Making decisions to manage climate variability
Managing increasing climate variability requires making tough decisions.
Before making these decisions, it is important to:
- develop your own principles
- have a vision for your business
- have an action plan to realise your vision
- know if the business is on track
Develop your own principles
You can make decisions more easily by developing your own principles based on:
- past experiences
- intuition and gut feeling
- objective information from research
- risk management tools that help you to maximise profits in good years and minimise losses in bad years
- your vision for your farm
- your commodity and region
- other farmers’ stories about how they made their decisions
Have a vision for your business
Decisions in any business should align with the vision for that business.
Strategic decisions are shaped by your vision for the future. The vision for your farm and your aspirations are made up of:
- the purpose for running the business: what you are planning to get out of the business/family farm
- the values used to shape decisions: why you do what you do
A vision is most useful when it is created and shared with others involved in the business.
Have an action plan to realise your vision
An action plan is an important component of having a vision that can be realised.
Action planning helps you to:
- consider the options
- identify the risks
- identify the costs
- decide what steps you need to take
- focus ideas
The best action plans are documented with a timetable.
Know if the business is on track
The key indicators of whether the family farm/business is on track are:
- return on capital (equity)
- growth in equity (wealth)
- net cash flow (liquidity)
They show how the farm is going in achieving its purpose.
Net cash flow is the key reflector of tactical decisions.
Finding indicators that measure values is difficult because they are internal and hard to measure. Indicators include satisfaction, happiness and quality of life.
Sources
- Bureau of Rural Sciences 2006, Science for Decision Makers: Climate Change: Adaptation in Agriculture (PDF also available from the The University of Melbourne)
- CSIRO 2008, An Overview of Climate Change Adaptation in the Australian Agricultural Sector – Impacts, Options and Priorities [PDF 9 MB]
- Grace, P 2006, Farming in a Changing Environment, a presentation at Grains Week 2006, Institute of Sustainable Resources, Queensland University of Technology