farmers adapting to climate change: financial and production analysis for three victorian farms -...
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Farmers adapting to climate change
Harm van Rees, Alexandra Gartmann, Brooke White, James Laidlawfor the BCG
Financial and production analysis for three Victorian farms
• 2001 to 2009 - drought years
• 2010 - decile 10 withwettest harvest on record(330mm)
Discussion topics
• Southern Mallee farm (Victoria)
• Long term production and financials analysis
• Importance of bio-physical constraints
• Impact of the Millennium drought
• Risk management
Southern Mallee farm background
• Change over to No-Till
• Precision seeding
• 70% - wheat and barley
• 30% - pasture / chemical fallow
• Occasional paddock of lentils
• 2000 ewes - self replacing flock
• Stocking rate - 3 DSE/ha
• Feedlot
• pH alkaline • Subsoil high in EC, chloride and
boron• Rooting depth: 60 to 80cm• Available soil water: 80mm
Soils
Bio-physical constraints
Agronomic
• Weeds• Herbicide resistance• Crop diseases• Soil less suitable to canola and
pulses
Farm financialsINCOME• Crop and livestock
COSTS• Inputs (chemicals, fertiliser, seed, sheep
husbandry, rates, office, insurance)• Machinery (depreciation, fuel, freight, repairs,
contractors)• Finance (land rent, machinery, interest)• Labour (owner drawings, employees)
Historical production
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0Sth Mallee Farm Cereal yield
Cereal yield
Cereal 3yr ave
Yie
ld (
t/h
a)
Income and Costs
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20080
50
100
150
200
250
300
350
400
450
Southern Mallee Farm – Farm income and expenses ($/ha)
Farm incomeFarm expenses
Farm
inco
me/
expe
nses
($/h
a)
Southern Mallee Farm expenses as % of total costs
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20080
10
20
30
40
50Farm inputsMachinery
Expe
nses
(% o
f tot
al c
osts
)
Benchmarks: Inputs 35%; Machinery 35%; Labour 15%; Finance 15%
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
2008-200
-150
-100
-50
0
50
100
150
200
250
0
50
100
150
200
250
300
350
400
450Farm Profit vs Growing Season Rainfall
Farm profit ($/ha)GSR
Farm
Pro
fit /
Los
s ($
)
GSR
(mm
)Decile 3-4
20002001
20022003
20042005
20062007
2008-500,000
0
500,000
1,000,000
1,500,000
2,000,000MalleeSouthern MalleeWimmera
Cum
ulati
ve fa
rm e
arni
ngs
($)
Cumulative profit for the Mallee, southern Mallee and Wimmera farms
Risk assessment• Crop production - Southern Mallee farm needs
a decile 3 to 4 to break-even; the Mallee and Wimmera farms a decile 2 (assuming average price)
• Livestock or another source of income is essential for the Southern Mallee farm
• 100% crop makes any enterprise vulnerable to a single frost or heat event; rain at harvest; poor price; crop disease etc.
Main messages• Understand the bio-physical constraints of the
enterprise
• Have a good grasp of the financial situation
• Consider the operators skill and capability
• Owner’s attitude towards risk
• Availability of labour
• Priorities for family and lifestyle