Farm Business

Water entitlement lease scheme

2 MAY 2019

I’m involved in an interesting project to develop a regional-based water entitlement lease scheme. The concept involves matching water owners with a selected group of irrigators, under leasing arrangements. There are opportunities for agreement where local supply chain synergies exist or there is a generational asset transfer, and price risk can be shared. Will keep you posted.


Ecosystem services

9 APR 2019

The environmental value landowners can create by improving on farm biodiversity and sequestering carbon is well known, but a comprehensive system of economic incentives for farmers to implement best practice NRM has eluded policy makers for decades.

The recent budget contained an announcement of $30 million for an ag stewardship package, intended to run a program trial across various regions and commodities, to inform the methodologies to be used in a later more comprehensive program. There’ll be a range of design challenges for any comprehensive ecosystem services payments scheme, particularly concerning measurement, accountability, governance, and how it’s integrated into emissions reduction policies, but it’s great to see some positive movement in this direction.


Food as medicine

6 FEB 2019

Doctors are increasingly prescribing food-based treatments for conditions such as diabetes, gut health issues, anxiety, depression, autism spectrum disorders and others. There is an increasing understanding of gut bacteria, mineral and micronutrient qualities in food, and their interaction with mental health issues. Maximising micronutrient and mineral content in food provides significant marketing opportunities for farmers able to produce accredited ‘prescribed’ foods, with verified nutritional qualities. Wouldn’t it be great if there were a working relationship between our sector and the medical profession to work out how to deliver these benefits?

The article below gets a little ambitious about the opportunities here, but is worth a read.

Check It Out Here


Weather insurance is developing

19 DEC 2018

I know I keep banging on about this, but good developments are happening in the weather insurance market. With increasing climatic volatility, and more farm business arrangements that require income stability, these products are going to be more critical.

In the last couple of weeks I’ve met with a couple of providers to discuss water allocation-related products, which would allow irrigators and entitlement owners to hedge their risk of very dry or very wet weather in the catchment. Allocation risk is impossible for anyone to price, but there should be a basket of rainfall metrics that can be used as a representative substitute for this risk. More to come…


Getting off the tractor

28 NOV 2018

There’s an interesting trend in agriculture occurring. The next generation of skilled farm operators are looking at new ways of getting off the tractor and running agricultural businesses that go beyond production from their own land. They’re starting enterprises branching out into management services, input supply, processing, and niche marketing. These are the operators who will be able to capitalise on opportunities and scale up their businesses quickly.

With increasing land and water asset prices, production from farming land is offering modest returns on asset value. Returns 5 per cent are being achieved by a small minority of farmers. Compared with investment in production inputs and downstream process and marketing, 5 per cent is modest. Farmers are increasingly looking to diversify their businesses into enterprises that provide a better return on investment of their capital.


China looks outwards on trade

7 NOV 2018

The Chinese Government has made a strategic decision to become a bigger importing nation and start to shift away from their focus on inexpensive manufacturing for export. They don’t want a fight with the US Government over tariffs, as they’ve got a whole lot on their plate trying to pivot their economy. The government’s focus is on reforming the economy to be driven by internal consumption and a stake in the infrastructure investment of neighbouring countries, who will shoulder more of the cheap manufacturing burden.

A major part of this is better connecting Chinese importers to global businesses, including Australian food companies. In early November, there’s a major import expo being held in Shanghai, being organised by the Chinese central government. Most of these events are organised at province level, so when the central government puts one on it’s a clear indication of a clear statement of direction. There are major opportunities ahead, but different business practices will need to be navigated by cross-cultural expertise. There’s little value in Australian businesses going in completely cold.


Grain contract washouts

5 OCT 2018

Agfarm’s recent weekly wrap included comment on crop washouts:

“This week saw continued enquiries on new crop washouts due to conditions, however not many are pulling the trigger just yet as numbers are very high with frost talk coming from all corners of Australia.”

Here’s a fantastic piece from Andrew Whitelaw at Mecardo on grain contract washouts.

Check It Out Here


Agricultural legal services

18 SEPT 2018
Some interesting comments have been reported from the NSW Law Society’s “Future of Law and Innovation Conference” about the digitalisation of agricultural legal services and how it will affect traditional partner-based, bricks and mortar arrangements. Digital communication will improve access to specialist services and cost efficiency through new delivery models. Although some disruption is likely to occur, there’ll continue to be an important role for traditional face to face services, in partnership with new specialists.

The cost of getting tier 1 legal services is enormous, and much of the expense is associated with expensive CBD real estate and bureaucracy. They are both unproductive expenses, and overprice the cost of matching capital to agriculture. The challenge will be for the university sector to prepare students for a graduate position without bricks and mortar firm support.


Protgected cropping

7 AUG 2018
Protected cropping is likely to grow significantly in the next 5-10 years. Being able to manage climatic conditions, pick niche market opportunities, and afford secure water supply is the kind of opportunity risk averse institutional investors are looking for. New technologies are making it more efficient and affordable, and renewable energy developments will also help reduce costs. Irrigation areas surrounding Griffith, Leeton and Shepparton are potential beneficiaries.


Investment trends

20 JUL 2018

With asset values continuing to climb, investors are seeking to deploy capital to intensifying land use through development projects. Nuts are a prime example of this, but we can expect to see the same trend in other horticulture crops as market opportunities develop. Proximity to air freight and fresh delivery in Asia could provide great opportunities for irrigators, if these developments can get through the maze of Australian regulation.


One for the young farmers

12 JUN 2018

A few months ago, I did an interview with Sam Marwood at Cultivate Farms about the process for farm businesses of preparing documentation outlining a business proposal to investors. It’s about 25 minutes long, and if you’ve got the time check it out here.


Pulse crops in the rotation

16 MAY 2018

Here’s a good GRDC publication on the economics of including pulses in the cropping rotation.

Check It Out Here


Testing the debt market 

25 APR 2018

The take home message of the banking royal commission for farmers: banks can also take their farm business clients for granted and take over-the-odds margins on debt. The same rationale is at play, with banks relying on customers taking a set-and-forget approach to financial services. Farmers have a great opportunity to keep their bank honest and reduce debt costs by engaging a finance broker to test the market.


Agtech hype

10 APR 2018

There are a lot of people talking about how technology is going to transform agricultural productivity over the coming decade. Certainly, some amazing innovation is occurring that has the potential to make farming more productive and more profitable. With our high labour costs and absence of subsidies, Australia should be a key testing ground and early market for new agricultural technologies.

But this is potential, not reality. A lot of useful technology has already been developed that isn’t being used on farms. Why not? It’s because people make decisions about adoption, and there is only so much capacity within a typical farm business to make the complex assessments needed that will ensure return on investment is optimised. Until there is some balance away from the whizz-bangery of the technology itself, towards the human systems required to ensure its implementation, most new products will stay on the shelf and all the VC money washing into Agtech will be largely fruitless.


Flex lease arrangements

6 MAR 2018

Many farmers wanting to lease extra land are frustrated with having to wear all production risk and pay a flat lease of around five per cent. It impedes good trading decisions when seasonal variations disrupt cash flows.

There are opportunities to better match the cost of accessing land with seasonal variation. Flex lease arrangements where lease payments are tagged to production measures have an important future. With these, good seasons extract higher lease payments, and in poor years base payments kick in. These arrangements make sure farmers have incentives to drive profitability, but don’t foster poor decisions from debt pressure.


Alternative finance

1 FEB 2018

Western Australian Nuffield Scholar James Dempster has put out a cracking report about overseas models of alternative finance for agricultural businesses, and how farmers can be prepared for accessing these alternatives if they want. For aggressive farm businesses, the structure and strategic partnerships offered by alternative finance will be appealing.

Watch or listen to his spoken report.


Progressive Agriculture goes to China

19 DEC 2017

I’ve been in China early this month. It was a very interesting experience. I learned a lot, but have much more to learn. Many things we consider to be straightforward here are not quite as easy there, but I’m aware that many Chinese people consider Australian cultural norms as unusual too. The challenge is navigating our different approaches to business for the mutual benefit that is there to be had. Chinese-born Australians will be needed to mediate between culturally different business parties.

China’s exploding economic growth combined with the interventionist role of government is a fascinating situation. There are contradictions between the incredible progress being achieved in such a short time, and the inefficiencies occurring in the government-led and organised rush. The Chinese real estate bubble must be worrying to the government and wealthy Chinese, and driving their supply side activity, but potentially at the later cost of cutting corners.


Good subscription

3 NOV 2017

If you want great farm business news and information get in behind a subscription email service from Rob McConnel at Deloitte Financial Advisory.

Check It Out Here


Ryegrass resistance

11 OCT 2017

GRDC have put out a release indicating that ryegrass resistance is increasing across NSW. The information is available here.

Check It Out Here


Multi-peril crop insurance

19 SEPT 2017

Graingrowers have put out an excellent publication on the current state of multi-peril crop insurance in Australia.
Here it is.

Check It Out Here


Private investment in farm businesses

29 AUG 2017

Younger farmers are increasingly looking at joint venture arrangements to have access to the farming scale they’re after. The Conversation article below covers the issue well, although the study quoted is a bit dodgy.

Interestingly, some banks are willing to facilitate these deals to secure new debt finance clients. ANZ Bank has been having discussions with the sector about how external funding might work for large family farms and Will Rayner, Chief Financial Officer at Rural Bank, has also done a Churchill Scholarship investigating this question.

Check It Out Here


Understanding the Chinese market

15 AUG 2017

Last week, I attended a forum organised by Chinese language media company Australian Insider, based in the Parliament House press gallery. They’ve got nothing to do with spreading Chinese influence in Australia – it’s all about facilitating business. A new business association called the Australian Premium Food Export Association was announced there, whose objective is to better connect Australian food producers, export service providers and overseas buyers. The emphasis in the initial stages is linking Australian and Chinese food business opportunities. I’m involved, and we’ll be looking to provide networking and educational opportunities for Australian producers considering new market opportunities. Please give me a shout if you’d like to know more.


Food export to China

1 AUG 2017

I’m doing a couple of things with a Chinese language media company Australian Insider. It’s run by the only Chinese language journalist in the parliamentary press gallery, Jethro Lyu. Recently, Jethro did a video interview with low-key ACT Liberal Senator Zed Seselja that attracted 20,000 views. Yes, 20,000 Chinese people watched an interview with an inconsequential Australian politician. These aren’t your reality tv fans either; they’re 20,000 Chinese businesspeople who are obviously getting limited information about our business and political environment. There are great opportunities for Australian producers looking at new export opportunities to promote their products to a (very large) niche audience. If anyone is interested in attending Australian Insider’s premium food forum at Parliament House in Canberra on 8 August, please let me know.


Craig’s interesting rice crop

19 JUL 2017

Twitter legend Craig Steel has been sharing his story of a super-late sown YRK5 rice crop. He wrote:

“Did everything wrong, as we were not planning on putting rice there when we harvested the Canola. When I decided to sow it I was worried about floating stubble and drainage in the unlasered paddock, so I pre-irrigated before sowing.

This put sowing back a couple of weeks. I sowed it on the 15th December into moisture, but it dried too quickly and very little germinated. Sown with my airseeder. I should have sown straight after harvesting Canola and flushed it straight away. At the start of January I flushed it to get it germinated and it came up ok. I put permanent water on in February.

Only sprayed with roundup before sowing and again with Barnstorm for barnyard grass before permanent water. Never had a plane over it. Spent little on the crop, only 250 kg/ha urea at sowing and 2 ground sprays. We probably only spent about $400//ha plus less than 10 of water. If you value the water at market price that’s another $800.”

The six tonne per ha yield was profitable. Well done Craig!


Tax time

4 JUL 2017

Robinson Sewell has put out some interesting information about maximising opportunities presented by farm tax deprecation arrangements.

Check It Out Here


Hemp update

20 JUN 2017

The Australian hemp industry is at the cusp of a growth phase. Medicinal marijuana is capturing a lot of attention and will be lucrative for those prepared to invest in the security systems and go through the onerous regulations. However, growing low THC hemp for seed food production has finally been legalised and significant opportunities should come from this.

Because hemp has been a politically sensitive crop, there’s been inadequate agronomic research on the crop in Australia. For those interested there’s a link to a reasonably old NSW DPI fact sheet below. Prospective growers should also be aware that seed availability, and downstream processing and marketing need to be better organised to provide a profitable option for growers.

Check It Out Here


Strategic tillage research

 6 JUN 2017

Here’s an interesting piece from GRDC on a study done by Mark Conyers at CSU on strategic tillage options. He outlines the circumstances under which tillage is justified and the period tilled soils took to recover.

Check It Out Here


Cottonseed reducing cattle emissions

18 MAY 2017

Feeding cattle cotton seed can significantly improve feed conversion and reduce methane emissions. Here’s an MLA article on the issue:

Check It Out Here


Farmers capturing farming opportunities

19 ARP 2017

There are interesting opportunities emerging for Australian farmers to start value adding their products within Australia, and exporting this branded product into Asia. These are starting to take shape in China and will spread into large parts of Asia as their middle classes start to grow, aided by globalisation and technology. The Australian government has done well to run the Farming Together program to help new and existing farming co-operatives get a share of these opportunities.

Check It Out Here


 Canola planting information

5 ARP 2017

With prices as they are, there should be plenty of canola going in this year. Rohan Brill from DPI at Wagga has done a timely piece on optimal sowing times for different varieties, and planting the crop into high N situations. No information on southern irrigated systems unfortunately, though it’s still useful. The article is here.

Check It Out Here


 Do you own the tractor you bought?

20 MAR 2017

An incredible/disturbing debate is emerging about the rights of farm equipment owners to choose who repairs their equipment. In partnership with Apple, John Deere is attempting to lock up access to the diagnostic software required to make even the simplest of repairs to these complex machines. And charge through the nose, naturally. They argue that farmers don’t actually own their tractor, but have an ‘implied licence’ to operate it. What a crock of shit. And it’s a false economy anyway, only sending customers to manufacturers who aren’t trying this nonsense, or convincing them to stick with older meat and potatoes engineering.

Check Out the Story Here


Cotton price drivers

5 MAR 2017

Eliza Star, Bidgee Valley Marketing Services Officer with Queensland Cotton, explains current cotton price drivers. “Cotton prices remain strong, driven largely by a stand-off between spinning mills’ short positions and speculators’ long positions. The long speculative positions continue at record levels as they await the expiry of both the May and July 2017 contract months when a large portion of the trade (mills) will need to square their positions. Expect volatility in this period. The strong prices have resulted in attractive cash price for growers in recent months with prices up to A$540/bale paid. Chinese Reserve auctions are again set to commence in 2017, with a start date of the 6th of March, with an expected that 2.5 million ton to be sold over the following months (down from 2.6 million in 2016). This should see the Chinese ending stocks coming in at around 7.6 million tons, after the peak was reported in 2014 at around 14 million tons – a welcome sight for many growers.”


Making good farm expansion decisions

16 FEB 2017

The Holmes Sackett team have moved into the Progressive Agriculture office complex and have timed the occasion with a good piece on farm expansion

Check It Out Here


We’re helping with farm succession planning

1 FEB 2017

Progressive Agriculture is beginning a collaboration with Peppin Planners to assist with delivering their succession planning services. Using the effective processes Peppin’s Rob Brown has built over many years, I’ll be working with clients to guide them through the challenges of farm business transitions. If you’re looking to put in place a successful family wealth plan, or have clients who might benefit from one, please get in touch.


Competitive finance

10 JAN 2017

Banks take customer loyalty for granted and frequently set uncompetitive rates for long term farm business clients. Farmers should speak regularly with a reputable finance broker about the competitiveness of their bank’s lending rates. Of all business costs it’s the easiest way to save money.

A good option to reduce lending costs is to offset bank loans against Farm Management Deposits, a strategy which is now permitted after legislative change. Banks don’t want to promote this opportunity because it reduces the amount of borrowings they can charge interest against, so clients need to raise it with their lender themselves. Rural Bank was the first to promote an FMD offset product and hopefully others will follow.


Seven habits of a financial winner

18 DEC 2016

Ian Robinson has written a good piece about business fundamentals, particularly where finance options are concerned. This is worth a read when on the header or needing to excuse yourself from inlaws.

Check It Out Here


A great professional development opportunity

29 NOV 2016

Progressive Agriculture and Peppin Planners at Deniliquin are looking to collaborate on a couple of things. One is to provide a professional development experience that will help entrepreneurial farmers reach their objectives. It will provide board-style farm business decision making, risk management expertise, investor readiness capabilities, networking opportunities and an overseas study tour to look at innovation and agribusiness investment in the US. Please flick me an email if you’d be interested or forward the opportunity to someone who might.


 New hiring platform – AgDraft

7 NOV 2016

Ella Shannon is a young agricultural entrepreneur who has set up an innovative new way for finding farm labour. AgDraft is an online marketplace where farmers can post jobs to an extended network of workers – either full-time, casual or seasonal – that are effectively reference-checked by their peers. It’s a good idea and can help businesses struggling to find the right people through local networks.

Check It Out Here


How will farm businesses manage drought risk in the future?

24 OCT 2016

Australian governments of both colours would like to get out of providing drought assistance. Many farmers don’t like it either, as it restricts their opportunities for expansion. The alternative often put up is multi-peril crop insurance, but whether it can stack up as a drought management tool is hard to fathom. It works in the US because the government underwrites it massively. Whether it will be priced commercially here, without government support, is questionable. The other difficulty is that a lot of farmers and politicians have a tacit understanding that in tough times the government will help out – there’ll be payments available to make sure that no too many farms go under. This makes it hard to incentivise enough farmers to take up insurance of this kind, leaving us in a continuous policy trap. Here is a link to Australia’s main MPCI option.
Check It Out Here

Farm advisory boards

9 OCT 2016

I’m pretty passionate about seeing highly professional decision making in agriculture. Nobody can pick the weather or prices, but if the decision making process is right, it’s more likely to be profitable. One way to do this is to adopt a company board approach to strategic decision-making. GRDC has put out some good information about farm advisory boards here.
Check It Out Here

Grain stats

1 SEP 2016

I’ve come across some pretty interesting stats from the Australian Export Grains Innovation Centre on the volume and value of Australian grain product to our major export markets. Have a look by clicking here.
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Check It Out Here