Pathway to the Future: An Autumn Perspective

You got through last winter! You got through this summer!

Now you must plan to get through this winter and to be viable as a business.

It is very easy at this stage to say, "Until it rains we can't plan our feed", and "We can't plan financially because we don't know when it will rain or what prices will be next year".

If you feel this way or your partner or friend feels this way, then it's time to get some help. Most people get help from someone with their planning and with just coping with the day to day grind of a drought. Helpers can listen and work with you to break the problem down into manageable pieces.

This book is to help you in your planning process BUT the first help you may need is in getting the problem in perspective.

Am I Feeding Enough Today?

The first job is to calculate the daily feed demand of your stock and compare this with the food value of the ration you are currently providing. You should do this in megajoules of metabolisable energy. Your other check in this area is to regularly weigh stock and make sure they are not losing weight.

If you're not feeding enough, you need to increase feeding to maintenance levels (assuming your stock can't afford to lose any more weight).

Have I Got Enough Feed for This Month?

Multiply daily feed ration for maintenance by 30. If this exceeds the reserves you have on hand, you need to think about either getting rid of more stock or buying more feed.

Have I Got Enough Feed for the Winter?

This is the big question. The crunch point on many farms will be when feeding levels need to increase before lambing or calving. You also need to build up pasture cover for this period.

You need to do a feed budget on a monthly basis assuming average conditions and then consider some "what if" scenarios. Now is also the time to look at mating strategies in terms of managing feed demands.

  1. Assume average pasture and greenfeed growth from 1 March onwards. Add feed reserves on hand. This is your monthly feed supply.
  2. Calculate feed demand on a monthly basis through to the end of September using appropriate feeding levels for maintenance, pre-lambing, etc. You also need to allow for an increase in feed cover on pastures from the existing level to at least 800 kg DM to allow for adequate pre-lamb feeding. This may use most of winter's growth.

If there is a shortfall, you will need to find solutions. Remember you are still well in front of the game at this stage. Options for dealing with the shortfall include:

  • Sell stock-and if so "In which order?" and "How low can capital stock numbers go?"
  • Get grazing
  • Buy feed-it is a question of getting the most cost effective feed that will meet you stock's requirements.
  • Grow more feed-applying fertiliser, using nitrogen and planting greenfeed are all options. You need to have the seed, etc all on hand ready to go. Greenfeed crops will grow more feed than old pastures.

Run some what-if scenarios and see how much extra feed is required. For instance, "What if it doesn't rain until 1 April, 15 April?" Start developing some options for these.

What Are the Financial Implications?

First, work out your expected end of June bank balance based on the feed you need to buy and the stock you need to sell, as well as all the other ongoing costs. Second, do next year's budget. This is the hard one but it must be tackled. Again, make some base assumptions on lambing percentage, lamb price, etc and then run some what-if scenarios. At this point, if not before, you should discuss options with your advisers. Remember to allow for restocking the farm and to look at all options for generating extra income, such as cropping, higher lamb weights and off-farm income.

What Financial Arrangements Do You Need?

The next step is to secure an agreement with your banker regarding financing next year's cashflow.

Depending on how your discussions with your banker went and on the outcome of your budget, you may need to review the long-term viability of the farm. Really, everyone needs to check this. Get some help from your usual advisers for this task. There is no need to make panic decisions but equally there is everything to lose if decisions are put off. Having made your plans, review them regularly and get stuck into implementing them.

Remember, keep talking to people-it makes the job a lot easier. Wrightson have recognised that many people need assistance to evaluate options, prepare budgets and plan the future.

Drought Decision-Making Principles

In developing your drought recovery strategy, it helps to have a clear set of guiding principles or a philosophy.

  1. It is usually more economic to sell stock than buy feed. This needs to be reconsidered if you are already down to less than minimum adult capital stock numbers.
  2. Don't feed any animals that will not be in productive condition next spring, ie 35-40 kg ewes are better sold.
  3. It is more important to maximise income after the drought than minimise costs during the drought. In simple terms, losing weight on ewes and cows now by under-feeding will cost far more in lost production next season.
  4. It is vital to do some scenario analyses-consider the big "What ifs". ("What if it doesn't rain until 25 April?") Solutions need to be identified for these and implemented when necessary. The corollary to this is keep reviewing your plan and considering alternative options.
  5. Use the destocking of the drought as an opportunity to consider future stocking and structural options, eg reducing cow numbers, increasing deer, switching sheep breeds.
  6. Monitor the condition of your stock and pastures regularly. In particular, you must know bodyweight of stock. Usually we over-estimate stock weights if we don't measure.

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