Farm planning for profit
Planning helps make proifitable farming: Case study on Kangaroo Island
Lloyd and Christine Berry are second generation farmers who love to farm because they enjoy the lifestyle and challenges but make no secret of the fact that they are farming to make a profit. While Christine is as comfortable seeding the crops and handling livestock as Lloyd, both admit she is better at crunching the numbers.
‘If you don’t do your bookwork and crunch the numbers you don’t know where you’re going’, Christine said. ‘It becomes our risk management tool and helps guide decision-making by enabling us to work out what our true priorities are’.
While many farmers may feel that bookwork isn’t ‘real’ farming and time inside is wasted, the reverse is actually true. Good planning has enabled the Berrys to identify the big ticket items on which they won’t compromise – for example, the health of livestock, and fertilisers.
‘These items drive our productivity and hence our profitability’, Christine explained.
‘Planning, both in terms of time and funds, takes the guesswork out of decision making and can stop us from making expensive mistakes. For example, we soil test so we know what fertiliser to apply and when to lime’, she added.
Feed budgeting is another key planning tool they use. Not only does it ensure stock are kept in good condition (they aim for all stock to be in score three for 12 months of the year) but it helps reduce their stress levels. For example, through carefully checking long-term rainfall records for their property they have calculated that the 95 percentile for an autumn break is 1June – meaning that in 95 years out of 100 it has rained by 1June. So every year they ensure that have enough feed on hand until then.
‘This means that come mid-May even if it hasn’t rained we are OK’, Lloyd said. ‘We are not forced into buying scarce and expensive grain to keep stock going’.
Technology is rapidly advancing and there is now a range of really useful products available to assist with decision making. One such tool is ‘Pastures From Space’ which uses satellite imagery to show real time pasture growth. This is used weekly by Christine to guide stock movement to ensure paddocks are not over grazed (ie which mobs need to be moved to fresh pastures and which mobs can stay in the same paddock for a while longer). You can spend all day driving around checking paddocks to get this information, or you can do a quick scan of the whole farm while having a cuppa!
‘Writing things down makes it happen’, Lloyd explained in describing their five-year plan.
‘The five-year plan (sometimes developed with professional help, sometimes on our own), is our vision of where we want to be in the next five years. It enables us to plan for machinery updates and succession planning, for example’.
‘The best thing is to stick it on the fridge so it’s a daily reminder. Plus it’s a great feeling as you tick off the items you have completed’.
From the five-year plan they develop a 12-month action plan which helps to co-ordinate activities and workloads across their mixed farming operation. A useful spinoff is that it helps identify when it’s convenient to take a short break or a longer holiday.
Lloyd and Christine realise the value of expert help, be it reading information from Kondinin or Holmes and Sackett or talking to the local agronomists or vets. This is their source of new ideas. A current favourite read is Sheep—the simple guide to making more money with less work (Google the title and down-load it for free).
They encourage others to seek sound independent financial advice and not to be afraid of paying tax as they say, ‘it means you’re making money!’
It was probably being involved in a Property Management Planning course back in the early 1990s that was the catalyst for them realising that proper planning was the key to success. Time in the office and time spent thinking about where they wanted to be really set their ground rules. It gave them the tools to work through the big ticket items like land purchase, down to the smaller details like changes to the cropping program depending on the timing of the break.
‘We are now comfortable with what we have achieved in terms of farm build up and increasing productivity’, Christine said. ‘Our planning now focuses on ensuring we are still on track and still ticking off the items on our current five year plan’.
(This article was written by Lyn Dohle PIRSA. It is funded by the Kangaroo Island Natural Resources Management Board as part of the Regional Landcare Facilitator project.)
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