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FARM BUSINESS PLANNING

Farm business planning is not our main focus but is an integral part of out service. We refer clients specialists as required. Important discussions that we initiate will relate to the following:

 

The farming business should have a Business Plan. It should include goals, all farm production plans, budgets (enterprise gross margins, cash flow, profit & loss, balance sheet) finance arrangements, risk management, production and financial KPIs, which will preferably demonstrate that the farming business is profitable and resilient.

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Farm enterprises should be chosen based on profitability, available skills and labor, compatibility with other enterprises, farm machinery, equipment and built structures such as sheds, grain storage, yards and fencing. 

 

The farm's overhead cost structure should reflect moderation. Farm businesses with high overheads such as wages, interest repayments and excessive machinery investment will invariably underperform over time compared to similar farms with lower overheads.   

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Key farm business risks should be identified in the business plan and strategies put in place to minimize their impact. Drought, high interest rates, markets fluctuations, excessive stocking rates, weeds, worker / skill deficits and OH&S are some major areas of risk that should be addressed. 

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Debt servicing & re-investment into the farm should be a such that the business remains viable and efficient. Debt accumulating over extended periods usually means that essential re-investment into the farm (fert & lime & other inputs), farm machinery and infrastructure repairs may be not be done causing productivity and efficiency to decline.   

 

Consider also the discussion points below.

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Wet grass

INDEPENDENCE & INTEGRITY

Enterprise

Enterprise planning:

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The enterprises generate the farm income so they require careful consideration. A single enterprise is unlikely to remain profitable indefinitely, so having more than one enterprise spreads enterprise risks such as market failure, disease or drought. When considering an additional enterprise, these points should be considered:

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  • The capital required and the effects on cash flow (set-up costs and inwards / outwards cash movements)

  • Markets: reliability, proximity, simplicity & flexibility

  • Labor and skill requirements and staff availability

  • Compatibility and synergies with other enterprises

  • Infrastructure and equipment required

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If you lack experience in managing different livestock enterprises or general farm activities, we would be happy to assist in the preparation of an annual 'Farm management plan'. It should include all critical decisions & timing.

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Enterprise planning decisions can be complex. We have a wide range of experience and will assist where we can. We also have a range of trusted associates to refer you to. 

Feed planning

Feed planning:

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A major risk on any livestock property is lack of feed supply, commonly due to overstocking or drought. Some basic planning and skills are necessary.

 

Pasture assessment skills:

Assessing the quantity of pasture dry matter (DM) in paddocks is not difficult but is critically important. It requires simple skills and knowledge which can be achieved through a training course such as PRO-GRAZE or researching and reading various on-line sources. Calculating 'feed-on-offer' (FOO) in kg/DM/Ha and using simple feed budgets will clarify whether feed grown and/or stored fodder (hay, silage, grain), will meet livestock demand. This takes the guess work out of stocking rate decisions and livestock nutrition generally. Energy, protein and digestibility of the feed are also important in making feed purchase and allocation decisions, but this information is easily sourced. 

We can help you to develop the skills and knowledge necessary. 

 

Other important practices & skills:

Know your livestock condition scores (CS) and CS targets:   

Consider the following saying;  'The fat on their back is valuable going into a dry spell'. Experienced livestock managers use fat reserves to get through periods of feed deficit. Take time to assess CS and compare them to pre-set targets. To adequately feed livestock and meet their nutritional needs, feed provided (pasture & other) needs to vary for the time of year and stage of their breeding cycle. These metrics are readily available. We can help you to develop the skills to get it right.

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Know your stocking rates (DSE/Ha):    

It is important to understand the DSE concept and keep track of the DSEs that you have on the farm at any time. Paddock under crops or sown to new pastures may provide only limited grazing if any, so feed availability will vary from year to year for that reason. Also there is rainfall variability to consider. By simply keeping track of livestock classes, numbers and DSEs carried on a quarterly basis and observing feed in paddocks, each season the available Dry Matter (kg/DM/ha) in paddocks can be compared to previous years. If your farm is on the NSW Tablelands, taking photos plus recording anb few notes of feed in paddocks annually in late April, early May, will allow you to compare seasons and provide confidence of the winter feed position.   

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Market intelligence:    

Regular updates of prices movements and stock sales are critical to successfully plan stocking rates. Check livestock numbers at weekly sales and take note of the locations that they are coming from. That can inform you as to whether dry conditions are closing in. Have in your plans trigger points for selling less important / disposable livestock as feed supplies decline. Sometimes it is only a matter of a few days between good and poor prices in the sale-yards or on-line markets, so get informed and be prepared.

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Don't underestimate the importance of feed planning. Reach out to us if you need assistance.​​

Drought planning:

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On livestock farms droughts can be managed in a number of ways.

Consider the following scenarios:

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  1. Cash reserves in a 'Drought' account can be called upon for

    living expenses. All stock sold early before markets fall.

  2. Livestock can be sold down to a point where only core
    breeding stock remain. They will be fed through the drought. 

  3. Core breeders can be sent away on agistment. Others can
    be fed but progressively sold if it continues.

  4. Major investment on fodder and grain reserves can be made

    in preparation for a drought. Disposable stock can be sold with core breeders fed until the drought is over. 

 

No two droughts are the same and there is no standard response. Of course water security is critical so necessary water supply investment should be part of any drought planning. Yours is likely to resemble parts of the 4 scenarios above but that does not matter. Being ready and having the 'peace of mind' that you have done all that you can to be prepared is what is important.

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Call us if you need help with your Drought Management Plan any time, before, during or after a drought.

Drought
Farm Business Basics
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