In Agriculture, we work in a very privileged space, even though sometimes it doesn’t feel like it. Not only is it a great industry to work in, Ag makes a lot of things the world needs, the people are genuine and the environment is great to work in. It is also quite easy to become isolated in our world and not look beyond the farm gate, although I think, as an industry, we are getting far better at it.
Now is one of those times that I think we should be watching and seeking to understand what is happening well beyond the farm gate. From this, consider the implications for our industry, and then how we should adapt our thinking in the coming years.
Consider this:
- Since Covid (and probably before), the world has changed a lot, and more than we could have imagined, and some of it is challenging.
- A person on the median income in Australia can no longer afford the median house.
- This was nearly impossible before interest rates lifted and now even more so.
- A person under the age of say 30, without the help of their parents will have significant challenges in becoming financially established.
- We are seeing a very large part of the population becoming disenfranchised with the lack of opportunity.
- Politics is becoming a lot more polarized and populist than I have seen in my career – where each side views their approach as the only answer and the opposing side will lead somewhere close to Armageddon. This is also happening in a number of countries, but the US is an obvious example – appealing to the disenfranchised such as those mentioned above.
- Government institutions and authority is being challenged more than it has been for some time.
- Conflict in the Middle East & Europe is causing greater instability in the world than we have seen for some time.
- We are fortunate that in Australia we seem to see less of the “all or nothing” view, and thankfully are less at risk.
I could go on, but you get the message. The globe, and democracy have some challenges and probably will for a while.
While this is important to be aware of, I am not advocating for a strategy that closes everything down – just awareness and consideration. I think there is very little any of us can do to influence this. Now is a good time to have a look in our own backyard and consider the implications of this on us and our businesses, and how we might manage the impact of these events if they continue to gain traction.
My thoughts on the broad strategy:
- Expect volatility and variability, both from our climate, but also from the political environment. Farm businesses are currently very strong – make sure you keep some of your balance sheet strength in reserve. In farming we have been fortunate enough to have some very good seasons in the last 5 – 10 years and farm balance sheets reflect this. Consider your business resilience with the next purchase or investment you make.
- Continue to manage your costs well – this is getting more and more difficult with some of the large items really impacting business profitability – Land, Machinery, Labour, Fert, Chem, Repairs, Fuel and potentially interest. These seem to becoming fixed at a moderate to high level, with an earnings stream that is variable.
- Know and understand your “2nd way out” if you are pushing your business.
- Consider diversifying your revenue streams
- i.e. most of what you already do.
So to finish where we started – There is a lot that is working really well, and will stay that way – someone has to feed the world. We now just have some significant influences on this that should become a part of our thinking and planning over the coming years!
