Australian farmers are already very flexible, but this year I recommend rolling out the yoga mat on the workshop floor at the start of each day, tuck your singlet into your stubbies, and salute the sun. Mountain pose, downward dog, upwards dog, cobra, and round it out with a bit of shavasana.
Why? Because if the growing season doesn’t look good in your patch, you need to be flexible, and prepared to change plans quickly.
Everything is expensive, and we don’t know what the grain price will be at the end of the season.
I’m stating the bleeding obvious here, but it’s worth stating because this is exactly what every farmer in the world is up against right now.
Let’s not get too alarmed, a profitable year is still on the cards if the rain falls and the grain price holds up, it’s just that we need to risk more to make that profit.
When you are under the pump seeding and sleep deprived, it can be very difficult to make good decisions, which is why you should sit down right now and scratch out a few scenario plans.
What do you do if we start the year with a full profile of moisture and the season breaks at the perfect time, versus what is your plan for a dry profile and a late break.
Go on, sit down and spend ten minutes scratching out a plan.
Then have a chat to your agronomist, your family, your mates, and the professionals who help you.
What can you do?
1. Profit is profit.
Remember that every dollar of operating profit that you make, is a dollar that goes towards paying for the below the line costs (personal, machinery, finance, lease etc.). Use this to decide if a paddock is worth putting in. If a paddock is likely to make an operating profit this is the first drafting gate as to whether or not you seed it. An operating profit is the income minus the variable costs (seed, chem, fert, diesel, wages, insurance etc.).
2. Order your seeding fertiliser.
Yes, it’s expensive, but it’s really important to ensure supply. With a volatile fertiliser market, a fertiliser company can go broke overnight if they speculatively buy fertiliser and the price drops when the boat is on the water. The companies will only ship what they have orders for, so make sure you have an order. If you don’t use it, the unused fertiliser sits on your balance sheet, and is not counted against your operating costs for the year. Yes, this unused fertiliser might turn out to be very highly priced if you don’t use it until 2024, but it’s important to have seeding fertiliser if the season starts well.
Fortunately, it seems that fertiliser prices are easing. Contact your fertiliser supplier and find out when is last drinks. When is the latest that you can order and ensure delivery in time for seeding.
1. Do your sums.
Some growers are commenting that inputs are so expensive they are not going to put a crop in this year. Lots of growers said that last year and many in WA, SA, Qld and parts of Vic had a very profitable year. Sorry NSW!
If you’re thinking of significantly reducing your crop area, do the sums on a few different scenarios and see which is best. For most people, with average yield and above average prices, the best thing to do is to stick with your normal program, but of course, this varies. If you do nothing, what is your loss? How much will it cost to make machinery repayments, pay yourself, pay your finance costs, and to pay the other fixed costs (rates, insurance, licenses etc.). It’s really good to know this number for your business.
2. Have a backup plan.
This is the flexibility bit. If the season does start badly, what does your backup plan look like? Make a list of paddocks that you will drop out of your program in priority order. Paddocks, that are for one reason or another, are not going to perform. They may be weedy, have high disease pressure, or perhaps they are just traditionally your worst performing areas of your farm. Higher rainfall growers may be less inclined to drop paddocks out entirely, but they should be able to prune back the costs on the big-ticket items such as fertiliser and chemical.
Where I’m based, most growers budgeted on a loss this time last year and many have had about their second or third most profitable year ever. But they were nervous right until the end because they had risked so much in input costs to grow their crop. We’re budgeting on losses again this year, which isn’t nice. We know we can have a profitable year again, but we also know that it can go seriously pear shaped if the season goes against us. So be optimistic, but also be flexible.
Namaste
The Terminator Agronomist
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Please note this advice is general in nature and not based on your specific circumstances.