James Hillcoat, Farm Business Manager
As Southern Australia grapples with drought and significant rainfall shortages in many areas, farmers face a challenging set of circumstances and uncertainty over the coming season. A decent rain would certainly go a long way to alleviating mindset and confidence but, until then, we need to play with a straight bat.
Whilst making decisions in challenging conditions can be hard, when well considered, they can often be the among the best laid out decisions we can make. The mindset being that every dollar saved or earnt during this period is extra important and so the thought process with decision making can be much deeper and considered. Whilst any dollar saved or earnt contributes equally in any year, with tighter margins, the effect is much clearer than when seasonal conditions are more abundant and there is more margin for error.
Despite this, with poorer seasons, it can feel like hard work and that the results of this enhanced decision making aren’t very clear. This can, at times, lead to decision paralysis, demotivation and/or missing some potential opportunities as things eventually turn around. Below are some points to consider that might help you feel more in control of the situation:
1. Work within the sphere of influence and control
Identifying what is outside of your control (weather) and what you could control or influence is an important mindset tool. We can exert energy and frustration on things out of our control but, essentially, have little to no impact on the outcome. Instead, we could look at the weather, for example, and focus on our actions stemming from it, rather than the weather itself. Is it likely to stay dry early? What starting moisture do we have? How does this impact feed requirements and stock numbers? Does it change our seeding plans? What contingencies could we build in to work around this?
2. Maintain goals
Whilst goals won’t change a drought, it is important to plan for recovery (medium term), look at some short-term initiatives and think from both a business and personal standpoint. Are there some learnings we might want to take forward? Even a quick business plan contains a lot of power. What are we going to do in the immediate future and what could we learn to take forward? This could also be a tool to get everyone in your business team together in brainstorm mode to help share the burden you may be feeling.
3. Don’t assume too much
As humans, we can often resort to the worst-case scenario. It is really important to remain grounded and in touch with the farm. When making fertiliser decisions for this year, for example, don’t assume the starting N levels. Get a good view of your farm’s performance. Whilst financially it may not be desirable, it can provide the clarity needed to help make decisions going forward. Link this to a forward budget to help be as proactive as possible and enable more confident decision making in the coming season.
4. Review spending but be pragmatic
Now is the time to look at your overall cost of production and make material change. This is best led with context and historical performance to ensure that decisions here are grounded in truth and not on a whim. We need to optimise decisions now and into the future, so thinking through the costs and the potential benefits is a key skill. For instance, feeding stock for an extended time versus selling now. Is there a cost benefit of feeding the whole flock/herd or can we offload a few more to increase our margin, versus buying-in expensive feed in an increasingly tight supply market. Can this simultaneously create selection pressure through a younger breeding flock, whilst reducing current cashflow pressure?
5. Use your business community
Drought not only affects the physical landscape but also the wellbeing of those within the community. Building a support network through your business network or your communities can provide emotional support and practical advice. Sharing strategies and solutions with peers can lead to innovative approaches you might not have considered.
6. Be ready to respond
When all is said and done, history shows that seasonal conditions will turn once again in our favour. When this happens, knowing some solid trigger points and a recovery plan will ensure you can be adaptive without being gun-shy. Be ready to capture opportunities. Define what these might look like and plan for the when better seasonal conditions eventuate.