Welcome to [ASK] - Always Seeking Knowledge! No 30 - March 17, 2008
Written and Published by Bruce Ward,
The Farm Business Gym Pty. Limited - the-farm-business-gym.com

In this issue:

1. Quick [ASK]
2. Welcome and announcements
3. Dealing with the known
4. Update your diary
5. Message board
6. Books and materials you can use
7. Quotes that mean something

1. Quick [ASK]

All round, both cropping and livestock as now practised have become a bigger game of Russian Roulette in these days of global climate change. The areas I have identified are also the areas projected to be most adversely effected in future years by changes in seasonal conditions.

2. Welcome and announcements
You might have noticed that ASK has been 'out of production' for a few months. I have been working on some projects, and these have taken up a lot of energy and time. In some cases they are not yet 'in the bag'. But I want to share some of what we are doing. I have co-shared the creation of a new, small but highly effective information web site that is gaining amazing traction around the world. It's called Soil Carbon Australia (SCA). You can click click here to see the site, where you can also download the PowerPoint Show, to see what we are about. Already we have the PowerPoint in other languages, with four more in translation at the moment. The purpose is to add to the awareness people have about Soil Carbon. In particular we are targeting the top end of town. These people are simply blown away by the story! We believe that when the top end of town is pushing down whilst farmers are pushing up, governments will eventually listen, and recognise the real 'value' of land, which is the carbon within it.

The special focus of SCA is the rangelands of the world. There is a huge amount of data about changes in Soil Carbon levels under cropping regimes. There has been virtually no research in the world to discover just how much carbon is consumed from the atmosphere into rangelands soils under holistic grazing planning. You may remember these figures from an earlier posting: cropping land in Australia constitutes just 3% of our land area; improved pastures represent 4%; whilst the true rangelands cover a whopping 58% of the 762,000,000 hectares that is Australia. It's important that there be awareness and knowledge about this. In addition, my associate in this venture, Tony Lovell, and I, made a substantial submission to the Garnaut Review in January. You can download it from the Garnaut Review Website. Scroll down to the bottom of the page. Our submission is marked "Lovell and Ward" in the Table. Click on the button to the right to download the pdf file.

3. Dealing with the 'known'
In my last issue I suggested that in agriculture, "anybody can take away your marketing advantage, but only you can decide to give away your low cost of production". Judging by the phone and email response I received, that resonated with a lot of people. In this issue I want to extend that thinking, and discuss dealing with the known.

Over the last eight months I have been simultaneously shocked and heartened by events in the agricultural sector. I have spent weeks working with families in nearly every region of Australia. Many lost their crop last season. For them this was the crop they needed in order to get back into the saddle. Like all non-irrigated crops, the 2007 crop was planted without prior knowledge of the season, nor, as it turned out, real knowledge of the price they might receive for their crop. Now of course, with record grain prices many people are yet again pinning their hopes on the "next crop".

The 2008 "next crop" is unquestionably a valid opportunity for some people. But contrary to conventional wisdom, a great many others have identified that the risk is too great for them, because there are simply too many unknowns. These unknowns begin with the risk of seasonal failure, and in some regions there is no certainty that things have changed from the recent patterns. I especially think of the mid-west of Western Australia, and perhaps South Australia and parts of Victoria. Who knows? That's part of the unknown! These regions have long been some of the safest wheat producing areas in Australia - with low, but relatively reliable rainfall. Over the last seven years the rainfall has become low and unreliable. That has wiped out vast areas of crops.

Of course many of these people also raise livestock, and they have not grown too much green feed either. That has been a real double whammy. They have repeatedly invested their money in crop failures, and at the same time have chosen to pay agistment or feeding costs for their stock, perhaps because they could make no other practical choice.

Farmers in these areas, whether specialist livestock or mixed crop and stock producers, often coincide their calving and lambing (the most vulnerable time of their livestock biological year from a feed demand, and flexibility of livestock movement, standpoint) to near the usually expected autumn/winter break. When the break is late, what feed they have (often none) is of very poor quality. It's also getting progressively colder all the time, meaning that the later the break, the longer it is until there is fresh new feed, and the higher the supplementation costs. This model effectively means they have chosen to give away some or even much of their low cost of production when a blip occurs. All round, both cropping and livestock as now practised have become a bigger game of Russian Roulette in these days of global climate change. The areas I have identified are also the areas projected to be most adversely effected in future years by changes in seasonal conditions.

Of course, there are a few other unknowns as well. Cost of inputs for instance. Its funny how these always go up when grain prices rise. The cynic would suggest that input costs are related to capacity of the market to pay rather than to the cost of producing the product. And they'd be right. And then, the price received is a bit of an unknown as well. It becomes a rather nasty mess when one pays for the inputs, locks in a fantastic price, and the crop fails. Last season I met dozens of people who ended up paying between $100,000 and $1.0m to buy their way out of forward contracts, and I expect more will get caught this year as well. If farmers borrow to pay for the adverse outcomes of these marketing decisions, the future profitability of the business is reduced. If the payment comes by using ones own cash, it is no longer available for other income earning activities. Whilst the producer can, in various ways, mitigate for all these unknown factors (by adjusting inputs, special tillage techniques to assist yield outcomes, and market manipulations to protect price received), the outcomes each year are still essentially outside their direct control. Here's the thing - despite their best efforts these farmers are largely dealing with the unknown.

So what can be done? Well, some of the most effective changes I have seen so far revolve around two things:

1. Choosing the most flexible enterprises possible
2. Changing ones position within the market from price taker to profit maker

4. Update your Diary

TRAINING:
We will be running a limited number of courses this year. Please keep your eyes open for these opportunities.

Holbrook, NSW - May 14 to 16
Introduction to holistic decision-making, and some work on growing season grazing planning
For more details call Bruce Ward on 02 9929 5568

There is real interest in programs on the South Coast of NSW (Call David Newell at Southern Rivers CMA, on (02) 6491 8204) and in the Mid-West of WA (Call Jane Bradley at Northern Agricultural Catchments Council, on (08) 9964 9774).

COACHING:
For those who wish to establish or improve their holisticgoal, graze plans, land plans and/or especially their financial plan for the next year, you are encouraged to email Bruce now to arrange your time.

5. Message board
Positions vacant
A very special opportunity exists to become the new overseer of a substantial cattle station in the Pilbara region of WA. The successful applicant will be open to the introduction of holistic grazing planning on this property. They will be responsible, with the owner, for devising and implementing methodologies that are appropriate to the environment, and consistent with the financial objectives of the business. Salary is by negotiation and will reward results.
Call Grant and Wendy Brooks on (08) 9652 8025

6. Books and Materials you can use
"Everything I want to do is illegal" ISBN 978-0-9638109-5-3
Joel Salatin

The book is subtitled "War stories from the local food front", and that indeed is what this book is about! Mostly, I don't think Joel sets out to deliberately annoy bureaucracies, but he has done so on more than a few occasions - in fact, a books worth. The book is delightfully and humorously written, although his subject is both serious and near to him.

Joel is passionate in his belief that farmers must be free to "talk" to their clients. By that he means that he, and all farmers around the world, must have the freedom, if they choose to do so, to talk to and sell to their customers on a one-to-one basis. He simply wants to tell people how he produces the food his customers buy, and to direct market his products to those informed customers. He wants that right for all of us, wherever we may be. He supports regulation when there is no relationship between producer and consumer, but riles visciously that the same rules should apply when a personal relationship exists. He believes that both sides of a personal relationship are capable of making sound judgements about the integrity of the production and supply chain they are involved in, without the need for bureaucratic interference. In fact, he believes that such a relationship demands even higher quality and attention to detail, because if the production chain is not 100% ethical and maintained with absolute integrity, the relationship - and very soon afterwards the farm business, will fail. He argues strongly that such a right would see a decreased requirement for regulation because relationship marketing would be so beneficial to all of the parties involved.

Joel's been relationship marketing his production since 1971, when he was just 14 years old. He's had plenty of experience at both inadvertantly and deliberately picking rows with bureaucracies whilst running his life and his business his way. The book offers a way forward: he suggests that farmers be able to choose to opt out of the "system" entirely - in return for never again receiving any government assistance in any form. "For ever more", he says, "that farmer should be able to choose to live his life and deal with his customers as he sees fit". That's the level of his passion.

Two quotes from the book appeal to me: "If I don't have the right to choose what to feed my 3 trillion bacteria in my intestines, then what other rights could possibly be more important? This is such a fundamental notion that to even say it seems silly. And yet, in our modern post-freedom America, many, many people do not believe such a freedom should exist." And this quotation from Albert Camus, "Integrity has no need of rules."

We have a library copy of "Everything I want to do is illegal" available for anyone who would like to read it. Write to Jo Richards and she will send it to you. If you would like to see Joel talking about his view of the world, then go to the 2005 video link of his speech at Princeton University

By the way, most books we recommend are available at:
The Book Connection in Dubbo, NSW
Ph: 02 6882 3311 Fax: 02 6882 3311 or E-mail the Book Connection
(Also ask David Pankhurst about his Mail Order Catalogue - it is terrific)
or
Scorpio Books in Christchurch, NZ
Ph: 03 379 2882 Fax: 03 379 2886 or E-mail Scorpio Books

7. Quotes that mean something

"Whenever you find yourself on the side of the majority, it is time to pause and reflect."
-- Mark Twain

"Many a false step was made by standing still."
-- Note in a 'fortune cookie'

"Action may not always bring happiness, but there is no happiness without action."
-- Benjamin Disraeli