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BUSINESS PLAN IN ACTION

Bruce Thompson

"Eromross" Sebastopol. 2666

I am part of a family-run farming business in the Temora area. Together with my parents and my brother, we grow mixed grains and run a wether sheep enterprise. Since 1970 my parents have traded in their own right, with my brother and myself coming into the business in the early eighties. The emphasis from 1970 was to clear the farm debt and buy out partners. This would then give us a solid base from which to expand. In 1987 and 1993, more land was purchased taking us from 1103 to 2406 ha.

The long term goal is to have a property each for my brother and myself supporting a good standard of living, as well as supporting our parents in retirement. This will be achieved more quickly while ever we run the business together, giving us a greater borrowing power, all having input into decisions and jobs, plus reduced costs from operating one farming plant. We plan to pay off the current debt in another eight years. Like all strategies, they will be adjusted as different circumstances arise.

The main tool that monitors the operation is the budget. Covering twelve months ahead, it is discussed daily, updated monthly, and reviewed every four months with our farm management consultant. As soon as we have completed the budget, we know our estimated position at the end of the month as well as at the end of the year. It is then we set our strategies for that period.

The business is dollar driven and flexible. At this stage the farm is 66% crop, 33% stock. If stock ever returned more per hectare than crop, we would sow down more pastures and reverse the ratio. Each enterprise complements the other; we do not expect to go 100% in either direction.

Cropping returns 80% of the income, taking up 90% of the time. With the gap closing between costs and returns we, like many farmers, have kept this apart by increasing yields. The last 10 years has seen a big increase in the science side of farming while, being practical, we try not to restrict the crop in any way. We try to provide the correct population of plants, sufficient nutrient, remove weed competition, move soil to a more neutral pH with lime, sow and do the above operations at an optimum time. At present we are checking plant populations, nutrient levels, weed control, so we can pick up at the earliest stage whether the crop will reach its target yield. The target is a yield the crop has previously achieved.

The home base being in good order has allowed us to spend most of our time developing the new land to a standard we set. In 1987, land purchased has taken five years to bring up to home base standards. With land purchased in 1993, we are nearly where we want to be after three years.

To achieve the correct timing of operations, we use contractors where necessary. We find contractors beneficial because they are professionals using their own modern equipment. This allows us to operate without the need for casual or permanent labour. We engage harvesting, spreading, spraying and aerial contractors who are often more efficient at the particular operation than ourselves. From these people we see and adopt the latest ideas and get the jobs done at the optimum time.

Stock returns 20% of the income for 10% of our time; a wether enterprise involves purchasing lambs at four months of age, shearing five times and selling at five years of age. Nearly all of the work is done under contract (shearing, vaccinating, ropelling). Only the lambs are separated and looked after more intensively, making sure they grow out. Any paddock not under crop has a lucerne-based pasture. The mature sheep are run together in varying mob sizes depending on grazing pressure needed. This will vary from 25 to 150 head per hectare.

Marketing has as much importance, we feel, as growing the product. We often sell product before and after it has been harvested. This is done to minimise the risk and help us make the budget. At the moment we are trucking off grain sold in March for July delivery, and have 35% of next year's budgeted wheat crop already sold; 40% of the upcoming canola crop is contracted as well. We will store grains that we consider have the most to gain, levelling out wild fluctuations in income or just carrying over to the next financial year.

For the past four years the wool clip has been sold up to five months before shearing. With a traditional high in the market around March, starting in early January allows us to get a feel for the market, getting prices in at different times, finally locking in on a favourable contract. The buyers will now pay today's price for wool delivered later in the season. Shearing takes place in July, with an August delivery and payment on the contract.

There are a lot of information sources available on all aspects of the farm business, with many professional people available for advice. We seek the services of consultants, accountants, bankers, grain agents, chemical agents, weather services, market intelligence, newsletters, faxes, but in the end the decision is ours to make from the information at hand.

Our accountant in the early nineties restructured our business, turning around a $54/ha tax bill into a refund situation. This tax minimisation then allowed us to buy a larger, more modern plant. Thus, when the next expansion took place the equipment was already in hand to do the job. Older, smaller equipment would leave us more vulnerable to breakdown, and a lesser part of the crop going in under ideal conditions. This is how the professional people help our business.

Keeping a high standard of business ethics, plus honouring the decisions we make is a necessity. This, in turn, allows us to freely go back to the people we deal with in the industry and also to establish new relationships.

Summary

Keep track of the big picture - prioritising

All have input - share the jobs

Never stop gathering information - field days, papers

Farm Consultant - our coach

Never think we know it all - question everything we do

Timing - helped from all above

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