What will you do when the drought breaks

							      Feature                                                     Enterprise strategy


     What will you do when the
     drought breaks?
Droughts are an inevitable risk associated with broad acre agriculture and, whether
we agree or not on climate change, the reality is that we are already accustomed to
managing risk and capturing opportunities that come with unpredictable and variable
annual rainfall.
Coming out of one of the most             Another important factor that may        3. Change the strategies used in
severe and widespread droughts in         help you to determine your                  your existing enterprise mix e.g.
recent history provides an                commitment to change is whether             change the herd/flock structure
opportunity to consider the structure     your current business performance           or the feed base.
of our business, how well it is           will be sufficient to meet your needs
                                                                                   4. Change the enterprise mix e.g.
performing and how well it enables        at some time in the future. It takes
                                                                                      cease one enterprise or consider
us to manage risks and                    time to plan and implement change
                                                                                      starting a new enterprise.
opportunities.                            and you may well need to start the
                                          process years in advance.                Sources of ideas are wide and varied
Do you want or need
                                                                                   – you can attend field days, read
change?                                   Will your current drawings be
                                                                                   widely, and travel to other regions.
Altering any business requires a          sufficient to meet the future needs of
commitment to change, a vision of         your family?                             How to evaluate options
where you want the business to be,                                                 The first pass in considering
                                          Are you accumulating sufficient
and a plan to achieve that change.                                                 alternative enterprise options need
                                          wealth to retire and leave the farm
                                                                                   not be onerous. The idea is to
The first question you have to ask is:    business intact for the next
                                                                                   consider lots of options, then select
“How committed are you to                 generation?
                                                                                   only a few to examine in more detail.
change?” Even the best plan will fail
                                          When you have determined your
if your commitment is poor.                                                        There are three areas of evaluation
                                          commitment to change, you can
                                                                                   you need to apply to any given
One simple way to gauge your              start exploring alternative enterprise
                                                                                   option: financial, social and physical.
commitment to change is to score          strategies.
yourself from one to 10 on how                                                     Financial analysis determines
                                          What options do you have?
satisfied you are with your current                                                whether the change will bring
                                          Here’s a simple guide to thinking
situation, with one being completely                                               financial benefit. Social evaluation
                                          about what your options might be:
satisfied and 10 being completely                                                  should uncover whether you will be
dissatisfied. If your score is low, you   1. Leave things as they are – your       comfortable with the management
are unlikely to see through any              business is as good as can be.        changes, labour requirements, skills
significant changes to your business.                                              and knowledge requirements, hours
                                          2. Expand exactly what you do now
A high score may mean that you have                                                of work and other necessary
                                             – your existing enterprise mix
a good reason to consider change                                                   changes. Physical analysis ensures
                                             performs well, you just need to
and, with planning, your commitment                                                that changes are possible within the
                                             expand them. This will generally
to achieve will be strong.                                                         constraints of the land, animals
                                             involve acquiring more land.
                                                                                   available, rainfall and climate, and

    Key points

    • Be sure you want or need to
      change when reviewing your
      enterprise strategy.
    • Consider the social, financial
      and physical implications of
      any change.
    • Know where your business
      is going and plan how to
      get there.




2      mlaPrograzier autumn 2007
                                                                                                        Feature




that there will be no negative impact
on the environment.
The MLA More Beef from Pastures –
The producers’ manual has 29
procedures designed to analyse
these aspects of your business in
considerable detail. This will also
help you to determine the scope for
improvement to your business.
For a really quick analysis of options,
the MLA Feed Demand calculator
will quickly show how well an option
matches feed supply and feed
demand and if it is biologically
feasible. It also gives you an idea of
the improvements you might make
to key performance indicators, such
as per cent pasture utilisation and
amount of pasture produced.
Using the MLA Cost of Production
calculator you can compare the
current enterprises’ performance
with the likely performance after
changes are implemented. Simply
create before and after scenarios by
adjusting the calculator inputs to
reflect the changes in livestock
inventory and proposed costs.
Finally, you should always check that
the feed demands of your flock or
herd and the stock classes that           What more is there?                      Be careful to make time to think things
you’ll have on hand each month of         If you’ve decided on a new enterprise    through and to monitor progress.
the year give you enough flexibility to   strategy, you will have to determine
manage the variability and reliability                                             A full annual financial and physical
                                          the sequence of events required to       performance report, such as the one
of your feed supply across the year.      implement the change. The most
To do this, cross check your MLA                                                   described in the article ‘Rebuilding
                                          important aspects to consider are        for Profit’ in this edition can be
Feed Demand calculator output             the amount of capital you will require
against your local pasture growth                                                  invaluable to monitor the
                                          and when you will need it, the timing    implementation of any enterprise
index, which you can find with the        and amount of labour required, and
MLA Pasture Growth to Outlook                                                      strategy change. Set limits for each
                                          any changes to cash flow or income       key performance indicator and have
tool. Test your feed demands              that might occur throughout the
against average, good and poor                                                     plans in place should you breach
                                          transition period.                       those limits. Sometimes it’s as
year feed supply scenarios.
                                                                                   simple as changing the timing of
                                                                                   investments.
 Next steps
                                                                                    More information
 • Attend a MLA More Beef from Pastures – ‘rebuilding for profit expo’.
   Call 1800 675 717 for more details.                                              • David Falepau, MLA
                                                                                      Phone: 02 6926 6272
 • Get a copy of the MLA More Beef from Pastures – The producers’                     Email: dfalepau@mla.com.au
   manual in hardcopy or CD-Rom (with Feed Demand and Cost of                       • MLA More Beef from Pastures –
   Production calculators).                                                           The producers’ manual is $65 for MLA
                                                                                      members, $130 non-members for hard
 • Read the Cost of Production and Rainfall to Pasture Growth Outlook                 copy plus CD-Rom or $10 MLA members,
   Tips & Tools information sheets, available online at www.mla.com.au                $20 non-members for CD-Rom only
   under ‘Information centre’.                                                        Phone: 1800 675 717
                                                                                      Email: publications@mla.com.au



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