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