Thanks to excellent July rainfall across most regions crops are looking superb right now, but with the sting left by the dry spring conditions experienced in 2014 and 2015, managing farm business risk has become a primary concern.
In recent years the focus of many farm businesses has been wholly and solely on growing crops, and it can’t be denied, this has led to dramatic improvements to the skills and capabilities of growers and the profitability of the cropping enterprise.
The industry rightly trumpets the fact that farmers in the region are now growing better and higher yielding crops with less rain. However, as the last two seasons have shown us, there are limits and when seasonal rainfall fails to come, profitability plummets.
Returning to the old proverb of ‘not putting all eggs in one basket’ (and perhaps motived by the excellent sheep and hay prices of late), there has been a renewed interested in mixed farming systems.
At the BCG Future Farmers Expo on July 6, Kaniva farmer Sam Eastwood said the inclusion of vetch and oaten hay into his rotation had reduced reliance on chemicals and improved the long-term profitability of his business.
In the same vein, Sea Lake farmer Bryan Hanns said that after a long spell sheep were returning to his broadacre cereal and pulse farm because of their ability to provide a buffer against poor seasons.
The experiences of Mr Eastwood and Mr Hanns were supported by South Australian farm business consultant Ed Hunt, who told farm advisors at the GRDC advisor updates at Ballarat, that farms which operate at 75 percent cropping and 25 per cent livestock consistently outperform businesses that are 100 per cent cropping, in long-term profitability.
“In an average (decile 5) or better season a continuous cropping farm has much greater capacity for profit, however it could also be considered a much riskier business than the mixed farm with greater losses in the poorer seasons,” he said.
Considering the regularity with which below average rainfall seasons now seem to occur, Mr Hunt said grain farming business must be structured to be both profitable and resilient.
“While the current move to high input farming may provide for increased profitability in average to high rainfall years, more attention needs to be given to the business’ ability to cope with successive poor performing years and planning and risk buffers must be extended out to cater for multiple years,” he said.
Improving the profitability of Wimmera and Mallee farming business that run sheep as a secondary enterprise will be the focus of BCG’s Sheep Management Showcase at Birchip next week.
The event aims to expose farmers to developments in the meat and wool industry and to opportunities to improve efficiencies and the overall profitability of a mixed sheep/grain farm.
The event will be held at the Birchip Leisure Centre on August 17. For details phone BCG on 03 5492 2787 or register at: www.bcg.org.au/events
This article was published in the Stock and Land on August 11, 2016.
