unit to manage it. Where labour efficiency is not matched to the benchmark levels then opportunities for improvement exist. Contrary to popular belief, expansion is not the only way to improve labour efficiency. Farming the existing area and either working off farm or using machinery for contracting elsewhere can achieve the same goal. The more time spent generating revenue off-farm the lower the opportunity cost of labour on farm.


Timeliness of operations is still a critical management issue and should not be foregone to generate a few extra dollars off farm. The cost of lost production due to poor timing of management events usually exceeds the benefit of generating income off-farm. Where labour efficiency is already at optimum levels then additional labour will be required to manage any additional area. Managers in this position will not achieve the same levels of scale advantage as will those who have a pre-existing labour inefficiency Increase machinery efficiency In cropping intensive businesses, where machinery is owned, depreciation can be a major overhead expense. Spreading the machinery plant over the maximum number of hectares keeps the cost of machinery low. The maximum number of hectares for machinery is dictated by the width of machinery, the speed of travel and the area allowing for timely operational management. Where there is spare or latent machinery capacity, expansion allows for an increase in profit by spreading overheads over more hectares. Additional plant, or upgrading to wider machinery, may be necessary when expanding if plant is already at capacity and this will add to the additional capital invested and the overhead costs on each additional hectare. Planning for succession Expansion is often seen as the solution when additional family members are looking for entry into the agricultural industry. Another family labour unit earning a living from a farm business should generate another $350,000 in gross profit. If 40% of this is retained as net profit at a target return of 6% then another $2.3 million in asset value is required to sustain the labour unit. The issues in such a situation are the ability to fund and secure the investment and the ability to repay bank debt if this is the proposed funding source. �

Increase capital growth (create wealth) The safe part of the total return in agriculture is the capital growth of land. Land accounts for around 80% of the total asset value. In expansion situations it could be as high as 95% if additional plant and equipment or livestock is not necessary. Provided the investment period is a long term horizon then rates of capital growth of around 6% are not unreasonable expectations. Rates of capital growth for agricultural land can be volatile with increases of over 40% in a single year being recorded in the last decade. Such spikes are often followed by long periods of low rates of growth bringing things back to the average. Land expansion through purchasing provides the opportunity to create additional wealth via capital growth in the land. Given that history shows capital growth in agricultural land is assured over the long term then investment in land seems a sure bet. This may be the case but the fact that the purchase of agricultural land is so capital intensive is one factor preventing investment. The other is that the operational returns may be inadequate to cover a completely debt funded land purchase. Business managers looking at this approach to expansion must have additional funds in reserve to support the after-interest losses of the farm.


Leasing and sharefarming do not provide the capital growth opportunities delivered by purchasing as the land is not owned under such arrangements. Improved utilisation of existing skills Improved utilization of existing skills may be a good reason to expand. As with labour and machinery efficiency, expansion can provide an opportunity to improve skill utilization or efficiency. There may also however be a range of other ways to use existing skills thus assessing all of the options is important. In order for an adviser to assess whether the farm business manager has skills worth applying to an expansion opportunity some sort of assessment must be conducted. Comparing the financial and production performance of the businesses managed by the operator over time is a useful method of assessment. When�to�expand?�

The time for expansion depends on the interaction between the following factors: • The motivation for expansion, • the proposed expansion method, and; • the ability to fund the expansion.

If there is no ability to fund the expansion, regardless of the method or motivation then there is no appropriate time to expand. There may however be ways of expanding production on the existing area at no cost. For example, improving the timing of management events such as sowing or spraying in a cropping program costs nothing but can lead to significant production and associated profit gains. If the proposed method for expansion is land purchase, the motivation for expansion is to become a land baron and capital is non-limiting then there is no time imperative for expansion. If the expansion method is land purchase and the decision is driven primarily by capital growth then the timing will be dependent on perceived value and speculation or the position taken on future capital growth. Scale�–�is�it�a�case�of�get�big�or�get�out?�

Holmes Sackett benchmarking data has been used to analyse the issue of operating scale. Mixed and grazing farms with over 8 years of benchmarking data have been categorised by asset value. The data presented are presented as simple averages. The variation within a group is much larger than the variation between groups. It is difficult therefore to draw rigid conclusions about profitability based on the total assets of a business. Some businesses in the data set may have land value influenced by factors that have no relationship to its productive capacity. This usually relates to farms located close to cities where land value is influenced by real estate, rather than productive value.


The results, shown in Figure 1, demonstrate that for grazing farms there is a trend beyond $4 million dollars in asset value for farm profitability to decline as asset value increases. While this doesn’t conclusively suggest that the ideal size of grazing farms for optimising profitability is under $4 million dollars it does suggest that farms with high asset value don’t necessarily provide greater profitability. The highest level of profitability for mixed farms is seen at $2-4 million and again at $8-10 million dollars in asset value. It is possible that the wave effect of low and high profitability for different asset values is a function of machinery efficiency and scale advantages for optimum plant size. That is, the optimum area for a single farming plant may equate to the area represented by an asset value of $4 million dollars. Doubling the farming plant with insufficient area reduces profitability as the overheads of the second plant are spread over too few hectares. The theory is that profitability increases again above $8 million dollars worth of assets as this is the area that provides optimum machinery efficiency for two machinery plants.

Figure 1. Bigger farms are not necessarily more profitable. The key point is that there is no evidence from a long history of benchmarking results that increasing farm size leads to increased profits. Scale advantages are achieved to a point and then decline beyond that point. The point at which scale advantages decline is a function of labour and machinery efficiency. Small farm businesses can achieve high levels of labour efficiency by matching labour and machinery to the size of the business. A small farm should not be expected to sustain a whole labour unit, particularly if it generates less than $350,000 in gross profit. Corporate scale does not appear to have any profit advantage over large sized family farm businesses.


Case�study�1�–�land�purchase�

Consider a manager with average farm financial performance who owns 1000 hectares. The features of the business under its existing structure are as follows:

• Historical return on assets managed is 3%. • Land value is $3,750 per hectare. • Land represents 80% of the total asset base. • Current equity equates to 80%. • The weighted average cost of borrowings is 8.5%. • The historical rate of capital gain has been 6%.

An opportunity has come up to purchase 150 hectares adjoining the existing farm. The price of the additional land is the same as the value of the existing land plus on costs of an estimated 4%. The production potential has been assessed and it is assumed to be similar to the existing farm. The steps for assessing the opportunity are as follows:

1. Assess the productive potential of the land so that a comparison of production relative to the existing business can be made.

2. Calculate the extent of the scale advantages offered through the expansion opportunity. Scale advantages are achieved as a result of fewer additional overhead expenses being incurred for every additional hectare managed.

3. Calculate the additional capital required. This includes assessment of additional capital for the land, livestock, plant and equipment and operating expenditure.

4. Calculate the return on investment to establish whether the projected return is commensurate with the additional risk.

The productive potential is assumed to be the same on the proposed expansion as it is in the existing business. An additional $50 per hectare will be required for overhead expenses on every additional hectare for items such as insurance, rates and labour. No additional capital apart from that required for land is necessary as the land will be suited to cropping and the existing plant will have the capacity to conduct the work.


Table 1. Completely debt funding this expansion opportunity leads to lower profits after funding costs.

The outcome The Holmes Sackett expansion tool, which will be available to participants in the GRDC updates on Holmes Sackett’s website, has been used to assess the opportunity. The first column of Table 1 shows the financial features of the existing business. The second column, titled proposed purchase, shows the marginal financial features of the purchase. The final column shows the financial features of the business as a whole.

The tool shows that the marginal return on additional assets is 6.2%, far higher than in the existing business.


This occurs partly because the marginal profit per hectare is higher as a function of fewer overhead expenses, but also because the only additional assets required for purchase were the land assets. This would not be the case if the expansion opportunity was a grazing enterprise as additional capital would be required for livestock. While the return on assets is high over the additional area, the additional area only represents a small proportion of the total area under management thus it has the effect of raising the average return from 3% to 3.4%. The analysis shows negative marginal tax paid on the additional area. Assuming an average tax rate of 30%, this adjustment for total tax is made in the combined column. The following questions and their answers, provided by the tool, are provided below:

The key issues that are raised as a result of the analysis are as follows:

• Due to the fact that the purchase is completely debt financed the additional profit before interest and tax is lower than the additional debt. This results in a cash shortfall in the business. This is offset by additional capital growth but the capital growth doesn’t fund the cash shortfall.

• The level of equity falls by 9% to leave the business at 71% equity after the purchase. At the current level of profitability this may be inadequate to provide the desired level of security and comfort to the financier.

• Interest cover, the ratio of pre-interest and tax profit to interest, falls from a ratio of 2 to 1 to 1.4 to 1. This occurs because the level of debt increases by more than the profit. This will be of concern to a financier as the business will be exposed to losses in drought. For example if returns fall to 1% in a drought then the loss after interest costs increases from $11,900 to $54,000.

• Does the reduction in cash income still provide sufficiently for the needs of the business? Capital re-investment and provisioning for retirement and family commitments are important considerations. If the reduction in profit doesn’t allow for these needs then alternatives to expansion should be considered in the short term.

• The investment generates a 9% internal rate of return on the marginal capital invested. This is a return that reflects the level of risk in the investment. That is, a large proportion of the total return comes from capital growth of the land. This part of the return is considered a low risk return.

�


Case�study�2�-�leasing�

Consider the same manager with the same business is faced with an opportunity to lease 150 hectares adjoining the existing farm. The price of the lease is $150 per hectare. The production potential has been assessed and it is assumed to be similar to the existing farm. The steps for assessing the opportunity are no different to the purchase case study. The productive potential is assumed to be the same on the proposed expansion as it is in the existing business. An additional $50 per hectare will be required for overhead expenses on every additional hectare for items such as insurance, rates and labour. No additional capital apart from that required to fund the lease and operating cost is required as the land will be suited to cropping and the existing plant will have the capacity to conduct the work. Table 2. Leasing provides scale benefits but lease costs erode returns

The outcome Table 2 demonstrates that there is no difference in the profit before lease relative to the purchase analysis. That is, the same benefits are achieved as a function of increased scale. The things that differ are the debt required to fund the lease, the associated equity of the business after funding, the profit after financing and lease costs and the lack of capital gain.


The following questions and their answers, provided by the tool, are provided below:


• The lease of the same area of land, relative to purchase, requires far less capital thus interest costs are low. An additional cost in leasing however is incurred and this has a significant influence on the profit after accounting for the lease cost.

• The profits of the business exceed the interest and lease costs thus the cash position is improved.

• The scale improvements of the additional leased area ($100 per hectare), are more than offset by the additional cost of leasing $150 per hectare thus the profit per hectare, after leasing costs have been accounted for, is inferior to the existing business.

• The up-front cost of leasing is $75,000 including operating and lease costs and the annual profit after lease is $13,600. This represents an internal rate of return of 28% which is well above the cost of capital.

• There is no capital gain thus 100% of the returns come from the operating part of the business.

• Leasing under these assumptions generates a return of 18%, which is approximately 10% above the cost of capital. A key question that arises from this analysis is whether the returns are adequate. That is, the analysis assumes that a return on the value of marginal assets managed of 6.2%. If this falls to 5% then the internal rate of return falls to 8.7%. Lowering the lease rate or improving management are factors that will increase the return on investment.

Case�study�3�–�improving�production�from�the�existing�area�

Consider the same manager with the same business now looks at his existing system and realizes that there are opportunities for improving profitability on the existing area. This is evident by looking at the historical annual return, 3%, and comparing it with the top 20% who achieve over 5%. The manager has identified that improvement in timing of operations could deliver an additional 0.5% return while investment into additional inputs will deliver another 0.5% return. This might be additional nitrogen in a cropping enterprise or additional livestock in a grazing enterprise. The outcome is an increase in income from the same area of $111 (up 19%) per hectare at a cost of $60 per hectare (up 20%). Overhead expenses do not increase on the additional area at all thus the marginal profit is $51 per hectare.


Table 3. Improving productivity from the existing area generates the greatest wealth

The outcome The increase in before-interest and tax profit of $51,000, as a result of improving management from the same area, exceeds the profit generated from spreading average management over more area ($36,000). An additional $100 per hectare has been allowed to invest in more livestock to increase stocking rate and an additional $60 per hectare has been allocated to improve soil fertility. This additional $160,000 debt results in an additional $12,325 in interest payments per year. The total wealth created from this scenario, assuming an average tax rate of 30%, is $27,000. This exceeds the wealth created from purchasing or leasing.


The following questions and their answers, provided by the tool, are provided below:


• The additional wealth created from improving management was greater than leasing or purchasing and required quarter of the additional capital necessary in purchasing.

• The associated reduction in equity was only 3% relative to a reduction in equity of 9% with purchasing.

• The interest cover of the business increases from a ratio of 2:1 to 2.3:1. • The internal rate of return from improving management, equates to 30% over a ten

year period, which significantly exceeds the purchasing options and is slightly superior to leasing.

Comparison�of�expansion�options�

A comparison of the outcomes from each of the case studies presented is shown in Figure 2. The graph demonstrates that purchasing has the greatest interest cost due to the cost associated with the land purchase. The operating profit with purchasing is negative but the wealth created is $23,000 indicating that the difference between the two has come from capital gain. The cost of the lease is included in financing costs thus this option has the next highest financing cost behind land purchasing. The profit (EBIT) just exceeds the financing costs and there is no wealth created from capital gain thus the wealth created is small in comparison with land purchasing. Increasing productivity has the lowest financing costs and increases the profit by the greatest percentage. This leads to the greatest profit after financing and tax. Even without capital gain this option provides the greatest wealth creation of the three options. This demonstrates that there is more to be gained from getting the business humming on the existing area before expanding average management over a greater area.


Figure 2. Increasing productivity generates the greatest wealth What�to�do?�

Figure 3 shows the internal rate of return or return on investment from each option. The land purchase is assumed to be a 30 year investment, the lease a 5 year investment and the increasing productivity a 10 year investment. The returns from investing in increasing productivity and leasing exceed those of purchasing. Purchasing is unlikely to ever deliver returns on par with those of leasing or increasing productivity because the returns relative to the amount of capital required for investment are always likely to be lower. Purchasing is however a lower risk investment than the alternatives due to the relatively assured capital gain over time.

Pursuit of the increased productivity, provided the risks do not present a barrier, should be the priority. The change in management can be proven over the existing area and then expanded by purchasing or leasing. This will deliver additional profits which can be invested as equity when the expansion occurs. It will also deliver far greater returns from the expansion investment options when they occur in the future due to increased returns from improved management.

The outcome of this analysis is dependent on the production and financial performance of the manager looking to expand. This is not a one size fits all outcome however the process will deliver sensible results provided there is adequate accounting for the changes between business operators. The ability to assess the financial performance of a business and to identify realistic opportunities for increasing profitability are critical in making a sensible expansion decision.


Figure 3. Increasing productivity generates the greatest return on investment �

Summary�

These analyses demonstrate the complexity associated with what appears to be a simple question in “should I expand?”. The outcome of these analyses is completely dependent on the assumptions. The assumptions that have the greatest bearing on the outcome of the analysis include:

• The management ability of the operator, • the productivity of the expansion opportunity, • the extent of the scale advantages achieved, • any additional costs that may be incurred, and; • the level of borrowings required to undertake the expansion.

The assessment of the relative returns of each of the investments provides an objective framework for decision making. The decision will come down to the assessment of risk relative to the return. On strict economic terms, under the assumptions in these case studies, investment into increasing productivity is the solution. As profitability of the existing business increases however the outcome will change. It is therefore important to understand the limitations of the business being analysed. Demonstration of the extent of the downside can also assist clients to make decisions as it provides an understanding of the possible worst case scenario outcome. An important point for advisers is to understand their limitations of experience in making recommendations regarding expansion. A thorough understanding of the production system as well as the financial situation of the business is absolutely critical in providing good advice. With agricultural expansion there is usually a lot of capital at play.


Key Questions Should farms expand? Why, when and how – which option in which circumstance Is it a case of get big or get out? What must be taken into consideration when making business decisions regarding expanding the farm? Key outcomes/key learnings: Do�farms�need�to�expand�over�time�to�remain�profitable?�

Expansion over time is not necessary to remain profitable. Matching the overhead cost structure to the scale of the business and generating optimum production is the key to remaining profitable. If the business is not of sufficient scale to sustain a full time labour unit this doesn’t mean that the business can’t be profitable, it just means that the business should match the labour input to the labour requirement. What�needs�to�be�taken�into�consideration�in�respect�to�farm�expansion�decision�

making?:�

• The current level of management and financial performance. It might be more cost effective to improve management on the existing business than to expand.

• The ability to finance and provide security for the proposed expansion. • The management ability of the operator. Outcomes are highly sensitive to management

performance. • The extent of the improvements in scale. These come from improved labour and

machinery efficiency and a lower marginal overhead cost structure. The extent of scale advantages will depend on the existing level of machinery and labour efficiency, the proximity to the existing farm and other factors influencing the marginal overhead expenses.

• The level of changes in production that may occur on additional land. The price of the expansion opportunity should reflect differences in productivity relative to the farm.

• The goals of the expansion. If the goal is increased wealth creation and the expansion opportunity doesn’t achieve this then the expansion shouldn’t occur.

What�are�the�opportunities�and�benefits�for�farm�expansion?�

Farm expansion, if well managed, improves profitability, profit and wealth creation. The rate at which all of these occur is dependent on management and the ability to finance the expansion opportunity. In order to achieve this interest cover ratios should be maintained at a level that reflects the risk profile of the manager. Land purchase opportunities are low risk investments due to the level of capital gain likely to be achieved over the long term. What�are�the�risks�associated�with�undertaking�farm�expansion?�

The risks in undertaking farm expansion are the losses that can be incurred as a result of: • A run of poor seasons, • poor management leading to lower than projected returns, • additional debt exceeding additional profits, and; • low rates of capital growth.


Any analysis should demonstrate the downside risk so that managers are aware of the extent of the losses that could be incurred and develop an exit strategy before expanding. A�comment�on�luck�

There is an element of luck involved in land purchasing. There are countless situations where average managers have put a lot at risk and been rewarded as a result of a great run of seasons or phenomenal rates of capital growth. Similarly, there are situations where good managers, have expanded at the wrong time, copped a run of poor seasons and low capital growth and have been forced to liquidate additional assets at significant cost. Contact�details�

�

John�Francis�

[email protected]


Notes


Financing�your�farm�-�how�

has�farm�finance�changed�

over�the�years�and�what�is�

the�current�state�of�play�

including�new�

opportunities?�Alan Blackburn, Alan Blackburn & Associates

Keywords:�farm�finance,�business�viability,�finance�loans,�business�opportunities�


• Be�proactive�with�respect�to�knowing�and�understanding�your�financial�position.�

• Manage�your�debt�and�keep�lenders�informed�of�changes�in�farm�performance.�

• Allocate�your�spending�so�that�you�get�the�‘biggest�bang�for�your�buck’.�

Introduction�

Financing farming operations is not new. The principles involved have not changed over the last 100 years. However the techniques for analyzing farm businesses, farming methods and production possibilities, and the expectations and requirements of lenders have however changed greatly and continue to evolve. This paper is limited to the key points to be discussed because the details are included in the book “Financing Your Farm” and everyone will receive a copy of this book.

Principles�of�financing�your�farm�that�have�not�changed�

Cash Flow Cash flow is king. Lenders require credible plans and budgets that demonstrate capacity to repay. (Refer Chapter 6, pp119-134)


Table 1. Characteristics of businesses with good and bad finances.

GOOD BAD�

Adequate finance

- Your farm plans demonstrate capacity to repay.

- Cash flow and finance requirements are negotiated with lender each year.

- You can control amount to be fixed or variable.

- You have spare capacity in case of poor seasons/prices.

Struggling for cash

- Credit cards are “maxed out”.

- Suppliers are phoning requiring payment.

- Pressure from lenders.

- In worst case, lenders are forcing sale of farm assets.

Business viability Lenders will support farms that demonstrate business viability.

Farming has been and continues to be in a process of ongoing restructure. This involves viable farms surviving and non-viable farms exiting the industry.

Lenders are ultimately responsible to their shareholders. Consequently they aim to avoid bad debts and the focus is on lending only to viable farms.

Lenders will generally extend some “slack” to farmers in times of emergencies such as drought, price crashes, etc. But if farm business conditions don’t resolve over time, lenders will still require that ongoing viability can be demonstrated.

Farm viability is mostly dependent on capacity to repay loans and to develop the business.

Farm business planning Lenders require business plans and budgets that demonstrate capacity to repay and sufficient strength to withstand business downturns. (Refer to Chapter 8, pp159-172)

Table 2. Characteristics of good and poor business plans and budgets.

GOOD POOR�

- Plans demonstrate a sustainable cash surplus and capacity to repay

- Plans and budgets demonstrate capacity to repay during downturns

- Budgets have been prepared for a range of scenarios

- Budgets are supported by work sheets so that it is possible to “drill down” to the calculations to show how budget were calculated

- Plans forecast a cash deficit and therefore rising debt

- Downturns make the deficit greater and forecast a greater increase in debt

- The sensitivity of the budget to negative events was not prepared

- No drill down work sheets provided

- The lender says the figures in the budget are “telephone numbers” and have no credibility


Risk Lenders seek businesses that show some immunity to risk.

Table 3. Characteristics of a good and poor business’s exposure to risk.

GOOD POOR�

- Income comes from diversified sources, eg

o Grain crops o Wool sales o Lamb sales

- The farm business has financial reserves (eg. FMD’s)

- Have off farm investments and income

- Income is solely dependent on several crops

- No financial reserves

- No off farm investments or income

Debt Although cash flow is king, lenders require the assurance that the debt is covered by assets.

It is very rare these days for a lender to lend simply because you have the assets to repay. However it is also very rare for a lender to lend simply because the projected cash flow looks great.

Lenders want both cash flow and equity.

Table 4. Characteristics of a good and poor business’s asset level

GOOD POOR�

80% and equity Titles held are known and only required titles are provided to lender

60% equity Lender takes all titles leaving borrower with less bargaining power if debt has to be extended

Preparing�the�case�for�a�loan�

(Refer Chapter 14, pp287-324)

Your Obligations • Manage the risks. • Repay the loan.

The Lender’s Responsibilities • Inform the business that the loan risk lies with them. • Identify all costs involved. • Refer the business to all potentially suitable sources of finance. • Identify the level of security required.


Loan Application The loan application should include the following:

• Funds requested and loan purpose.�• Statement of Assets and Liabilities.�• Collateral available. • Physical farm plan (repeat for subsequent years). • Cash flow projections (repeat for subsequent years). • Sensitivity of cash flow to key risks (weather, price).

Controlling�farm�finance�

(Refer Chapter 16, pp335-352) Obtaining funds from a lender is only the start. For the business to develop a rapport with the lender the business needs to demonstrate that the plans have credibility. Lenders will generally understand “slippage” due to seasons and prices, but if this is an ongoing event then this will limit your relationship with the lender and the lender’s future willingness to extend credit.

Systems of financial control Set up a system to control your finance. Financial control involves comparing your budget with actual performance on a month by month basis. E.g. In March, compare July-March actual income and expenses against budget forecasts.

You then have the capacity to discuss your farm’s performance with the lender on a regular basis and, where possible, alter plans in accordance with changed circumstances.

Table 5. Characteristics of a good and poor system of financial control.

GOOD POOR�

The budget is placed onto your computerized accounting system and each month budget versus actual reports are printed.

Budgets are not prepared or if they are they are not used to prepare budget versus actual reports.

Budgets use the same chart of accounts as used in the farm accounting system. This enables budget and actual to be compared.

The budget chart of accounts is entirely different to the chart of accounts used in the farm accounting system. It is impossible to meaningfully compare budget and actual.

You maintain control of the farm accounting system. You actively manage your finances.

Your accountant is the person in control. You rely on an external party to arrange your finances.


Current�opportunities Low interest rates Interest rates are at record lows. Take advantage of this situation. (Refer Chapter 12, pp245-260)

• Good time to lock in fixed rates.

Planning software

There is excellent farm business planning software available.

• Obtain the software and become proficient in its use

Accounting system Set up your farm accounting system so that you can plan your budget on the computer and prepare monthly budget versus actual reports.

• If need be, restructure your chart of accounts. • Ensure your budget uses the same chart of accounts as used in the farm accounting

system. • Use the monthly budget versus actual report as the basis of a monthly review of

business performance.

Be in charge Be proactive, stay in charge.

• Always know and understand your financial position. • Have a business plan. • Know the available sources of finance. • If one lender does not provide you with a competitive funding solution , take your

business plan and budgets to alternative lenders. • Remember that lenders set your lending margin and that is dependent upon your

cash flow, security provided, business plans, history of repaying loans, and systems of financial control you have in place.

• Manage debt and keep lenders informed of changes in farm performance. • Target business expenditure where there is the greatest pay off. In other words

ALWAYS ALLOCATE YOUR SPENDING SO THAT YOU GET THE BIGGEST BANG FOR YOUR BUCK.

Contact�details�

�

Alan�Blackburn�

Alan Blackburn & Associates PO Box 916, Geelong, Victoria 3220 0408 296 195 [email protected] www.farmconsultant.com.au


Notes


Crop�sequencing�–�what�

are�the�key�issues�to�

making�profitable�and�

sustainable�crop�

sequencing�decisions?�Roger Lawes, CSIRO Sustainable Agriculture Flagship �

Keywords:�break�crops,�profitability,�weed�control,�disease�control�

�


• Break crops can improve cereal yields by 0.6 t/ha. • While they can be costly to grow, the increase in profitability of future crops can more

than offset these short term costs. • Break crops should be considered, providing they help control weeds and disease. If

break crops do not help weed management, then other options, like fallow, should be considered.

Background�

Break crops form an important part of the cropping system. Break crops can provide alternative options for weed control, reduce the likelihood of soil borne diseases, and if legumes are grown, provide an additional source of nitrogen (N) to the subsequent cereal crop. In general break crops increase the yield of the following cereal crop by an average of 0.6 t/ha in Western Australian systems (Seymour et al., 2012). The size of the yield benefit following a break crop is influenced by the ability to control grass weeds as these can host crop diseases like take-all and reduce the effectiveness of the break crop (McLeod et al., 1993). While break crops have historically been an important part of the cropping system, recent farm and paddock level surveys suggest farmers are growing fewer break crops (~ 10-12% of farm area) than is economically optimal (~20-30% farm area) (Robertson et al., 2010). It is conceivable that the prevailing management strategy revolves around growing a cereal crop until there is a problem and then spelling the paddock from cropping operations to control weed and disease issues.


Therefore, when should you consider growing a break crop? The answer is defined by what price, disease load, weed load and break crop yield do you need to justify not growing a cereal. We explore these questions using the LUSO (Land Use Sequence Optimiser), which is a bio-economic model designed to evaluate crop sequencing issues. Materials�and�methods��

The LUSO model was parameterized from data generated in a FACEY group crop sequence trial. Lupins, canola, wheat and CadizA serradella pasture were sown in 2011 where the growing season rainfall was 257 mm. Wheat (cv MaceA) was sown over every plot in 2012, creating crop sequences of lupins-wheat, canola-wheat, wheat-wheat and CadizA-wheat. Since yields from the crop sequencing trial were abnormally low for wheat (0.4) and high for lupins (2.3) (Table 1), an alternative parameterization of the model was considered with the following yields (wheat, 2.5 and lupins,1.5, Table 1). Table 1. Yields and prices used with the LUSO model. 2011�crop,�cultivar�and�

sowing�rate�

Yield�(t/ha)� �Price�

Lupins�(cv�MandelupA,�72�

kg/ha)�

2.3��/�1.5� $216/t��

Canola�(cv�CobblerA,�2.5�

kg/ha)�

1.3�� $450/t��

Wheat�(cv�BullaringA,�60�

kg/ha)�

0.4��/�2.5�*�� $275/t�

CadizA�serradella,�15�kg/ha� 4.0�**� $75/t�

*Wheat�was�frosted,�so�the�district�average�of�2.5�t/ha�was�used�in�its�place�

**�CadizA�yields�refer�to�biomass�produced�and�the�price�refers�to�the�feed�value�of�the�

forage�given�lamb�prices.��

�

Model scenarios were conducted on a 5 year cropping sequence and sequences considered were:

• Wheat, wheat, wheat, wheat, wheat. • Wheat, wheat, canola, wheat, wheat. • Wheat, wheat, lupins, wheat, wheat. • Wheat, wheat, CadizA, wheat, wheat.

The management choice was to evaluate the economic cost or benefit of growing a break crop instead of growing wheat in a continuous cropping scenario. These crop sequences allow us to consider what the future cost or benefit to wheat production and profit is when you decide to include a break crop in the sequence after two years of wheat. A break crop would be deemed successful if it contributes to higher wheat yields and future profits that offset the cost of growing the break crop or pasture.


Results�or�economic�analysis�scenarios��

In the continuous wheat scenario, annual profit declined steadily from $48/ha to just $12/ ha over the 5 year period because wheat yields were reduced by the increase in disease and weed pressures (Figure 1).

Figure 1. Annual profit, disease impact on yield and weed impact on yield for wheat grown in sequence for 5 years. �

The continuous wheat sequence generated an overall profit of $46 when the value of the sequence was discounted for weed seedbank. When lupins were grown in the 3rd year in the place of wheat, this increased to $63. In a separate sequence, when canola was grown in the 3rd year in place of wheat the profit increased to $78. Sprayed pasture generated a loss return of $66, while grazed pasture generated a return of $140 when it was grown in the 3rd year of the sequence. The final economic returns are discounted for the size of the weed seed bank remaining at the end of the sequence. In this situation, when break crops were grown in the 3rd year, they generated losses of $60 for canola, $111 for lupins, $134 for grazed pasture and $344 for sprayed pasture in that year. However, because weeds were controlled, disease was managed and in the case of lupins and pasture, N was added to the system profits increased considerably in the 4th and 5th years of the sequence (Figure 2). In the case of canola, lupins and grazed pasture, the increase in wheat yields over two years combined with possible savings in fertiliser N generated a positive economic return that justified growing a break crop in place of wheat.


Figure 2. A comparison of annual profit from a 5 year cropping sequence, where wheat, canola, lupins, grazed pasture or sprayed pasture are grown in the 3rd year of the crop sequence.

From these simulations, break crops can improve cereal yields and long term profits, by suppressing weeds and disease. However break crops will only be profitable if weeds are controlled and diseases are suppressed. In some instance, where ryegrass cannot be controlled in lupins, the benefit of the break crop to the cereal crop may be compromised and in these situations alternatives such as fallow may need to be considered. In this simulation, it was assumed that weed populations could be managed effectively in wheat crops and in the break crops. Weed populations that cannot be controlled may require different crop sequences. In closing, break crops should be viewed from the perspective of their economic return and the benefit they confer to the subsequent cereal crops. Growers should ask the question; what will be the future profit that this break crop will generate?

References�

Macleod WJ, MacNish GC, Horn CW (1993) Manipulation of Ley Pastures with Herbicides to Control Take-All. Aust. J. Agric. Res., 1993, 44, 1235-44.

Robertson, M., Lawes, R., Bathgate, A., Byrne, F., White, P., Sands, R., 2010. Determinants of the proportion of break crops on Western Australian broadacre farms. Crop & Pasture Science 61, 203-213. Seymour M, Kirkegaard J A, Peoples M B, White PF, French R J (2012) Break-crop benefits to wheat in Western Australia- insights from over three decades of research. 63. 1-16.

Acknowledgements�

I thank Sarah Hyde and Graham Manton from the Facey group for conducting the trial the yield data originated from.

Contact�details�

Roger�Lawes�

CSIRO Sustainable Agriculture Flagship, Wembley, [email protected]�

-400�

-300�

-200�

-100�

0�

100�

200�

wheat� wheat� wheat� wheat� wheat�

1� 2� 3� 4� 5�

Profit�($)�

wheat�

canola�

lupins�

sprayed�pasture�

grazed�pasture�


Notes


Agricultural robotics – what could future broadacre farming mechanisation look like? Robert Fitch and Salah Sukkarieh, Australian Centre for Field Robotics, School of Aerospace, Mechanical and Mechatronic Engineering, The University of Sydney, NSW Australia.

Keywords: agricultural robotics, autonomous systems, unmanned ground vehicles, unmanned aerial vehicles, whole-farm optimisation Take home messages

• Significant advances in future farm productivity will be enabled by robotics and autonomous systems.

• Production advances will be by a step-change in productivity through the use of many small autonomous robots that operate within a whole-farm optimisation context.

• The key challenge to be addressed in realising the benefits of these new technologies is to 'think beyond the robot' and develop a new logistics and information systems view of farm operations.

Introduction Australian food production in the 21st century is being asked to respond to significant new demands and pressures (DAFF, 2013). Although current production allows for roughly half of all food produced to be available for export, projections of massively increasing demand from Asia have prompted government to set aggressive targets for production increases. One such target is to increase exports by 45% by year 2025. Because natural resources are limited, achieving such goals must involve increasing the efficiency of production while at the same time engaging in environmental stewardship, and contending with rising human labour costs and diminishing availability of human labour. Established trends in mechanisation for farming seek increased productivity through ever-larger tractors and implements, and in the last decade, through the use of GPS guidance technology to restrict vehicle impact to precisely defined tracks. The downside of increased vehicle size is that the associated increased weight leads to long-lasting damage to soil structure. The soil under the precisely guided tracks becomes hyper-compacted, leading to substantial and long lasting loss of land productivity.


Concurrently, the number of people involved in agriculture has been in steady decline for the last four decades (Australian Bureau of Statistics, 2012). The number of farmers in Australia has dropped by 40% since 1981. This decrease is due in part to the reluctance of young people to remain in family farms. Worse, nearly one quarter of farmers are at or above retirement age. In order to increase its competitive position, Australian agriculture and horticulture are beginning to invest heavily in mechanisation and automation through robotics. One of the leaders of Australian agricultural robotics research is the Australian Centre for Field Robotics (ACFR) at The University of Sydney. The Centre is recognised as one of the largest field robotics groups in the world and one of the largest robotics research organisations. We conduct basic and applied research using both ground robots and aerial robots that is helping to shape the future of farm mechanisation. In this short paper, we briefly describe our current work that addresses weed maintenance and crop intelligence. We also discuss the broader role of robotics in an operational context.

Ground robots for weed maintenance and crop intelligence The drawbacks of increasingly large tractors are evident in zero-tillage agriculture. We are involved in a collaborative project with Queensland University of Technology (QUT) and Bendee farm in Emerald, Qld to address these drawbacks through robotics (SwarmFarm, 2013). In this project, we are creating a new robotic vehicle technology that replaces a single large soil-compacting vehicle with many small vehicles that move lightly across the surface without compacting the soil or disturbing its protective top layer. The core challenge is to develop the intelligent robotic technology that will enable a single operator to manage a team of small vehicles, rather than a single large vehicle. We are demonstrating the capability and benefits of this new robotic technology in its application to weed eradication in broadacre agriculture on 4000 hectares at Bendee farm (Queensland Country Life, 2013). Our prototype robot platform is shown in Fig. 1 (left).

Figure 1. Small autonomous robot for zero-tillage agriculture (left), two ground robots and one aerial robot for crop surveillance in tree-crop applications (right).


Another important application of agricultural robotics is crop intelligence, where robots are used to perform autonomous farm surveillance (mapping, classification, detection) and autonomously gather valuable information about crop growth and health. We are working in collaboration with Horticulture Australia Ltd (HAL) to demonstrate the capability of robots in tree crop applications such as almonds and apples, and also in the vegetable industry. Figure 1 (right) shows two ground robots and one aerial robot used in this work. These ideas could also be applied to broadacre agriculture, possibly in combination with weed maintenance. The value of crop intelligence lies in its ability to provide timely and accurate information, such as real-time yield estimates, to support management decisions. Aerial robots for weed detection and maintenance Another approach to counter the drawbacks of large tractors is to employ small aerial robots equipped with sensors. Although large manned aircraft may be cost prohibitive for routine information gathering, small autonomous platforms have strong potential. We have completed several projects where we developed and demonstrated aerial robotic systems for weed maintenance in an environmental monitoring context, including aquatic weeds such as alligator weed (with Land and Water Australia), and larger woody weeds such as prickly acacia (with Meat and Livestock Australia). In these projects, the idea is to locate sparse concentrations of weeds that exist in large areas, and then to deploy the herbicide locally and in a targeted manner. Weeds are automatically identified using classification algorithms that operate on visual imagery collected by the aerial robots. Herbicide can then be delivered manually or via a specially equipped robot. In the broadacre context, this type of approach can complement ground robot systems by rapidly finding concentrations of problem weeds that can then be efficiently targeted by the ground robots on an as-needed basis. Whole-farm optimisation Although the projects we have described, as well as others worldwide, are focussed on addressing the fundamental capabilities of isolated farm robots, the role of robots in a whole-farm context remains an open question. How will such robots be used operationally, and to what benefit? Answering this question requires a whole-farm optimisation approach. Crop intelligence and weed maintenance must be considered along with other farm operations, such as autonomous harvesting. The farm of the future will not simply replace manual operation with autonomous operation, as is the case with GPS-guided tractors, but instead will adopt a systems view that coordinates all activities. Whole-farm optimisation can be seen as 'thinking beyond the robot' to restructure farm operations in terms of the timing and logistics of all activities, and in terms of information systems where individual crop elements have a ‘personality’ that is accurately tracked over the crop lifecycle. The ACFR has a long history of working in large-scale operations and optimisation within defence (BAE Systems, US Air Force, Ministry of Defence UK, DSTO), mining (Rio Tinto, BHP), and commercial aviation (Qantas, Airways NZ), and we are now beginning to apply the successful methodologies developed as part of this work in the agriculture domain for more efficient operations and production systems. This whole-farm optimisation approach is where we see the greatest benefit to broadacre farming.


Summary Significant advances in future farm productivity will be enabled by robotics and autonomous systems. The incremental gains provided by monolithic tractors and implements with add-on automation such as GPS guidance will be replaced by a step-change in productivity through the use of many small autonomous robots that operate within a whole-farm optimisation context. We have described several current projects that demonstrate ground and aerial robots performing two initial applications of agricultural robots: weed maintenance and crop intelligence. The key challenge to be addressed in realising the benefits of these new technologies is to 'think beyond the robot' and develop a new logistics and information systems view of farm operations.

References Australian Bureau of Statistics. (2012). Australian Social Trends. Catalogue number 4102.0.

DAFF. (2013). National Food Plan, Our food future. Department of Agriculture, Fisheries and Forestry, Canberra.

Queensland Country Life. (2013). Robocrop: farm robots a reality. From http://www.queenslandcountrylife.com.au/news/agriculture/agribusiness/general-news/robocrop-onfarm-robots/2663726.aspx

SwarmFarm. (2013). From http://swarmfarm.com

Contact details Dr Robert Fitch Australian Centre for Field Robotics The Rose St Building, J04 The University of Sydney, NSW 2016 02 9036 9194 [email protected] Prof Salah Sukkarieh Australian Centre for Field Robotics The Rose St Building, J04 The University of Sydney, NSW 2016 02 9351 8154 [email protected]


Notes


Getting�your�act�together�–�three�tips�to�get�an�effective�‘head�plan’�Dennis Hoiberg, Lessons Learnt Consulting Pty Ltd Keywords:�resilience,�mind�control,�brain�power,�challenging�times�

Take�Home�Messages:��

• Got�your�machinery�all�ready�for�this�season?�–�Check!�• Got�all�the�material�you�need�for�this�busy�season?–�Check!�• Got�the�workers�all�organised?�–�Check!�• Got�your�mind�sorted�to�use�your�brain�–�HUH???�

Introduction�I was coaching a client in my office recently listening to him outline his challenges. Certainly, there was a lot on his plate. He appeared almost overwhelmed by the numerous priorities, concerns and worries. I asked him, after about 40 minutes, ‘OK – What’s your plan?’

The response I got back was akin to that kangaroo I hit just outside Jamestown at about 5.40 pm one evening. Regardless of what I did, all I got back was a startled, unblinking stare.

This reaction is something I have seen so many times in the work I do with people around emotional resilience strategies. People not having, even not believing it was possible to develop a plan as to how they will cope with the challenging times when (not if) they occur.

I find so many of my clients, especially in regional and remote areas, an absolute paradox when it comes to planning. I observe people will spend days planning how they will approach the coming season. I see computer projections and project plans as to what is going to happen when and at what time. I see things timed to virtually the very minute.

Some of the people in this sector are the best planners I have been exposed to in my professional life. Not only are they good planners, but they are also excellent contingency planners. They have more plans B, C, D, etc than Port Power Football Club have avenues to score!

So many people are experts at looking after their own businesses but are absolute novices at looking after themselves. This is simply not sustainable.

So why don’t we spend time getting the mind ready to use the brain! Think of the ‘mind is to the brain’ as ‘diesel is to the tractor’! Both are interdependent on each other to work!

All I ask is that people in this sector apply the same skills and thinking to themselves as they apply to their farming and business activities.

Have�a�resilience�plan,�or�in�other�words�have�a�‘head�plan’.�


Regardless of what will happen to you in life, if you have a plan and a strategy to implement the plan, than most times you will come out of the situation, probably stronger, happier and more resilient. More importantly you will know that you will cope and thrive. So next time you are challenged, you will have a life experience. Remember, you will never know where the edge of the envelope is until you give a real crack at pushing it!

To follow is a discussion, which I frequently use with my clients in assisting them develop a ‘head plan’.

It’s quite simple. For every stimulus in this world, there is a response. If you are resilient and have the strategies to respond to the stimulus, you will display problem solving behaviour. Your response will be, when you are challenged by the stimulus ‘the�resilience�response’. ‘OK, this has happened, so now I am going to do this’. Another version of this response is ‘OK so this has happened, and while I don’t know precisely what I am going to do YET, I know some strategies that will get me through the uncertainty and allow me to bounce forward’.

However, if you lack this resilience and lack the strategies to appropriately respond to the challenge, you will display flight or fight behaviours (or freeze – you don’t know what to do!).

Flight behaviour is avoiding it, not talking about it, denying the nature of it, even lying to yourself and others about the seriousness of it.

Fight behaviour is best summarised as shooting the messenger as opposed to addressing the message.

What’s�your�strategy?��

Before suggesting some strategies, we need to understand the brain and how it works.

We are learning more about how the brain works through recently released books such as “The Brain that Changes Itself” (Norman Doidge) and “How to Take Control of Your Brain” (George Lee Sye).

We accept the fact that most of us make use of less than 1/6th of the potential power of our brain.

We also accept the fact that most of us work our brain on autopilot. We also know that our brain tries to hard-wire everything, to make things predictable. So one of the strategies we need to adopt to improve our own productivity is to start to work with emotions, thinking and habits.�

We know that our brain has a very acute threat detection system. The�brain�loves�certainty�and�adores�absolute�certainty. When it doesn’t have this, the brain feels under threat and the mind creates this flight or fight response. As a self defence mechanism, the brain initiates a chemical release that creates all sorts of in-balances between cortisol, melatonin, serotonin and insulin chemicals!

So in developing your brain plan, apply three rules:

• A rule for “Concentration”. • A rule for “Creating Certainty”. • A rule for staying “Cool under Pressure”.

If�you�can�apply�these�three�rules,�you�will�thrive�under�the�pressure�that�comes�with�

working�and�living�in�this�rural�environment.�


Here are some practical activities you can do to use your mind to release some of the awesome power of the brain.

There is a simple law to apply to achieve concentration of the mind and it is: “To effectively tackle tasks that require serious thinking, you must develop a disciplined habit of removing distractions to get quicker and better results”.

The brain loves clarity which is achieved through focus. So DO the following ten things to achieve clarity:

• Develop a work plan; • Create and use “To Do” lists; • Tick off achievements (as well as focus, the brain loves achievements); • Remove clutter from your workplace and at home; • Remove all distractions; • Ensure other people understand and agree with the focus; • Get adequate and good quality sleep; • Apply 90 minute “energy chunks” to your work. Have your mind tell your brain that

for the next 90 minutes, you are going to focus on this task (then have a 10 minutes break and do the same again);

• Develop and stick with healthy habits, and, • If possible schedule short breaks – maximum of four days during your busy period

but minimum of four days in the ‘down” period.

The brain seeks clarity. More�critically,�lack�of�certainty�is�a�threat!�Look for certainty. That’s why habits are so important.

To create certainty, do these ten things;

• Ensure there is a plan; • Use powerful and positive language – eg “I am going to do… “as opposed to “Maybe,

I will…” • Ensure all people know what is going to happen when, who will do what, etc. (This is

especially true for members of the family – especially children. We know young people need structure so outline schedules, time lines , who is picking them up from sport, school etc.) In a period of prolonged absences, ensure people around you know how long you will be involved in the work, when it will be finalized and what sort of celebration will occur after the work load ceases (this answers the “what’s in it for me question?”);

• Monitor your self talk. Remember how you feel about yourself will influence your words which will drive your behavior;

• See change as a positive opportunity (as opposed to a threat); • Tick off achievements on your “To-do” lists; • Engage with people and where possible give control through delegation; • Be open to new ideas; • Be open to cooperation and collaboration; and, • Where possible engage in team work – but ensure the “Powergrams” of effective

teamwork are clarified and public.


When you need to stay cool under pressure, you need to get above the drama, detail and emotion, and focus on the outcome you want and the next step to take you forward. So, to stay calm under pressure, do these ten things;

• Keep reminding yourself of why you are doing what you are doing? Why the price of the pain is worth the effect?;

• Remind yourself of the steps you are taking to achieve the goal; • Remind yourself of the progress that you are making (hence the value of to do lists

and project plans); • Remember the value of deep breathing and the positive effect this has on your

mental health; • Go for a walk to calm down, refocus and re-energize; • Look after your most valuable asset - your health! • Keep connected with your family, your friends and your community, this brings

perspective to your life; • Keep the brain “fresh” through challenging yourself mentally– read, do cross words,

Sudoku, etc; • Get quality sleep, keep hydrated (monitor the colour of your urine to ensure you are

drinking enough water), monitor alcohol free days (maybe two-three a week and cut down/out smoking); and,

• Seek external help, if you feel that you may be “going under”.

If you apply these 30 tips, your mind will manage your brain, allowing you to be focused, effective and happy through even the most challenging times.

�Contact�details�

Dennis�Hoiberg�

1300 365 119 [email protected] www.lessonslearntconsulting.com


Notes


The 2013-2015 GRDC souTheRn ReGional Panel

Level 1, Tourism House | 40 Blackall Street, Barton ACT 2600 | PO Box 5367, Kingston ACT 2604 | T +61 2 6166 4500 | F +61 2 6166 4599 | e [email protected] | W www.grdc.com.au

Chair Keith Pengilley

Keith is the general manager of a dryland and irrigated family farming operation at Conara in the northern Midlands of Tasmania, operating an 8300 hectare mixed farming operation over four properties. He

is a Director of Tasmanian Agricultural Producers P/L, a grain accumulation, storage, marketing and export business.

M 0448 015 539 E [email protected]

Deputy Chair Dr Chris Blanchard

Chris is an Associate Professor in Food Science at Charles Sturt University’s School of Biomedical Sciences in Wagga Wagga and has an Honours Degree in applied science, a PhD in molecular biology

and qualifications in teaching and management. His research has included projects in genetically engineering plants, human genetic diseases, grain quality and the development of functional food ingredients.

T 02 6933 2364 M 0438 662 992 E [email protected]

neil Fettell Based at Condobolin in the central-

west of NSW, Neil is an authority on cropping and tillage systems, stubble and soil management and crop physiology. A University of New England part-time Lecturer in Crop

Production, he also assists the Central West Farming Systems group and previously led grain research projects across the southern region.


susan Findlay Tickner Susan is a partner in Yellow Grain

Pty Ltd, an innovative and expanding dryland cropping enterprise producing cereals, pulses and oilseeds near Warracknabeal in north-west Victoria. She has a background in science

communication, specialising in grains and climate research, development and extension. Susan has a Masters in Communication, a Diploma in corporate governance and is a graduate of the Australian Rural Leadership Program.


Richard Konzag Richard has been a grain grower

at Mallala, in SA’s Lower North, since 1981. He is currently cropping about 1800 hectares to wheat, durum, barley, beans, lentils, canola and oaten hay. He has served on the

SA Advisory Board of Agriculture, representing the board on various forums and committees and chairing its ‘Achieving an Informed and Supportive Government’ working group. Richard has also served on the Plant Biosecurity CRC Grains Advisory panel since 2008.


Bill long Bill is an agricultural consultant

and farmer on South Australia’s Yorke Peninsula. He has led and been involved in many research, development and extension programs and was one of the

founding members of the Yorke Peninsula Alkaline Soils Group and chairman of the Ag Excellence Alliance. He has a strong interest and involvement in farm business management and communication programs within GRDC. He is a Churchill fellow.


Geoff Mcleod Geoff runs an irrigated cropping

farm near Finley in southern NSW. The farm produces a range of winter cereal, oilseed and grain legume crops and soybeans using both overhead and surface irrigation

systems. Geoff has a degree in Agricultural Science and 30 years experience with irrigated and dryland farming systems in southern Australia. Geoff is a board member of SoyAustralia and chairman of Southern Growers, a local grower group in the southern Riverina. Geoff also provides consultancy services to government, industry and catchment management authorities related to land and water management.


John Minogue John runs a mixed broadacre

farming business and an agricultural consultancy, Agriculture and General Consulting, at Barmedman in south-west NSW. John is the chairman of the district council of the NSW

Farmers Association, Deputy Chair of the Lachlan Catchment Management Authority and a winner of the Central West Conservation Farmer of the Year award.


Rob sonogan From Swan Hill in north-west

Victoria, Rob is an extension agronomist who has specialised within government agencies in the areas of soil conservation, resource conservation and dryland farming

systems. Over some three decades he has been privileged to have had access to many farmers, businesses, consultants, rural industry and agribusiness advisers. Rob also has been closely involved in rural recovery and emergency response into issues as diverse as locusts, fire, mice, flood and drought. Rob is currently employed part-time within the Mallee consultancy group AGRIvision.


Mark stanley Mark has had extensive experience

in field crops development and extension and more recently in natural resources management with the State and Commonwealth Governments and with industry. He has led a number

of extension programs including the introduction of canola in SA and the national TOPCROP program. He currently operates his own project management business, Regional Connections, on the Eyre Peninsula of South Australia. Mark is the executive officer with the Ag Excellence Alliance, supporting farming systems groups across SA, and is also on the board of the Eyre Peninsula Agricultural Research Foundation. He is a committee member of the Lower Eyre Agricultural Development Association.


stuart Kearns Stuart joined the GRDC in 1998

as the Northern Panel Officer and has worked in a number of roles throughout the organisation since then. He is currently the Executive Manager Regional Grower Services.

The aim of the Regional Grower Services Business Group is to deliver new, innovative, high-value and improved regionally relevant products and services that meet the needs of growers and their advisers.

T 02 6166 4500 E [email protected]

southern Panel support Belinda Cay (formerly Barr)

Belinda and the Raising the Barr (RTB) team are a communication company that design creative science education programs and corporate exhibits, plus offer media, marketing, facilitation and

communication services. She has a Bachelor of Science (Honours) and a Graduate Diploma in Scientific Communication. RTB provides panel support services to the Southern Regional Panel.



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Balance between the new topics and the familiar/important topics was right.

Offered too little new information and went over too much of what was already known.PTO

DOOKIE FARM BUSINESS UPDATE FOR GROWERS – September 10th 2013 Evaluation


10. What is the likelihood that you will attend an Update like this one in the future? (Circle the % likelihood that you will re-attend)

100% 90 80 70 60 50 40 30 20 10 0% Totally likely to re-attend Not likely to re-attend

Comment ……………………………………………………………………………………………………….............

11. Please indicate your degree of satisfaction for the following presentations 10 = totally satisfactory 0 = totally unsatisfactory

TOPIC Content Presentation

Grain market update and insights – Malcolm Bartholomaeus

How to make good farm expansion decisions – John Francis

Financing your farm – Alan Blackburn

Crop rotations and farming systems – Roger Lawes

Agricultural robotics robotics – what could future broadacre farming mechanisation look like? – Robert Fitch

Getting your act together – three tips to get an effective ‘head plan’ – Dennis Hoiberg

Comments regarding any particular presentation (s):

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12. How would you rate: (tick one option per line)

Satisfactory Just OK Unsatisfactory Venue

Visual Aids

Audio

13. Please make any extra comments on anything organisers can do to deliver a better Business Update in the future

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14. Overall how did the event go at meeting your expectations? (please tick)

Very much exceeded Exceeded Met Partially Met Did not meet

15. What are three important topics you would like include on the Update program next year?

a) ………………………………………………………………………………………………………............................

b) ………………………………………………………………………………………………………............................

c) ………………………………………………………………………………………………………............................

Thank youORM Communications Ph 03 5441 6176 Email [email protected]

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supporting the australian grains industry through the 2013 ...€¦ · dookie campus – the...

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