Harm van Ree's presentation to Climate Champions at the National Workshop, Adelaide 2011
22
Weathering the weather Harm van Rees, Brooke White Cropfacts P/L Financial and production analysis for three Victorian farms
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Harm van Rees is a consultant from the Birchup Cropping Group, Victoria. Harm was invited to give a talk to the Climate Champions during the February Climate Champions National Workshop held in Adelaide, 2011.
Transcript of Harm van Ree's presentation to Climate Champions at the National Workshop, Adelaide 2011
Weathering the weather
Harm van Rees, Brooke WhiteCropfacts P/L
Financial and production analysis for three Victorian farms
Nine consecutive yearswith decile 3 or less rainfall
to
decile 10 with the wettestharvest on record
(Nov to Jan rainfall - 330mm)
Discussion topics
• Comparison of three farms in the Mallee, southern
Mallee and Wimmera
• Importance of bio-physical constraints
• Impact of the Millennium drought
• Long term production and financials - profit
• Risk management
Bio-physical constraints
Multiple year droughtSingle year drought
0
100
200
300
400
500
600
700
800
Rain
fall
(m
m)
Birchip annual rainfall (1891 to 2010) (average = 365mm)
Annual rainfall
5 year running mean
Federation drought WWII droughtMillennium
drought
(i) Rainfall
• Mallee clay loam
• pH alkaline
• Subsoil high in EC, chloride and boron
• Rooting depth: 60 to 80cm
• Available soil water: 80mm
Southern Mallee
(ii) Soils
Mallee farm background
• No-Till operation since 2003 (sold all livestock)
• 100% crop – wheat, barley, canola, pulse crops
• All stubbles retained
• Precision seeding
• Liquid and solid fertiliser application at seeding
Southern Mallee farm background
• Change over to No-Till
• Precision seeding
• 70% - wheat and barley
• 30% - pasture / chemical fallow
• Occasionally a paddock of lentils
• 2000 ewes - self replacing flock
• Stocking rate - 3 DSE/ha
• Feedlot as containment area and forfinishing lambs
Wimmera farm background
• Mainly No-till
• Chickpeas, lentils, canola, wheat, and barley
• Export oaten hay
Farm production
• Nineteen years data
• Farm size
• Paddock rotation
• Production (yield and protein)
• Inputs such as fertilisers and herbicides
• Management practices
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)
0
1000
2000
3000
4000
5000
Are
a (h
a)
Southern Mallee Farm - area (ha)
Historical production
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Yie
ld (
t/h
a)
Sth Mallee Farm Cereal yield
Cereal yield
Cereal 3yr ave
Yield and Rainfall
Income and Costs
0
50
100
150
200
250
300
350
400
450
Farm
inco
me
/exp
en
ses
($/h
a)
Southern Mallee Farm – Farm income and expenses ($/ha)
Farm income
Farm expenses
Southern Mallee Farm - expenses as % of total costs
0
10
20
30
40
50
Exp
en
ses
(% o
f to
tal c
ost
s)
Farm inputs Machinery
Labour Finance
Benchmarks: Inputs 35%; Machinery 35%; Labour 15%; Finance 15%
Livestock on the southern Mallee farm
-200
-100
0
100
200
300
400
cash
mar
gin
$/h
a
Sth Mallee Farm - cash margin for crop and sheep ($/ha)
crop
sheep
-200
-150
-100
-50
0
50
100
150
200
250
Farm
Pro
fit
/ Lo
ss (
$/h
a)
Southern Mallee Farm Profit
0
50
100
150
200
250
300
350
400
450
-200
-150
-100
-50
0
50
100
150
200
250
GSR
(m
m)
Farm
Pro
fit
/ Lo
ss (
$)
Sth Mallee Farm - Farm Profit vs Growing Season Rainfall
Farm profit ($/ha)
GSR
Decile 3-4
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
Cu
mu
lati
ve f
arm
ear
nin
gs (
$)
Cumulative profit for the Mallee, southern Mallee and Wimmerafarms
Mallee
Southern Mallee
Wimmera
Risk management• The three farms are well managed (financially
and agronomically)
• For crop production the Southern Mallee farm needs a decile 3 to 4 to break even; the Mallee and Wimmera farms a decile 2 (assuming average price)
• Livestock or another source of income, other than crops, is essential for the Southern Mallee farm
• 100% crop makes any enterprise vulnerable to a single frost or heat event; rain at harvest; poor price; crop disease etc.
Farm profit efficiency
Profit ($/ha) = 2 x (GSR + Price of wheat – 350)
-200
-100
0
100
200
300
400
500
200 300 400 500 600 700
EBIT
($
/ha)
Growing season rainfall plus on-farm wheat price
Farm profit (excl. tax and interest) in relation to rainfall and the price of wheat
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
