Putting farm businesses under a ‘drought microscope’ is step one in being prepared
With the ENSO Outlook still at ‘El Niño watch’, meaning ENSO is currently neutral, Fiona Best, Regional Director for the Vic Drought Hub, is encouraging producers to plan ahead.
Ms Best, who is also CEO of BCG, said: “While a ‘watch’ is no guarantee that El Niño will actually occur, it signals that some of the typical signs are in place. Therefore, it’s a good time for all farm businesses to put various elements of their operation under a ‘drought-resilience microscope’.”
This process entails reviewing and assessing the capacity of an entity to withstand extended periods of dry weather, and, should it happen, drought. She said some elements will be common across all enterprises, with others enterprise specific.
“In our region we can break these elements down into five categories: business, finance, people, livestock and cropping, and look at each using a ‘drought resilience microscope’. For example, when analysing whether the finances are drought proof, it is important to understand your business’s equity ratios, cost of production, cash flow requirements and reserves as well as the ability to access cash.”
People, Ms Best said, was just as important to examine as other elements: “Consider, how is the business managing the most valuable asset – people? Are their shared goals and aspirations within the business? How can each person be actively building resilience to draw upon in dry times, is their flexibility for people to build connections through local clubs, time allocated to activities outside of the farm business? It’s all important.”
“For those with livestock looking through a drought resilience microscope means knowing fodder requirements and your supply – is there enough, if so, for how long? Will feed need to be bought in? When? What? From where? Do I have a stock containment area established and is it fit for purpose?”
Reflecting on the sowing season can also be a useful tool Ms Best said – did it run smoothly or were there delays? Does a crop type or variety need to be changed? Do sowing times need to be changed? Does paddock preparation need to be approached differently?
“These are just a few ideas and certainly not definitive but this ‘drought-resilience microscope’ process is vitally important for farmers to identify areas of opportunity and risk within their business.”
Ms Best said farmers had many resources to avail themselves of, including discussions with banks and financial planners and attending field days to access the latest agronomic information: “Talking with other farmers about strategies they are putting in place in readiness for drier times is one of the best ways to exchange ideas and learn new approaches. More and more farmers have been discussing and implementing farm advisory boards to help provide direction, pragmatism and diverse perspectives to assist with building a strong foundation, and when required, a drought resilient business.”
“On the Vic Hub website, we also have some excellent information about farm finance, springing from our research and farmer consultations, which identified the important role of farm advisors – be they bank managers, accountants, agronomists or rural suppliers – in building strong farm businesses that are drought prepared and drought resilient.”
For more information on the Vic Hub and its work, please visit https://vicdroughthub.org.au
Average of international model June 2023 forecasts for NINO3.4.png (Source: BOM)
