Farmers need robust systems at work

Mr Doonan was one of the guest speakers at the GRDC Farm Business Update for Growers, held at Clare following the Hart Field-Site Group's Getting the Crop In seminar.

He said many farm business managers adopted an over-simplified approach to their business, farming the way they wanted to rather than being driven by profitability.

"If you have an overwhelming desire to just farm the way you want to farm, you have to have a business that can justify you basically having a hobby," he said.

"If you look at your business this way, all you ever have as a business strategy is hope."

Mr Doonan said the environment that farms operate in was dynamic, which meant that any decision needed to take into account how it would interact with the entire farming system.

"Farm managers have been shown to consistently and repeatedly get this process wrong, particularly in times of higher prices when they tend to farm how they would like rather than how they should," he said.

"In the higher-price years, farmers need to think about how they can invest in their business, so that's more robust in the future."

Mr Doonan said by farmers farming the way they always have, they left their businesses exposed when prices fell, there were seasonal challenges or costs rose sharply.

"The primary focus on systems selection should be to marry it with the farm businesses' resource base in order to optimise profit," he said.

"Farming lifestyle can only be sustainably maintained after profit is achieved."

Mr Doonan said it was not necessarily the bigger farmers that were better at what they do.

"We're told the best farmers are those with the bigger farms, who spend more on fertiliser and chemicals, who take on more debt to purchase more land," he said.

"These are characteristics of better farmers, but they are not the cause of their success.

"There's really a myth about getting big or getting out, there's no relationship between farm size and profitability.

"Most profitable farmers tend to be bigger, but that's because they tend to be have been little profitable farmers, who bought out the bloke next door.

"To be profitable, you need to create robust systems, and that could be as simple as paying a bit of debt off."

* Full report in Stock Journal, March 20, 2014 issue.