Future Farm Business (FFB)Future Farm Business (FFB)Future Farm Business (FFB)Future Farm Business (FFB)A A participatory action learning workshopparticipatory action learning workshop

Amir AbadiFuture Farm IndustriesFuture Farm Industries Cooperative Research Centre

The Challenge

Can you build and run a sustainable and resilient farm business?

You need to decide on yearly allocation of land and input like fertilisers to:A l lik h t d l l t lik l– Annual crops like wheat and canola or annual pastures like clover or

– Herbaceous perennials like lucerne or saltland pastures; or

– Trees for wood, CO2 Sequestration, biomass, oil; or

Deep drains to reduce water tables– Deep drains to reduce water tables

Must consider past farm records of climate and commodity prices (markets)

Bear in mind risks and uncertainties of climate, markets & innovations

Manage the stocks and flows of cash and credit as well as assets and liabilities

Mind the ground water and manage hydrology if you can to arrest or delay damage to soils and loss of productivity

Future Farm Business Issues Adjusting the production systems and mix of crops and livestock to

– Ever changing commodity prices– Deciding if recent price/cost trends are here to say– Land use sequence and choice of crops, pastures and rotations– Cost of inputs and adjusting to rising price of fuel, fertilisers and herbicides;

Climate Change– Higher risk and variability brought on by known and predicated climate

change; Choice of innovations – finding, evaluating and deciding the best way of

adopting:T i b lt f d bi d i t d d d t lik– Trees grown in belts for woody biomass and associated end products like energy, oil or wood;

– Trees in block plantings for reafforestation– Trees for permanent carbon sequestration;

Perennial pastures like Lucerne– Perennial pastures like Lucerne– Saltland pastures on saline land

Management of farm’s hydrology and movement of water– Engineering solutions like drains or plants for managing recharge and

discharge;discharge;

A Participatory Action Learning Environment

Learning from self, peers and presenter Engaging - happy minds learn better

Learning Environment

Engaging - happy minds learn better To learn how to make good decisions Lets participants choose their responses

N d t ith i f t k l d Need to cope with imperfect knowledge Combination of rivalry and co-operation Software synchronises scenarios and choicesy Software checks and verifies adherence to rules Data demonstrates key concepts Game offers teaching moments Game offers teaching moments No one right answer – participants may

– share their opinions and discuss reasons for their choices– discuss reasons for their choices

See the farm layout and its features

including the areaincluding the area and elevation of each of the nine

paddocks (fields)paddocks (fields)

Each tile gives a summary of how a paddock is being

managed in any given yearmanaged in any given year. It also shows the returns

from the field in that year. Clicking the tile allows you g yto change its land use for the

forthcoming year.

Each season ends with a display of summary report of land use l t d b th f th t diti f th l d t thselected by the grower for that year, condition of the land at the

end of the season, profit and loss, and the closing equity.

Climate and market outlook for the forthcoming season combined with summary tables of past records of rainfall, prices and land use help the y p , p ppartners decided what to grow, where to grow them and estimate how much they expect to earn for the year..

Market outlook for all the crops ( d li t k)

Analogue years give some

(and livestock) provides an

indication of the revenues that

indication of the kind of season that could be

revenues that can be generated

from each enterprise.

facing the grower

e te p se.

Chart s show how crops and pastures

respond on different il t i t lsoils to incremental

changes in inputs (like fertilisers) and

rainfallrainfall

Good managers use records to get a realistic sense of the potential of the resources at their disposal to generate cashflow and profit. Partners use this

d t h k hi t i lrecords page to check historical prices, past rainfall, water tables

(salinity levels), preceding land use sequences and key financialsequences and key financial

indicators like equity etc.

Land use choices (i.e. choice of l dannual crops and pastures, trees

and drains) will affect the amount of water that is recharged into the

water tables On some farmswater tables. On some farms, significant rises in water tables

may, over time, affect the quality of the land This is especially theof the land. This is especially the case in WA where on some farms paddocks at the lower parts of the landscape can suffer from salinity.p y

Clicking a tile allows for

The choice of crops on each field is easy by using the pull down list. Then comes the

change of land use of the

field.

choice of the amount of inputs to be applied (e.g.

fertiliser). On the right hand side the revenues costs andside, the revenues, costs and gross margins of the selected

land use are displayed.

You can manage the field in an alley configuration with a

combination of trees and agriculture. For instance

choose oil mallees in belts with wheat in the inter-rows.with wheat in the inter rows.

It i ibl t i t llIt is possible to install drains in fields that are

next to the creek. Installing drains comes g

at a cost and may if done at the right time

and place reduce water tables and preventtables and prevent

salinity and waterlogging.

Forward contracts for grains provide opportunities for managing the risk associated with commodity prices. However, this can also increase risk if d t d l l T t iti il bl t h d th i fadopted carelessly. Two opportunities are available to hedge the price of

grains. The first is prior to seeding and the second opportunity to take out forward contracts is during the growing period

Th fi i l i t fThe financial impact of plans and decisions are shown. The state of the

farm’s assets and liabilities and the cashflow of the

business are shown in detail in this dedicateddetail in this dedicated

screen.

Key indicators of the performance of the farm are appended to the records page as the workshop proceeds. This page displays of summary report of land use selected by the grower for individual years, condition of the land at the end of the season, profit and loss, and the closing equity. The chart provides a quick graphical overview of the variation in profit and loss and change in the state of assets and liabilities.

S stems Approach in FFBSystems Approach in FFB Mimics running a simplified rural business over 25 yearsg p y

Integrates biological, hydrological and economic factors

Limits time, credit, rainfall and land use choice

Has inflation and cost price squeeze trends built in

Includes changes and chances of climate and markets

Gives choice of enterprises for scarce resources

includes farming system drivers – interactions like: – N-Fix and disease break in rotation of cereal and break crops

– Shelter and competition effect of trees in the proximity of crops

Woody perennials in the broadacre farming systems of southern Australiafarming systems of southern Australia Decide where, when and how many hectares of each tree type

to growto grow. Consider:

– Water use of trees: interaction between trees and ground water;Prospects for marketable products like– Prospects for marketable products like

• Wood• Biomass• Sequestered CO2 and permits• Oil

– Competition and shelter benefits of trees– Opportunity cost of land - profitability of trees compared to crops

lik h tlike wheat– Effect on cash flow, peak debt and payback period

Credits and Ackno ledgementsCredits and Acknowledgements

I thank the following contributors very much for making FFB what it is today.

– Quenten Thomas– Don Cooper– Ross Kingwell

D id P ll– David Pannell