So the Drought rolls on…..

I wrote a post about the drought last year (Drought – Just my thoughts) and looking back thinking hasn’t changed too much, just it is now more dire.  I would like to now take an in depth look at an approach to drought/climate variability.

The way I see this is that you don’t need to be a believer in “Climate Change” (I choose to, no judgement either way) to actively manage a changing climate.  As a farmer we can only manage what we are faced with, there is very little we can do to control the weather, economic climate or even consumer demand, we just need to manage our way through changes.  We use a combination of making decisions that take us towards where we want to go and avoiding business crippling risks.  It can be very difficult to use this strategy if you first; don’t really have a clear direction or second; haven’t made a clear decision to arrive at where you are.

I would like to focus on the second part of that statement first.  Why do we call “business as usual” no decision in a changing climate?  Business as usual in an ever changing climate is going against the grain and the flow of Mother Nature and therefore needs to be acknowledged as a poor decision.  The main point here is that if you don’t acknowledge this as a decision, when you find yourself in a dire situation you have no idea how you got there and then it is really hard to work out how to get yourself out.  I’ll give an example below:

No decision:

• Mid 2017 and shearing comes along, bit dry she’ll be right no need to change.
• End of 2017 crutching comes along, still very dry stock really are sliding backwards, better start feeding, most other people are.
• Mid 2018 shearing again, ewes doing it really tough, country bare, feed getting hard to come by and expensive, we just have to keep going this drought will break.
• End of 2018 we didn’t get many lambs really sick of feeding, there is no option we have to save our genetics because it will be too expensive to buy back in after the drought breaks.
• Mid 2019 another dry shearing, very few ewes in lamb even though we fed them well. Feed really expensive now and most of our loans are maxed, people have had enough of feeding stock.  There are no options though, as a livestock farmer you must hang on to your stock, that is the choice you make.
• End of 2019 not many sheep left to crutch as ran out of money to buy in adequate feed, hardly any lambs and the thought of another dry year ahead………………how did we get here? Surely it has got to rain soon?  Why doesn’t the bloody Govt do more to help us?

So lets try and change this outcome, giving someone who is in this position a way through and a future direction.

• First step is for those in this predicament to seek outside advice, it is too difficult to solve this when you are right in the middle of this looming disaster, too much pain.
• Then we just work through what resources they have currently, money, grass, livestock and people.
• Then work out just what outcome they want out of this, is the family committed to stay on this farm? What are the most important components of this business?
• From there you can generate some options.

*Example:

• The family in this example seek advice from a grazing consultant as they realise they need someone with a much broader knowledge base than just livestock or business.
• The advisor very quickly works out that they have no grass, no money and very few saleable stock, as most are too light.
• The family love being part of the community and have the next generation really keen on a future in Ag. The house they live in and their land has a lot of history and significance for them, they have strong roots here and don’t want to leave.  Up until the last 18 months, they have had very little debt and now they just seem snowed under and spiralling out of control.
• Important points – The land is the most valuable asset and the people are the most important. These 2 can’t be compromised.

Options:

• Sell all stock after feeding to put back in healthy condition – how to cashflow?
• Identify top 20-30% of ewes and sell balance, again feeding until healthy – how to cashflow?
• Slaughter all stock on farm to minimise costs going forward.

In order to maintain the mental health of the people the slaughter option was dismissed, so then it was a mater of working out the cashflow of feeding up and selling all or a portion of the sheep.  Options to achieve this – contact rural financial counselor and enquire about innovation loans to build confinement feeding sites.  Then approach bank and or stock agent with a plan to feed to sell, so requiring short term finance.

After going through these processes it was just a toss up about how many to sell and after looking at future budgets and the costs of feeding it was easy to work out then when there is grass in the paddocks, regardless of animal price you can always identify animals that will make profit.  When there is no grass, there is no business, it is that simple.

In closing I would really like to reinforce the point that for our livestock industry to bounce back well after this drought then sell as many animals now that you need to so that the land and importantly the good livestock farmers (you) are in good shape to rebuild when the season turns.  The people, the farmers, are the single most important asset to the Livestock sector.

*Please remember that this is only an example, I’m not suggesting it is where people are at, nor is it based on any actual situation.