Making decisions to manage climate variability

Managing increasing climate variability requires making tough decisions. These decisions are difficult because of risk and uncertainty, unknowns, cost considerations, and social considerations.

Before making these decisions, it is important to:

 Useful guides and information:

 

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

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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.

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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.

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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.

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Maximise seasonal variability opportunities through planning

Seasonal risk can be managed successfully by implementing reliable and robust exit strategies. 

These strategies need to be tailored for individual businesses and may include:

  • the sale of surplus animals 
  • decreasing the area of crop 
  • agistment and supplementary paddock feeding
  • confinement feeding (in most mixed farming systems)

Increasing stocking rates (i.e. improving feed utilisation) depends on the ability to manage seasonal risk through a planned process, such as reducing property grazing pressure. 

The result can be a more profitable grazing enterprise which is still sustainable and fits within the labour profile of the property.

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A 3-step guide to managing the impact of climate - from Meat and Livestock Australia

There are three steps to managing the impact of climate, which will help reduce the greenhouse gas emissions footprint of your property and can also have positive benefits on productivity and risk management.

  • Step 1: Monitor regularly. There are five things that you should be monitored, and projected forward: soil moisture, pasture growth, feed demand, feed reserves like grain and hay, and medium and long-term climate outlook.
  • Step 2: Set triggers for action and develop flexible strategies to respond. The triggers that are set will be unique to each farm business and should be based on the level of risk you are prepared to take, flock or herd structure and the environment in which the enterprise operates.
  • Step 3: Put the plan into action, and be decisive. The final step is to carry out the plan and make decisions early if trigger points are met. Producers who consistently perform well tend to have a significantly higher profit from livestock trading. They monitor the business and make decisions early.

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Using climate and weather data objectively - from Grains Research & Development Corporation

Climate and weather forecasting continue to improve as the Bureau of Meteorology develops and refines new technology and modelling. Growers and advisers can consult a range of information to interpret emerging trends that can help with seasonal planning and decision-making.

  • Look for consistency between different outlooks and forecast models. If the majority point to a similar outcome, then it is more likely to occur.
  • Seasonal forecasts alone should not be used to make firm decisions.
  • In southern Australia, seasonal outlooks are most accurate when made in winter and spring. They are least accurate when produced during autumn.

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A 2-step guide to managing climate - from Sugar Research Australia

There are three steps to managing the impact of climate, which will help reduce the greenhouse gas emissions footprint of your property and can also have positive benefits on productivity and risk management.

There are two important considerations for growers in managing for climate:

  • manage the timeliness of planting and harvesting operations to optimise the beneficial effects of climate and minimise the adverse impacts. Strategies include: timeliness of planting and harvesting, re-evaluating the use of chemical cane ripeners, irrigation and green cane trash blanketing.
  • make better use of climate and weather forecasting tools. Strategies include: using the most reliable weather forecast available, using seasonal forecasts for more than three months in advance, and watching trends in the Southern Oscillation Index (SOI).

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Farm risk management in a changing climate - a paper published by ABARES

This paper examines the risks of climate variability and climate change to agricultural production.

In particular, it discusses risk management as the most effective tool for agricultural producers to manage climate-related risk.

Two risk management options - decision support systems and financial products, such as insurance - are reviewed in this paper, both for their efficacy in managing current risks of climate variability, and for their potential role in managing future risks of climate change.

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Climate Outlooks explainer video - Bureau of Meteorology

A short video released by the Bureau, explaining how you can best interpret its climate outlook information to help in your decision-making. Shows you the odds of a weather event occurring, enabling you to plan ahead and make more informed decisions.

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