Harm van Rees is a consultant from the Birchup Cropping Group, Victoria. Harm was invited to give a talk to the Climate Champions during the February Climate Champions National Workshop held in Adelaide, 2011.

1. Weathering the weather
Financial and production analysis for three Victorian farms
Harm van Rees, Brooke White
Cropfacts P/L

2. Nine consecutive years
with decile 3 or less rainfall
to
decile 10 with the wettest
harvest on record
(Nov to Jan rainfall - 330mm)

3. Discussion topics
• Comparison of three farms in the Mallee, southern
Mallee and Wimmera
• Importance of bio-physical constraints
• Impact of the Millennium drought
• Long term production and financials - profit
• Risk management

4. Bio-physical constraints
(i) Rainfall
Birchip annual rainfall (1891 to 2010) (average = 365mm)
800
Annual rainfall
700 5 year running mean
600 Millennium
Federation drought WWII drought drought
Rainfall (mm)
500
400
300
200
100
0
Multiple year drought
Single year drought

5. (ii) Soils
• Mallee clay loam
• pH alkaline
Southern Mallee • Subsoil high in EC, chloride and
boron
• Rooting depth: 60 to 80cm
• Available soil water: 80mm

6. Mallee farm background
• No-Till operation since 2003 (sold all livestock)
• 100% crop – wheat, barley, canola, pulse crops
• All stubbles retained
• Precision seeding
• Liquid and solid fertiliser application at seeding

7. Southern Mallee farm background
• 2000 ewes - self replacing flock
• Stocking rate - 3 DSE/ha
• Feedlot as containment area and for
finishing lambs
• Change over to No-Till
• Precision seeding
• 70% - wheat and barley
• 30% - pasture / chemical fallow
• Occasionally a paddock of lentils

8. Wimmera farm background
• Mainly No-till
• Chickpeas, lentils, canola,
wheat, and barley
• Export oaten hay

9. Farm production
• Nineteen years data
• Farm size
• Paddock rotation
• Production (yield and protein)
• Inputs such as fertilisers and herbicides
• Management practices

10. Farm financials
INCOME
• Crop and livestock
COSTS
• Inputs (chemicals, fertiliser, seed, sheep
husbandry, rates, office, insurance)
• Machinery (depreciation, fuel, freight, repairs,
contractors)
• Finance (land rent, machinery, interest)
• Labour (owner drawings, employees)

11. Southern Mallee Farm - area (ha)
5000
4000
Area (ha)
3000
2000
1000
0

12. Historical production
Sth Mallee Farm Cereal yield
4.0
3.5 Cereal yield
Cereal 3yr ave
3.0
Yield (t/ha)
2.5
2.0
1.5
1.0
0.5
0.0

13. Yield and Rainfall

14. Income and Costs
Southern Mallee Farm – Farm income and expenses ($/ha)
450
Farm income
400
Farm expenses
Farm income/expenses ($/ha)
350
300
250
200
150
100
50
0

15. Southern Mallee Farm
- expenses as % of total costs
Farm inputs Machinery
50
Labour Finance
40
Expenses (% of total costs)
30
20
10
0
Benchmarks: Inputs 35%; Machinery 35%; Labour 15%; Finance 15%

16. Livestock on the southern Mallee farm
Sth Mallee Farm - cash margin for crop and sheep ($/ha)
400
300
cash margin $/ha
200
100
0
-100 crop
sheep
-200

17. Southern Mallee Farm Profit
250
200
150
Farm Profit / Loss ($/ha)
100
50
0
-50
-100
-150
-200

18. Sth Mallee Farm - Farm Profit vs Growing Season Rainfall
250 450
200 400
150 350
Farm Profit / Loss ($)
100 Decile 3-4 300
GSR (mm)
50 250
0 200
-50 150
-100 100
Farm profit ($/ha)
-150 50
GSR
-200 0

19. Cumulative profit for the Mallee, southern Mallee and Wimmera
farms
2,000,000
Mallee
Southern Mallee
Cumulative farm earnings ($)
1,500,000 Wimmera
1,000,000
500,000
0
-500,000

20. Risk management
• The three farms are well managed (financially
and agronomically)
• For crop production the Southern Mallee farm
needs a decile 3 to 4 to break even; the Mallee
and Wimmera farms a decile 2 (assuming average
price)
• Livestock or another source of income, other
than crops, is essential for the Southern Mallee
farm
• 100% crop makes any enterprise vulnerable to a
single frost or heat event; rain at harvest; poor
price; crop disease etc.

21. Farm profit efficiency
Farm profit (excl. tax and interest) in relation to rainfall and the price of wheat
500
400
300
EBIT ($/ha)
200
100
0
-100
-200
200 300 400 500 600 700
Growing season rainfall plus on-farm wheat price
Profit ($/ha) = 2 x (GSR + Price of wheat – 350)

22. Main messages
• Understand the bio-physical constraints of the
enterprise
• Have a good grasp of the financial situation
• Consider the operators skill and capability
• Owner’s attitude towards risk
• Availability of labour
• Priorities for family and lifestyle