Peter McInerney Principal 3D-Ag

 More than just your production system = Physical, financial and human elements of the farm business AND how they interrelate 3D-Ag

 People – the skills and motivation they bring to management 3D-Ag

MANAGEMENT MATTERS …

3D-Ag

? Everyone knows a good season follows a drought! 2009 Where’s your thinking this year

►Production ►Weather ►Finance ►Price volatility ►Management ►Other issues

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 Have clearly defined goals and objectives of all involved in the business  Be able to step back and view your business as a whole  Develop a plan with agreed targets & timetable If necessary get outside help to facilitate the process, clarify issues and ensure objectivity 3D-Ag

by things you can’t control & as a result … 3D-Ag

 Robust whole farm system ◦ Sound rotation / soil & water management  High quality pastures, animals & grazing management  Complementary crops  Rejuvenation phase / stubble retention  Integrated weed management ◦ Targeted program  Inputs matched to anticipated production / quality  Non price linked products

Accounts for 95% of the variance in profit! 3D-Ag

Management gap Actual yield Product Yield Available moisture Minimise 3D-Ag

MANAGEMENT MATTERS …

 Realistically assess potential ◦ Paddock by paddock and the farm as a whole ◦ Resources - management, funds, tools and technology Consider the impacts of previous seasons on fertility, weed spectrum, profile moisture, management’s outlook - as it affects the coming season’s potential 3D-Ag

 Appropriate crop and pasture sequences that: 1. optimise productive potential 2. minimise agronomic risk - balance 3. have a ‘moderate’ but appropriate cost structure “80% of farms” are currently not meeting these objectives! 3D-Ag

 Soil health – structure, fertility, biology ◦ The role of:  Rotation – diversity of species, root type  Groundcover / stubble retention  Compaction / grazing management  IPM 3D-Ag

 Profitable quality crops and pastures  Complementary species – a mix of plant species / types, root systems to manage: ◦ disease and weed issues, reducing reliance on chemicals; and ◦ produce ‘free’ nitrogen 3D-Ag

 Inputs targeted to expected yields - how low can you go? Consider …  What has been your standard rate?  What is the trend in levels over recent years?  Can you afford that new machinery / technology upgrade? Can you afford not to? 3D-Ag

Law of unintended consequences Beware the backfire - cost cutting that could cost $$ in a good season. 3D-Ag

 Target quality as well as yield – crop and varietal selection  Know your true cost of production  Develop a selling strategy  Review crop, weather & market signals regularly 3D-Ag

Minimum Crop Estimates (MCE) MCE = The likely yield (i.e. how much product you have to sell) in a worst case scenario. 3D-Ag

Potential Yield MCE t/ha Moisture 1st Apr1st Jun1st Aug1st Oct 010%20%60% Wheat 5.5 x Canola 2.7 x %30% Wheat 5.5 x Canola 2.7 x

1.The tools/methods used to crunch the numbers… 2.How specific is the information used - be wary of assumptions - be wary of assumptions 3.Does ambition match ability 3D-Ag When forecasting results - consider

 Typical gross margin – Wheat  Income 2.5 $180 $450 A. Total income $/ha $450  Variable costs ◦ Seed and fertilizer $73 ◦ Herbicides $45 ◦ Operations $122 B. Total variable costs $/ha $240 Gross margin (A – B) $/ha$210 3D-Ag

 in a continuous crop business ◦ Costs divided by ha of each enterprise or crop  in a mixed business - for simplicity ◦ treat crop and animal enterprises separately 3D-Ag

 Graze - additional animal product - opportunity to manage pastures for higher quality and longevity Ability to - spell pastures - manipulate weed populations  and Grain 3D-Ag

Narrow leaf lupins H1 wheat Actual farmer result $300$303 D I I (NSW) $257$300 3D-Ag What’s the difference?

3D-Ag

Wheat gross margin 2010 per ha Variable machinery costs only Decile 3 $11-$10 Decile 5 $236$215 Decile 7 $461$440 3D-Ag Including cost of machinery ownership

 Only variable costs included  Potential variability when assumptions are used - revenue … yield & price estimates 9 months in advance - expenses … non specific costs of machinery  The generic GM … ‘one size does not fit all’ 3D-Ag

 Apportioning the other costs of doing business – so called ‘fixed costs’ ◦ Financing ◦ Capital ◦ Business ◦ Personal per ha / enterprise 3D-Ag

Gross margin to Variable machinery costs only Decile 3 $9,396-$8,474 Decile 5 $193,311$175,441 Decile 7 $377,226$359,356 3D-Ag Including cost of machinery ownership Net margin -$141,375 $42,540 $226,455

 The latest technology or herbicide is NO substitute for management!  Sustainable profit comes from a robust system! Beware the ‘silver bullet’ sales pitch or generic GM… 3D-Ag

 Recognise the skills lacking in your business and seek training or ‘employ’ the necessary help 3D-Ag

take care not to concentrate your focus on fixing one aspect of the farm business and end up SWAPPING ONE RISK FOR ANOTHER! 3D-Ag

Realistic plans Sound simple system Active focused management 3D-Ag Doing the essentials well and doing them on time!

Get the whole picture! 52 Fitzmaurice Street, Wagga Wagga Ph: