Benchmarking and Passion What the top farmers say about their substantial profits… Graeme McConnell, Peter White, Gerard Obrien 28 February 2012

What can be done to make your farm more profitable?

The best farmers are achieving 174% of the average farmers profit Year in year out…….

On our survey average farm size of 3139ha this equates to $226,008 more operating surplus…… every year. Over the six years this translated to an additional $1,764,815 in equity growth. –The best farmers actually grew by $2.8m

AverageTop% Difference Total Effective Area ha2818 ha105% Total Effective Area ha3529 ha112% Ave Rainfall May-Oct (05-10)238 mm240 mm1% Some basics about the businesses…. They started the period with similar size farms.

Input levels and enterprise mix (2010 only) Average ($/ha)Top ($/ha)% Difference Fertiliser % Fuel & Oil % Weeds & Pests % Plant Repairs % AverageTop Ave % Crop (05-10)61%73% Ave % Legumes (05-10)16%15%

Crop performance AverageTop% Difference Ave Wheat T/Ha (05-10)1.85 t/ha2.26 t/ha22% Ave Lupins T/Ha (05-10)1.17 t/ha1.39 t/ha18% Ave Barley T/Ha (05-10)1.95 t/ha2.32 t/ha19% Ave Canola T/Ha (05-10)1.03 t/ha1.10 t/ha7%

Key points from the data Difference in profits too large to ignore Consistent points –Passion –Planning –Preparation –Commitment/determination –Timeliness –Getting the job done

Production lessons Very integrated approach eg Dry seeding average 35% of program Depth of thought to rotations Weed control driven around having paddocks available to dry seed Must get seeding right Only relatively small changes to enterprise mix or program during seeding They seem to be able to match inputs to seasons very well.

Management Lessons Approach to business is very rational – profit focus The thinking and awareness of their business is intense. The ability to understand the impact of a decision on their system is very good. Not early adopters of new technology or varieties.

Management Lessons Planning and preparation is key. Know their enterprise margins well Relatively set rotations, although not usually on paper past 1 year Actively moving larger decisions outside periods of stress Rarely make losses

The Human Element Most have significant levels of experience Many have children that are engaged in the business and actively pushing for improvement Involved in management decisions from early to mid 20’s Training and succession – they seem to be able to keep someone in the business operating in their prime.

The Human Element They estimate they work 103 hours per week on average during this time Average off peak hours are also high at 54hrs/week Good communication They don’t do it alone

AverageTop% Difference Equity 1 Feb 2005$5,253,501$4,998,998-5% Equity 1 Feb 2011$6,275,744$7,785,81519% Compound annual growth rate3.0%7.7% Ave Return on Capital % (05-10)1.3%4.4% Equity and Return on Capital

Where does BYG fit with WMG? Increase productivity by 2 million tonnes by 2015 but only if profitable What is WMG contribution to this? Local target- Increase profitability by 5% in 3 years?

How are we going to achieve this? Survey- top growers don’t do it alone Small grower groups Focus- management options for non- wetting sands

What’s the benefit? To the Growers involved Explore the opportunities with access to experts, consultants and economists Best ways to implement Short term & long term impacts To the WMG Short term & long term impacts of picking up new technology options

Questions? Gerard O’Brien (BYG Advisory Board) Mob: Graeme McConnell (Planfarm) Mob: Peter White (DAFWA) Mob:

Some basics about the businesses…. Investment in plant AverageTop% Difference Plant$985,726$1,170,73019% Ave Plant Value $/Crop Ha$535.79$ % Ave Plant Value/Crop Income$2.62$ %

AverageTop% Difference Ave Opening Sheep Nos (05-10)4,6664,170-11% Ave Lambing % (05-10)84%88%5% Ave Lambs/WGHa (05-10) % Ave Wool Kg/WGHa (05-10) % Ave Stocking DSE/WGHa (05-10) % Some basics about the businesses…. Livestock performance

Some basics about the businesses…. AverageTop% Difference Ave Open Farm Value $/Cl Ha (05-10)1,8292,07313% Ave Debt to Income Ratio (05-10) % Ave % Income From Crop (05-10)66%78%18% Ave % Income From Livestock (05-10)30%18%-41%

Some basics about the businesses…. Operating results AverageTop% Difference Ave Gross Income $/Ha (05-10)$355$47032% Ave Op. Costs $/Ha (05-10)$259$30216% Ave Op. Surp/Def $/Ha (05-10)$96$16874%