BROAD MANAGEMENT STRATEGIES
TOWARDS BETTER PLANNING
A modern farmer needs to think laterally, plan long term and minimise business spending on non essentials.
If farmers are to deal with problems better in the future, in the words of Baden Powell, they need to “be prepared”.
Planning involves preparing for problems before they happen.
To plan successfully, you need to be able to see what is likely to happen before it happens. In a rapidly changing world, this is an increasingly difficult task. Often we can’t be certain of what will happen until it is about to happen. However, this is no excuse to avoid planning.
Despite the future being uncertain, it is possible to make a relatively educated guess at what is likely to happen. Sometimes you don’t know when something will happen, but you do know it will happen sooner or later (e.g. drought, running out of money, etc.).
At other times you may not be certain of market changes (e.g. growth or reduction); but you have a basis upon which to guess the future.
The distant future is always harder to predict than the near future.
Planning is all based on probability. You need to try to determine the likely outcomes of alternative actions and then select the actions which are most “probable” of giving you the best results. If you are going to plan the future of a farm or hobby farm, you need to try to foresee the future.
A WAY OF THINKING
Farming has been a very traditional and predetermined way of life for centuries.
Consequently, most farmers have naturally been relatively conservative in their thought processes.
Today successful farmers need to be more innovative than in the past; not just prepared to change, but they need to actively chase new ideas and continually introduce improvements.
Farms have always been product based industries (i.e. they make their money out of producing a product such as milk, fruit, meat, vegetables, or grain).
They have sometimes partially processed their products (e.g. a dairy farm separating cream from milk); but rarely to a stage where the product is ready for retailing. Some farmers do go the extra “value added” step (e.g. a small town butcher using his own stock).
A financially struggling operation may be able to increase their economic viability by turning their attention towards deriving more income by processing their produce, or by providing income generating services such as farm tours or accommodation (e.g. farm stay).
ANALYSE THE MARKETPLACE and THE INDUSTRY
If planning is to be effective, it is essential that you are familiar with changes and trends in any relevant areas of the industry.
This is usually achieved by being continually vigilant about maintaining awareness:
a) Be aware of your own property! In particular keep good records (eg, records from the past on weather for a local area).
If you know what has happened in the past, you have a basis upon which to predict what is likely to happen in the future.
b) Be aware of your industry!
Developments in your industry are beyond your control; but knowing about them sooner, will enable you to adapt faster and reduce any negative financial impact (or optimise any financial gain). eg....subscribing to trade magazines, attending shows, field days, associations/societies/clubs, internet, radio/TV shows, department of agriculture, etc.
c) Be aware of wider global developments!
Farming today is affected by industries beyond Agriculture. Decisions & developments in politics, science or economics, amongst others, can result in rapid and dramatic changes to the viability of agricultural enterprises.
It is imperative to stay abreast of local, national & international news. Listen to the news daily on radio or TV, buy and read at least weekend newspapers, and perhaps follow developments on the internet. Some trade or professional associations are also good at monitoring and informing farmers of potential future impacts of developments in such areas.
OTHER APPROACHES TO PLANNING
There are many different ways of approaching planning on a farm. Commencing with a drawn plan of the farm, with all assets and land features illustrated lets the farmer plan other strategies over the land.
Often a farmer will be encouraged to follow a particular procedure or model which has been established by so called “experts”. From time to time, new such “models” emerge and become popular or trendy. Generally these models emphasise one aspect or another, in response to deficiencies perceived in other approaches to planning.
“Whole farm Planning”, for example emphasises a holistic approach, where consideration is given to everything (ie. not just the economics, but also conservation, health & well-being of the farmer his family & staff, etc).
“A Business Plan” in contrast, concentrates on the “business”, and is not particularly concerned with social impacts of what happens.
The approach which you take to planning is not as important as the fact that you do plan.
In actual fact, different things are of different significance on different farms; so whatever procedure you follow, you will probably need to modify where you put your emphasis, depending on what is important to you.
Just keep it logical, and think things through before making decisions.
The farmer needs to make decisions every day, but each decision varies in terms of:
Some decisions will have a greater impact than others (eg. Buying new land or changing agents). Obviously more significant decisions warrant more careful planning.
Some decisions need to be made repeatedly and frequently (eg. buying fertiliser or stock food). Good planning may involve establishing a procedure to help with such decisions (e.g. reorder when the quantity in stock drops to a certain level). Some decisions need to be made straight away (e.g. treatment of a serious disease), while others might not matter if they are delayed (e.g. replacing a fence).
Some decisions are permanent (eg. planting an orchard), while others are easier to change (eg. the amount of water applied each week).
WHAT TO PLAN FOR
There are many different things which might require planning decisions on a farm. Each decision needs to be based upon sound information. The decisions and corresponding information requirements which follow are typically dealt with in farm planning. The relative emphasis given to different aspects (e.g. production, finance, marketing, welfare, etc), will vary depending upon what is more important to a particular farmer, and the circumstances in which they find themselves.
A production plan is designed to prepare for the production of a particular type of process. It might include a statement of what you aim to produce, followed by an analysis of relevant information, and then a determination of decisions, based upon the information analysed. A simpler approach which can sometimes be appropriate, might be to simply prepare a production schedule or timetable (i.e. a statement of the tasks that need to be undertaken, step by step, in order to produce a particular product).
Example of a simple production plan for growing a carnation cut flower crop:
Week 1: Sow seed and place in greenhouse.
Week 2: Check for germination. Keep well watered.
Week 3: Check for damping off, thin out if necessary. Spray fungicide if necessary.
Week 4: Plant seedlings into rockwool slabs. Spray with insecticide for caterpillars etc. Feeding with high Nitrogen fertiliser.
Week 6: Check for insect & fungal problems. Remove affected leaves plants, or spray.
Week 8: Treat with fungicide
Week 10: Check for disease, insect damage & nutrient deficiencies.
Week 12: Harvest.
Note: This is only one of many possible ways to grow carnations.
We have provided a great deal more information about some than others...this does not mean that those dealt with in detail are the best options! Also the list is not exhaustive.
Use this chapter as a guide; but treat it as only a starting point. Once you decide on one (or several) enterprises, you will need to learn a lot more about them before investing too much money or time. This can be done through such means as:
In recent years, farmers from many countries have looked increasingly towards growing new types of crops or animals. There can be a distinct advantage in getting in first with potentially valuable products. At the same time there can often be a disadvantage in that the country does not have an infrastructure developed to deal with the product. For example, Australia has been farming an increasing number of emus and ostriches, but there are few abattoir facilities developed to kill and process the meat, leather, feathers, etc.
Advantages & Disadvantages of New Industries
Getting In First. It may be hard to break into the market in the face of established producers, but you may be able to bypass mistakes made by the earlier people (pioneers in the industry).
High prices are generally obtained for stock/produce at first, particularly if they are in high demand as breeding stock, but once numbers increase then price drops rapidly. You can lose a lot of money buying expensive stock, only to see prices plummet in a short time.
Timing your entry into developing industries is crucial.
You can often get extensive help, advice, support from various government agencies (e.g. agriculture departments) who are keen to develop new industries in conjunction with farmers. Some new products require more sophisticated facilities for processing than others, while others can utilise existing facilities for other crops or animals You need to be aware of what is needed and ensure you have reliable access to such facilities (or an ability to develop suitable processing facilities), before making a commitment to grow something new or different.
Markets may already be established, or you may need to develop market opportunities.
New industries often have additional tourism potential, for example, uncommon animals will attract interest as an oddity to be looked at, not just for meat, fleece, or milk, production.
WHICH NEW ENTERPRISE TO CHOOSE?
Careful selection of which new enterprise/s too undertake is extremely important. Choosing the wrong enterprise can result in expensive outlays for little return, a lot of work to produce a marketable crop or service, poor yields, poor quality product, or even total failure of the enterprise.
HOW THEN DO YOU DECIDE WHICH ENTERPRISE/S TO TRY?
A simple process to get you started is to consider, on a BROAD SCALE, all the possibilities for potential enterprises. This could be done as a brainstorming session, perhaps with relatives, staff members, and/or fellow farmers. Don’t limit yourself at this stage - no idea is too silly. You may want to do a little research to give you a few more ideas. What products or services are being trialled in Australia, or which are being grown overseas successfully, but not yet trialled in Australia, that you might be interested in?
A little research, even a visit overseas, could extend the range of possibilities to consider.
List all the ideas you come up with. A list of possible enterprises/activities to give you a good head start is included later in this chapter.
List all of the things that you already have, or could readily get hold of, that could be potentially utilised as part of a new enterprise. Once again don’t limit yourself. Items to be listed could include such things as:
- Land - how much, where is it located (eg. next to a major highway or near a big town), topography, soils, climate, etc.
- Water - how much, from what sources, cost, quality, reliability, etc.
- Established infrastructure - do you have sheds, buildings, dams, fences, roads, etc. on your property?
- What services do you have access too (mains water, power, telephone, etc.)?
- What equipment do you have, or can readily get access too (e.g. tractors, harvesting equipment, cultivating equipment, sprayers, irrigation equipment, vehicles, etc?
- What enterprises are these resources suited to, or could be readily adapted to?
- What skills and knowledge do you have - don’t just consider farm production skills, also consider computer skills, marketing skills, cooking skills, handyman skills, business skills, etc. Some crops and animals are very difficult to grow; others are easy. Some services are easy to provide, others may be more difficult. If you are inexperienced, it is often best to start with the easy ones, even though profit margins may not be as high as for other products or services.
- What are your personal interests? You will put much more effort into something you are really interested in.
- Can you get extra, suitably trained staff easily if required?
What things would limit you from doing certain enterprises? List these. Could these limitations be readily overcome? You might, for example, have a water shortage problem, or your property may be well off the beaten track, or your property is subject to heavy frost.
Go through each of the potential enterprises on your first list and cross check them with your other two lists. Put a tick or an asterisk against those enterprises that you feel you could do given the list of resources you have or could readily get hold of. Put a cross next to those enterprises where you feel you wouldn’t have the necessary resources to carry out that enterprise. Also put a cross against those enterprises where the items from your limitations list would make the undertaking of that enterprise difficult, for example, if you have water shortages, then trying to produce a crop or animal with high water demand (e.g. water chestnuts, aquaculture) is not likely to succeed.
Start to carry out some initial research into the items that you have asterisked or ticked. You may limit this step to those enterprises that particularly interest you, especially if your list of possible is still a long one. Don’t throw away your original list though. As conditions change (e.g. finances improve, irrigation channels are supplied to your area) you might want to later on reconsider some of the enterprises you have at first rejected.
Some of the following points might help you further cut down your list of possible enterprises.
Are you producing for your own needs, for commercial production, or for both?
IF PRODUCING FOR YOUR OWN NEEDS:
Your market is assured here.It is difficult to go wrong provided you do the following:‑
- Ensure that you have or develop the skills required to produce the product or service you have selected.
- Ensure that you have the right equipment, materials, etc. to produce the product or service.
- Check and be sure that you can grow or produce or deliver each particular product or service cheaper than you might buy the product for ...
BEWARE, even though it may seem ridiculous, it is often possible to buy something for less, or hire someone to provide a service, than it might cost you to grow it or provide a service yourself.
IF PRODUCING A PRODUCT OR SERVICE TO SELL:
Your market is rarely assured, and when it is (e.g. contract growing), there are generally disadvantages involved. Choosing which product or service to grow or provide might include:
- Studying the demand of alternative products or services under consideration and select high demand ones.
- If you choose a crop or animal, then how suitable is that crop or animal to the soil & climate of your area. Would expensive site modifications need to be made to allow that crop or animal to be grown successfully (e.g. greenhouse installation, windbreaks, soil works).
- Could you borrow, lease, hire any other equipment you might need on a short term basis, while you have a try out producing a new crop, animal, service, etc.?
- What is the cost, and availability, of planting material, breeding stock, specialist equipment? Can you get it, and/or can you afford it?
- Consider the keeping quality of any products. Those which only keep for short periods only are more of a risk than ones which keep well.
- Can the products you might be considering growing be processed to give them a much longer life?
- Could processing be used to increase the value of the products you are considering (this is known as value adding)?
- Consider when the product or service will be sold/supplied and the likely changes in demand throughout the year.
- Consider the relationship between cost outlay & return. Some enterprises require large capital outlay before any return can be obtained (eg: Walnut orchard ... property & labour, etc. can be tied up for up to 10 years before reasonable crops start to be obtained from the trees).
- Consider the scale on which that product or service is normally grown or delivered commercially.Crops grown on large scales (e.g. Wheat) are subject to scale economies (ie: they need to be grown on large scales to achieve a reasonable cost efficiency).
- Consider how well established the particular sector of the industry your are considering is, and study what other people growing that crop or providing that service are doing. If everyone grows a particular crop or animal, or decides to provide a particular service because there has recently been a high demand ... next year may result in an over supply of that crop, animal, or service, and very cheap prices.
- Consider the likely transportation & marketing requirements of the products or services.
- Consider the time that particular crops or animals take to mature and the length of production of that particular crop or animal. Some crop bearing trees, for example, can take four or more years before you get a worthwhile crop, but will keep bearing, if well maintained, for decades.
- Consider market presentation & preferences before beginning a venture.Some products or services require a larger capital outlay to package & present at market than others.
For “new” or experimental crops or animals, determine what information is available on their culture, and what grower support (e.g. Dept. of Agriculture). Trying crops or animals that are new to your area, or are experimental can be costly if results are poor, but also have the potential to be very rewarding if results are good. Researching overseas efforts with such (or similar) crops can often provide important information.
WHERE TO GET HELPFUL INFORMATION
There are numerous government and industry organisations which can be of great assistance to anyone considering growing a new crop or animal, or providing a new farm based service. Field Days, Agricultural & Trade Shows are another good place where you can get a wealth of information & assistance if you are starting out in a new profession,or even just commencing to grow something new for your own use.
Extract from our Sustainable Agriculture Course
EBOOKS - Published by the school, written by our staff - Available in our Online Bookshop
Course Outline & Enrolment Details
Duration: 100 hours self-paced study
Learn to make farms more sustainable - economically and environmentally!
There are eight lessons in this module as follows:
1. Introduction: Scope & Nature of Sustainability
4. Land Care: Weed Control, Tree Management, Pest and Disease, Fire, etc.
5. Financial Sustainability
6. Broad Management Strategies
7. Enterprise Selection & Management: Plants
8. Enterprise Selection & Management: Animals
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