Low Risk Farming
About the Low Risk Farming Initiative
Effective risk management is vital to maintaining farm sustainability and profitability for growers in the face of climate risk and rising production costs.
The Grains Research and Development Corporation (GRDC) gathered a team of experts through the Low Rainfall Collaboration project to develop a range of packages to provide growers with the best advice from a whole-of-farm approach to the many challenges that will be associated with grain production and marketing. Participants in the workshop, and contributors to this document, included senior researchers, private consultants, advisers, farmers, bankers and marketing experts.
The ‘2012 Farm Gross Margin and Enterprise Planning Guide’ is designed to help farmers work their way through a decision-making process that will lead to the best possible outcomes for the 2012 cropping season.
Technical, financial management and marketing information designed to be of value in developing low risk strategies to minimise up-front costs without limiting productivity and potential profit or increasing the risk of natural resources damage are highlighted in the guide.
Guidelines are by nature general and so expert local advice should be sought before any of them are implemented in a farm business.
The GRDC would like to acknowledge the input provided by the workshop participants and in particular the contributions of Geoff Thomas, Project Manager, and Nigel Wilhelm, Project Leader.
2012 Farm Gross Margin and Enterprise Planning Guide (5.1MB PDF)
- Compare the gross margin profitability of enterprises, paddocks and rotations
- Make the best decisions
- Compare the sensitivity of profit of enterprises to a change in production, costs and price
That grain farmers face many challenges is an understatement. Seasons, mice, low prices and wet harvests are just some of these. Yet for many, recent yields have been good with good financial returns.
In the good times, farmers often neglect the opportunity to optimise their profit and manage risk so that they are well set up to weather the inevitable poorer seasons and lower prices. Currently, overall prospects for farming are quite good and we can expect to go through a period of growth. To benefit will require a keen eye on the farm business.
Change will no doubt continue and there will be the need to adopt new technologies and to increase the effectiveness of existing operations to reduce costs. It will also be necessary to consider different ways of managing risk whilst maximising profit to improve total farm income. This will involve close examination of the key drivers of both profit and risk.
This publication, 2012 Farm Gross Margin and Enterprise Planning Guide, will help farmers and their advisers compare the gross margins of enterprises, paddocks and rotations and their respective sensitivity to changes in production, cost and price to ultimately make the best decisions to maximise the chances of a successful 2012 season.
We know that each farmer and their farm business is different and so a ‘one size fits all’ approach will not work. The templates and sensitivity analysis provided in this guide allows you to feed in your own figures and ask the ‘what if’ type questions appropriate to you and your situation. The guide is to help inform your decisions and compare options – it does not make the decisions for you.
2010 Farm Gross Margins Guide
Success and Survival is about Making Profits while Reducing Risks
Farmers have been seeking guidance for years as to how they can improve the fit of the various components of their farm operation to improve profitability and reduce risk.
In the past a lot of attention has been placed on agronomic factors with a concentration on varieties, rates, seeding dates, row spacing type work. Similarly with livestock we have seen work on grazing cereals and other crops. While all of this has a place, farmers are now seeking more and more advice on how they fit the various technologies together to best effect. That “best effect” no longer just means production as it often did in the past – farmers now see profitability, better targeted inputs and management of risk as the major drivers.
Gross margins are a useful tool to compare options on the farm and that is where the Farm Gross Margins Guide produced by Rural Solutions SA, SAGIT and the GRDC comes in.
Not only does it provide it provide gross margins for most crops and livestock enterprise across a range of rainfall zones, it provides a template and the necessary information for farmers to make their own calculations.
It is a ready reference which has a place on the desk of every farm business and adviser.
We hope that you will find it valuable in your decision making.
Due to the large size of the Farm Gross Margins guide it has been divided into four parts which you can download below
Improving Farmer Capacity to Manage Profitability and Risk
Farmers have been seeking guidance for years on how they can better fit the various components of their farm systems together to improve overall profitability and risk management.
One response by the GRDC has been to support a pilot project using a whole-farm, case-study approach, which brought together past experiences and activities and involved farm business experts, consultants and farmers.
The aim of the project was to evaluate adaptive farm systems using a case-study farm and then to develop simple approaches that farmers can use to help their decision making, especially in the face of more uncertain seasons and profit margins.
The pilot was conducted through BCG, at Birchip, Victoria. The Birchip area in the southern Mallee is characterised by a mix of heavy and light soils and had just experienced an extended period of the lowest growing-season rainfalls (GSR) on record.
2009 Planning Guide for Farmers with Limited Finances (1.03MB)
For those businesses with sufficient resources to carry on in 2009 with relative freedom to operate, the 2008 guidelines and options are still relevant, providing any financial data is updated to current levels. These guidelines have been developed to help farm businesses plan a low-cost/low risk-strategy designed to return a modest profit while maximising the chances of the business continuing. The aim is to minimise costs and risks, not maximise profit by carefully considering how much the business can afford to lose, rather than what it can potentially make. This approach will probably mean reduced profit potential, should 2009 prove to be a ‘bumper’ season, but financially constrained businesses simply can’t afford the costs and risks of a full program.
2008 Planning Guide for Low Risk Farming (1.5MB)
The ‘GRDC 2008 Planning Guide for Low-Risk Farming’ is designed to help farmers work their way through a decision-making process that will lead to the best possible outcomes for the 2008 cropping season. It was developed following a November 2007 workshop organised by the GRDC-funded low rainfall collaboration project. Participants in the workshop, and contributors to this document, included senior researchers, private consultants, advisers, farmers, bankers and marketing experts.
Agronomy after the drought - 2007
The information in this publication is based on presentations and discussions at a GRDC “Recovery After the Drought” cropping workshop run after the 2002 drought but has been updated with the latest knowledge available in the topic areas covered. It is designed to be relevant to growers cropping a wide variety of soil types in districts across NSW, Victoria and SA, so it contains mainly general principles and guidelines.
Agronomy after the drought - 2002
The following information is a summary of the presentations and discussions delivered during a GRDC coordinated "Recovery After the Drought" cropping workshop in Melbourne on 13 January 2003.
Research update papers
2008 GRDC Planning Guide for Low Risk Farming - Research Update paper (Southern Region Adviser Updates)
The following strategies designed to minimise up front cropping costs without limiting productivity and potential profit, have been selected from a comprehensive “Planning Guide for Low Risk Farming – 2008”. This Guide was developed following a November 2007 workshop organised by the GRDC funded low rainfall collaboration project. Participants included senior researchers, private consultants, advisers, farmers, bankers and marketing experts.
Executive Manager Regional Grower Services
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