Expired: InTouch December 2020

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CEO Update

Dave Heinjus

Welcome to the first edition of InTouch, our Pinion Advisory newsletter.

The first 6 months of Pinion Advisory has been exciting. The combination of merging Rural Directions, Macquarie Franklin and Sunraysia Environmental has been challenged by COVID-19 travel restrictions, however I believe we have managed to maintain and enhance client services and, simultaneously, build our team.

In addition to client services, we have also been working on aligning internal business systems and ways of doing things. I have been focusing on the mantra, “there is your way and my way, but now we are focusing on the new way”. Like any change management, this is a slow process, but it is critically important we build a very solid foundation.

As the new CEO, I have adopted a supportive and encouraging approach to managing change. I have elected for a slow and steady approach, as we are in a marathon, not a sprint. I think this has been appreciated by all clients and team members.

Personally, the change has been rewarding as I transition from lots of consulting to less consulting and more business leadership. I see myself as having four key roles that include chief strategist, chief team builder, chief business ambassador and chief innovator. Hopefully, this leadership and management style will start to become evident as we roll out new and complementary services across Australia.

COVID-19 has meant we have focused on Australia. International travel restrictions have meant all global activity has been via video conference. There is nothing like face-to-face meetings, but using video is also very viable.

This means our Australian business strategy is very clear. Our client outcome is ‘to build profitable, healthy and enterprising clients’. Profit is about developing a business model that generates consistent and bankable profitability. Healthy is meeting our current needs without compromising the ability of future generations to meet their needs. Enterprising is about empowering clients to seek and act on opportunities that create a positive future.

One of the benefits of the new Pinion Advisory business model has been the ability to attract and retain the best people. Since launching on 1 July, we have recruited 9 additional people. This is a combination of new consultants and business support. All of our new team members are outstanding operators. Our existing and new consultants will create a lot of value for clients.

We have some very exciting projects planned for roll out over the next 12 months. I look forward to sharing these opportunities with you as we continue to develop Pinion Advisory.

Wishing you a very merry Christmas and safe and happy new year. I hope you enjoy and find our first edition valuable, please email me if you have any questions or comments.

WBrahman Heifers Boulia

Demonstrating sustainable beef farming

Leanne Sherriff (email) and Jo Jones (email)

Customers and other industry stakeholders are increasingly looking for evidence of sustainable production practices across agricultural industries, including beef production. The ‘demonstrating beef sustainability credentials and fostering practice change’ project provides an opportunity for beef producers to demonstrate their sustainable production practices. The project gives producers and beef industry stakeholders an opportunity to design and build sustainability reporting and learning platforms that are simple, practical, user friendly and meaningful.

The project will enable beef producers to take advantage of emerging opportunities presented by markets and supply chains looking to access red meat with verified sustainability credentials.

The demonstrating beef sustainability project is a partnership between MLA, University of Queensland and WWF-Australia, funded through the National Landcare Program’s Smart Farming Partnership grant. The project will run for three years, finishing in June 2023 and will engage beef producers and value chain stakeholders throughout the project.

Pinion Advisory have recently commenced in the National Coordinator role.

The project is designed to enable beef producers to demonstrate environmental credentials to red meat customers across five themes:

  • Balance of tree and grass cover
  • Biodiversity stewardship
  • Ground cover and soil conservation
  • Carbon balance
  • Drought resilience

The project will develop an on-line sustainability platform, with relevant measuring tools and links to learning modules for each of the five themes. Wherever possible, the platform will use remote sensing tools (e.g. satellite imagery) for demonstrating sustainability. Learning modules, based on best practice science, will be available for producers seeking to improve their knowledge and practice. The platform will be opt-in and confidential, with beef producers in control of their own data.

The project will directly engage grass-fed beef producers in the design and development of each of the themes. For each theme there will be a co-design group responsible for developing the measures and learning module. Each theme will be peer reviewed by technical experts aligned with the Australian Beef Sustainability Framework. There will also be an opportunity for the wider industry to test and pilot the platform before it is finalised.
An advisory group, made up of representatives from beef producers, processors, retailers, food production companies and independent stakeholders with relevant expertise, will guide the project. They will provide strategic input and advice to the project team, to ensure the beef sustainability project meets the needs of producers and value chain stakeholders.

The Pinion project coordination team consists of Leanne Sherriff (lead), Basil Doonan (business planning and technical advice) and Jo Jones (project management support). The team will draw on our extensive livestock industry networks across Australia in a range of sectors from producers, processors, advisors and consultants, government extension providers and researchers.

We look forward to sharing updates about this exciting new project with our clients as developments occur and bringing you on the journey as the platform takes shape.

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Global markets in a COVID-19 world

Tom Reichstein (email)

This season, global commodity markets have faced dynamic forces like they always have, but with a heightened amount of ‘noise’. The key driver behind all commodity markets are the fundamental basics and volatility of supply and demand. These constantly change due to the risk management of macroeconomic influences, such as the environmental conditions or the geopolitical landscape at that time.

As we were introduced to COVID-19, the world quickly changed, and so did markets globally. Supply and demand elements were stripped back to necessities, highlighted by the amount of panic buying that was occurring. Supermarkets shelves were emptied of staple foods like flour, rice, bread and pasta, inflating prices internationally. Perceived luxury goods and services like wool, lobster, faba beans and cruises all took a back seat due to poor tourism and decreased need for indulgent items while a pandemic spread. Oil prices were reduced to record lows, with much of the world moving into lockdown.

For agricultural markets moving forward, what is it we need to be wary of?

Investors are enthusiastic about the news of promising vaccine trials, which gives support and a positive outlook to industries that have struggled through the pandemic. But this could take months, or even years, to be rolled out and for trade routes, tourism, international travel and, even just, general day to day business to have a pre-COVID feel.

Another layer to the supply and demand pie that is always dominant for commodity markets are the geopolitical risks, which continuously fester in the background. Australia has been caught up in a tirade of tariffs and trade exemptions from China, as they flex their muscle on the international stage. Also, the world is watching the transition of US President Elect Biden into office. His stance on trade relationships, monetary policy and spending within the US will have huge role to play in how markets will react moving forward.

From here on, assuming a gradual vaccination program is successful, slowly but surely the world we have become used to over the past year will fade away. Rushing to the supermarket to buy staple foods when cases break out will ease. The need to go back into lockdown to stop the spread should subside, leaving the oil market open to less volatility than it is usually used to. As the global oil market strengthens keep an eye on fertiliser and diesel prices, which may also rise.

Other farm input prices may also be affected as broader commodity prices change. As the global economy gradually firms there could be an eventual increase in interest rates. In addition, the speed that different economies recover will have an influence on exchange rates. In Australia this will often influence machinery prices, not just simply our export commodities, so is certainly something to keep watching.

In the meantime, an approach to mitigate these risks is to seek some diversity in your marketing strategy. If a commodity is heavily reliant on a particular market, having some alternatives will lessen the exposure and, therefore, the subjected volatility that will follow. ‘Picking’ a market or price is hard enough without all the external noise. That’s why working to a well thought out marketing strategy focused on your business needs, can allow for peaks, troughs and everything in between.

As life moves on, the question is, will we ever get back to what we considered a normal world again? Only time will tell. The main thing to remember is that Australia will continue to be export focused for much of our farm produce, so we need to be prepared for the market volatility that comes with it.

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Strategy development from benchmarking

Royce Pitchford (email)

Benchmarking can sometimes get a bad rap as being too focused on the past, and not insightful for the future. In reality, the value in benchmarking comes from using it to inform future plans, and providing a sound base to launch from. Here are some thoughts on using benchmarking for strategy development.

Strategic planning requires a clear understanding of where you are now, as well as looking to the future and where you want to be. Benchmarking is useful for both purposes. By identifying trends and the strategic issues that might be holding back business performance, it helps to prioritise where to invest time, capital and effort to improve returns. Or it may highlight that things are tracking well and its time for the next opportunity!

Once opportunities have been identified, historic benchmarking provides a realistic baseline for scenario planning. This enables comparison of different options to be done with realistic underpinning assumptions around performance. The numbers don’t lie!

Using industry benchmarks can provide the ‘guard rails’ to test future growth plans or new opportunities against. Indicators such as debt to income ratio, finance coverage ratio, and return on assets managed are all useful ways to assess the viability of a new plan. It can help to put some objectivity around pursuing what seems like a great idea, and overcome any biases within the business.

Having benchmarking results on hand can also aid quick decision making when unexpected opportunities come up. For example those that have a good handle on their numbers are able to quickly assess whether a new lease or land deal might fit, and are able to act decisively on opportunities that suit.

Finally, ongoing benchmarking can help to measure progress against a strategic plan as its being implemented. It provides a set of standard protocols to measure against and track progress.

Pinion Advisory has our Snapshot® benchmarking system and experienced consultants that can assist with benchmarking and strategy development, so why not find out more about the opportunities in your business today? If you are interested to know some overall trends in performance from the 2019 year, our 2019/20 benchmarking summary report is available now. Contact Royce for details.

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Managing dairy effluent

Ryan Francis (email)

Effluent management is often forgotten about until it hits the ‘fan’ (or sensitive receptor, creek, neighbour etc.). Different state legislations and industry codes require that the effluent from dairy premises does not leave the farm boundary and that the system and its operation is designed to manage the system responsibly. Three design and management issues are commonly observed throughout dairy effluent systems.

The most common shortfall of dairy effluent systems is that the ponds are too small and, therefore, the irrigation of effluent is often undertaken when soils are saturated. These design issues can result in ponds overtopping into waterways and irrigated effluent running off paddocks, breaching the codes and legislation. In order to avoid these risks, it is recommended to design effluent storages that are capable to hold all effluent and rainfall within the effluent catchment for any period when soils are saturated (no soil moisture deficit), for a 1 in 10 wet year. While this often results in a considerably larger effluent pond, it also creates peace of mind and ensures the system meets the requirements of the relevant legislation and codes.

Another common issue is nutrient management in the soils which are irrigated. Potassium is often at high levels in the effluent, with 500kg of potassium per megalitre of effluent not uncommon. What is often observed is that this valuable nutrient, being applied through irrigation, is not accounted for and irrigation areas are far undersized for the volume of potassium being applied annually.

The final common issue is solids management. Often fancy solids separation systems are installed to remove solids from the effluent. Mechanical systems such as screens and screwpresses, or travelling solids traps, can result in considerable operational costs due to regular breakdowns, replacement of parts and constant time spent cleaning or emptying. These systems have their place, however if space and gravity are available, a solids pond or sedimentation trench can achieve greater solids separation and require considerably less ‘man hours’ to manage. Solids ponds can be designed to hold several years of solids, if the space is available, and can often be left with minimal management until desludging is required.

So how do we fix these issues? Unfortunately, capital expenditure is often the answer. However, a well-designed dairy effluent system can remove many ongoing operational costs, it can turn the nutrient in the effluent into a valuable resource, it can create a fool proof system that allows easy management for all staff, it can reduce those risks of effluent leaving the property and it can reduce time and operational costs spent on the effluent system.

Pinion Advisory has a team of water and recycled resource specialists who can help to design and monitor effluent systems. Our services aim to improve environmental performance, meet compliance targets and convert waste products into valuable agricultural assets (nutrients, water and carbon).

Next Gen Breakthrough

Rebekah Starick (email)

Get your business started in March 2021 with Next Gen Breakthrough. Aimed at next generation farm managers, this three year program has been developed to give you the confidence and skills to help your business succeed into the future. The group features like-minded producers from different regions, business models and levels of farming experience, to learn practical techniques, tools and processes to implement within their own farming businesses. It is delivered through a combination of group delivery with peer reflection, coaching support, and external mentoring. Managing a farm is a complex business, but this program can help young managers ensure a profitable and resilient farming operation.

Contact Rebekah to begin your professional management journey via email, or call 1300 746 466.