As the 2024 cropping season finishes with dry conditions in some cropping regions in Southeast Australia, Agricultural Economist, Prof. Ross Kingwell shared an encouraging message at the BCG Main Field Day on 11 September. His key takeaway: droughts can push farming businesses to make strategic enterprise decisions, leaving them in a stronger position in the long term.
Sharing his insights from a ten-year long study (2002 to 2011) of the financial and production performance of 270 farms in southwest Western Australia, Prof Kingwell urged growers to be proactive in analysing their business structures saying farms in the study that adapted their enterprise mix in the face of challenging conditions were able to make strategic changes that benefitted their businesses in the long term.
“At the end of that decade they were much stronger, much more profitably structured businesses than they were at the start of the decade” he said.
Characterised by “a period of warming”, the ten years of study had times that “forced an early restructure” in enterprise mix due to challenging factors such as historically low rainfall, “huge variation in that rainfall”, some drought periods and significant price volatility.
The research also found that businesses that experienced two consecutive droughts generated more long-term learnings than for those that experienced two separate droughts. “Farmers that experienced separated droughts were not forced to reappraise their enterprise mix and they continued on” Prof Kingwell said. “But those that were forced to pivot experienced structural changes that eventually provided lasting benefits”.
Professor Kingwell is in the School of Agriculture and Environment at the University of Western Australia and is principal economist in the Department of Primary Industries and Regional Development.
The full BCG Main Field Day presentation, “Maximising Farm Success: Factors for Top performance”, can be accessed here: https://youtu.be/Dg9aoTFPqrs.
This project received funding from the Australian Government’s Future Drought Fund.
