Profitable Farming

 

A book by John Mason, available through our online bookshop. Click for details or to order a copy.

Read the following extract from this book:

SECRETS OF SUCCESS

There is no real secret to success. It is a combination of factors including hard work, tenacity, ongoing education, adapting to change, and yes, a certain amount of luck. But mostly, success in any field is about being aware and taking advantage of your own skills, resources and knowledge. Many highly successful people will tell you they were just "in the right place at the right time". Being in the right place, though, is often due to knowing what is happening and being there to take advantage when it does happen.Most successful farms are those that are:

Always be prepared to change.

Routine, and doing things the way they've always been done, is comfortable.You know the procedure and in most instances the outcome. But many farms fail because, unbeknown to them, everything else is changing around them. This is not to say that old-fashioned ways are not good ways. In fact, many people are willing to pay extra for what they feel is extra service or extra quality.But that does not mean that change is not necessary.

A good example would be in providing farm fresh eggs. A small egg producer may have always managed chickens free range. Some people are willing to pay a premium to obtain free range eggs, and the cost of producing free range eggs is higher for the producer. What may have to change is the way the eggs are marketed. It is no longer good enough to sell the eggs as 'Farm Fresh'. The emphasis must be changed from that to 'Free Range'. So, the change here is small, but very effective.

Other changes may be more substantial, such as changing the overall production output of the farm. In the case of a farm raising wool sheep - is that the most effective use of all the land? Could the wool clip there be subsidised by growing a crop on part of the land? This would lessen the size of the wool flock, but may be more productive overall.

Know their strengths and weaknesses, both personally and professionally.

There is always an emphasis on knowledge in business. Know your market, know what is going on in the economy at large, know what your product and core business is, know your strengths and weaknesses. It can be quite overwhelming. But being able to identify your strengths and weaknesses is important to knowing all of these other aspects of your business.

Identify what your strengths are, both personally and professionally. Then look at your weaknesses, so that you can identify where you need to find support. The most successful people don't expect to know everything. What they do know is how to admit where they need help and where they can get it. Expert advice need not always be costly.Producers organisations are a great source of information. They often provide forums for discussion, both formally and informally, as well as current information relevant to your particular market. They also often act as a lobby group, acting on your behalf on government issues.

Support can also be found through outside professional services. This can be in the form of bookkeeping service, accounting and legal advice, or through government advisory services.For instance, the Bureau of Meteorology have a wealth of information on weather patterns, temperatures, rainfall, etc. Many farm management decisions must be made based on the weather.If you are not good at keeping weather records, or have not had the opportunity, they can enhance your knowledge.

Half the battle of addressing and providing for your strengths and weaknesses is knowing the 'lingo'. All areas of business have their own language, be they plant growers, bankers, chemical suppliers or equipment dealers. By having an awareness of the language, you are half way to having the knowledge. If you feel that lack of understanding is a weakness, first try learning the language.You will find in many cases that you know a lot more than your thought you did.

Plan ahead and always have contingency plans in place.

There is one thing that is sure about farming, that is that unexpected things will happen. You need to plan for things such as drought, fire, crop failure, animal diseases, etc. What arrangements, if any, do you have to cope with such problems. Could you plant fodder trees as windbreaks, that could be used as emergency stock food?. Do you have other sources of income (e.g. off farm investments, another job) that could support you through lean times on the farm? Have you invested profits from good years in new equipment, new dams, paying off loans ahead of schedule, etc? During a good season do you buy up large quantities of grass/lucerne, hay, etc; various grains when prices are low; molasses, etc. Do you alternate sources of feed for your stock in times of drought, such as road verges, timber plantations, public land, etc?

A contingency plan for dispersal of stock when drought is imminent from weather forecasters, etc, or dry spells are lengthened:

It is financially sound to take a slightly lower price at the beginning of a suspected drought than have to resort to shooting starving stock or watching them starve to death or die in bogs - neither of which is good husbandry practices.

It is not what you have (money, facilities, assets etc), it is how you use it.

You might, for example, produce a wheat crop year in, year out, because that is what you, and your father, etc. have always done. Is this the most effective return for your time, money, equipment and material inputs? In many cases farmers often get little or no return from all their efforts and inputs - they would have been better off not growing a crop at all, instead of utilising their resources to do something else, or saving them for better conditions, and the land may be better off in the long term after a year of rest. Usually it is better to expend more time and effort in those areas where you get the most returns, or look at alternative enterprises with potential higher returns.

Always be different - try to think laterally.

Just because everyone else in your area, and previous generations have all grown the same crops, or raised the same animals, doesn't mean you have to do the same things. Many of our farming enterprises, and production systems are based on those the early settlers brought with them from Europe. They may have been suitable for European conditions, but Australia is a lot different, particularly our generally low fertility soils, and lower average rainfall over much of the country. Why not look at other countries with similar climates? What crops are they growing successfully? What production methods are they using? What crops or animals are they experimenting with? What about crops or methods being used successfully elsewhere in this country? Are their crops or animal products that Australia imports, that could be readily grown here? Could you experiment on a small scale, without having to initially spend a lot of time and resources?

Look at ways to add value before your product hits the market.

Each step in processing a product, can significantly increase its value. For example milling wheat to produce flour, will see an increase in value. Converting that flour into products such as pasta or bread will see another increase in value, as will further processing those products into a cooked meal (e.g. sandwiches, pasta dishes). Could you readily process your products in some way 'on farm' to get a significant increase in value. This may not require a significant investment in processing equipment, or the returns from purchasing or building such equipment may make such investments well worthwhile in only a few years. Further examples of value adding are discussed in the chapter on Alternatives.

Know what your business is.

Be sure you know what you are doing, or aim to do. Don't try and be all things to everyone. You will generally get better results concentrating your resources (time, money, equipment, etc.) on one, or perhaps two or three enterprises, than on many enterprises, otherwise you will find yourself running from one to another, and not doing justice to any of them. You might find yourself literally a jack-of-all-trades and master of none. Customers will generally prefer to deal with someone who is an expert in their particular field or enterprise.

You need to give people a reason to spend money with you rather than with someone else.

Your product or service needs to be sufficiently different, or of better quality, be better marketed (e.g. attractive packaging), or you provide better service (e.g. follow ups, transport, advice, etc) than what competitors may provide to ensure customers choose you to provide the service or product.

Taking Risks

The old saying that "you can't make an omelette without breaking eggs" holds true when considering new enterprises. If new enterprises where easy, or didn't take a lot of time, effort and research then lots of people would try them. Be prepared to take risks, but make sure they are calculated risks. Ensure that you have done as much research as possible into any proposed enterprises, and that you are as aware as possible of things that could go wrong. Learn from other people's mistakes in the same or similar industries.

If possible have fall back plans. Could you use equipment, materials, etc. you have purchased for other things, rather than wasting them if the enterprise you are trying is not successful? It is generally a good idea to experiment at first. Try things in a small way, and see if you strike any problems, if so, can they be easily overcome. When you feel confident with what you are doing, only then consider expanding. This may be a step by step process, rather than jumping in feet first, spending a lot of time and money, only to fail.


Distance Education Course in Farm Management

FARM MANAGEMENT BAG104

Duration: 100 hours

COURSE STRUCTURE

There are eight lessons in this module as follows:

1. Strategic Planning

2. Business Plans

3. Business Assessment

4. Viability Analysis

5. Management Strategies

6. Human Resources

7. Physical Resources

8. Natural Resources

COURSE AIMS

1. Develop strategic planning methods for an agricultural business.

2. Learn how to prepare a Farm Business Plan.

3. Aim to develop methods for assessing the operations of a Farm Business.

4. Analyse the viability of different production enterprises through assessing profits, risk analysis, cost efficiency, quality standards and financial records.

5. Aim to develop strategies for managing different farm production enterprises, covering workplace organisation and crop scheduling.

6. Plan the management of human resources in a farm business covering supervision, types of leadership/managers, orders & instruction, motivating employees and recruitment.

7. Develop methods for managing the physical resources of a farm business including managing equipment, machinery and buildings.

8. Develop methods for managing the natural resources of a farm business, covering topics such as regulations & legislation, landcare programs, erosion control, soil degradation, salinity, soil acidification, chemical residues and compaction.

WHAT YOU WILL DO IN THIS COURSE

Here are some examples of what you may do:

- Find a property which is either not developed or is underdeveloped, and has potential for an enterprise you have in mind. You may very well already know of a property which satisfies these requirements. Alternatively, you may find a property by looking in newspapers or real estate publications in your local area. Identify potential farming ventures for this particular agricultural site.

- Determine approximate capital and finance you would require to develop a specific farm business operation on this property

- Produce a chart to explain preventative and sustainable management practices on a farm you are familiar with in your locality.

- Investigate two farm businesses identified by interviewing at least one person in a managerial position in each. Attempt to find out anything you can about factors which are critical to business viability, such as production costs, annual income, variations in profitability and related issues.

- Consult with government and other organisations in order to determine regulations and procedures controlling the employment and management of staff on a farm; including:

* Workplace Health & Safety Requirements

* Award terms and conditions

- Investigate two different farm properties to determine the physical resources which exist on those properties. One of these farms should be the one which was investigated in lesson 2, and at other stages throughout this course. The other may be any other property which you are (or have become) familiar with.