Welcome to [ASK] - Always Seeking Knowledge! No 31 - October 2, 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. The international credit 'crisis' - creating a positive, short and long-term response to it
4. Update your diary
5. Books and materials you can use
6. Quotes that mean something

1. Quick [ASK]
Something is 'on', and we shouldn't be surprised. Perhaps the surprise is that, so far, the situation down on the farm is less punishing than it might have been. I am not sure we should assume it will stay that way in the next year or two. This situation will see many totally unexpected events play out yet.

2. Welcome and announcements
Another gap, another [ASK]! My other interest, Soil Carbon Australia has been busy working with bureaucrats and scientists, lobbying to have the value of Soil Carbon properly recognised. You can check and download our SCA PowerPoint presentations, in many languages here. You will see below that Prof. Tim Flannery is now on the public record as saying that under changed management, the rangelands of the world could consume much of the current CO2 in the atmosphere, causing the current problems. I remain convinced that climate change remains the problem that will be with us till the end.

It has been a busy year. Just one major course for the year, but a very large amount of one-on-one family time in NSW, WA and NZ. The NZ activity included several joint venture jobs with Jim Howell, of Colorado. Next week, Jim and Daniela are moving to NZ with their two girls, Savi and Mia, for some months.

3. The international credit 'crisis' - creating a positive, short and long-term response to it
In the short term there are vibrations in finance circles around the world. Are they important, and if so, how do we deal with them?

I talked with my mother-in-law a few weeks ago, just before the recent Wall Street implosion. I asked her, "What were you and others feeling in the weeks and months leading up to the outbreak of World War II?". She told me that there was an air of inevitability, and a feeling of foreboding. Other contemporary accounts I have read describe a feeling of excitement. Whatever, people knew something was 'on'. I'm not sure what you think, but I reckon there is an air of inevitability in the current situation. Something is 'on', and we shouldn't be surprised. Perhaps the surprise is that, so far, the situation down on the farm is less punishing than it might have been. I am not sure we should assume it will stay that way in the next year or two. This situation will see many totally unexpected events play out.

Other people are thinking the same way. If you have not yet read the article, Scream-crash-boom-2 by Paul Gilding, I urge you to do so. Paul Gilding recently retired as CEO of Ecos Corporation, a very succesful multi-national business consultancy that he founded. Prior to establishing Ecos he was CEO of Greenpeace International. Paul has a broad, informed view of the world, having worked at the highest possible levels both 'within' and 'outside' the business tent.

Three words come to my mind when thinking about the word, 'crisis', or as Paul describes it, the great disruption. Two are negative, and one is positive. The negatives are 'traumatic' and 'stressful'. The positive is 'opportunity'. We all instinctively know from our experiences in managing holistically that disturbance can be either degenerative or regenerative. As managers, we get to choose. It is well documented that however difficult it might be, change always creates opportunity for one or more of the participants. This time round, expect changes in the following four aspects of your business: economic, social, political and ecological, probably in that order. The task is to maximise the opportunities so that you minimise the stress and trauma that will arise. Being an 'ostrich' won't be a good idea this time round. You are going to have to plan and adapt. Or get out now, before it is too late.

Economic change
We should start by recognising that whatever 'bail out' is negotiated in the US Congress (and/or in the UK, Europe or Australia, as the heat gets hotter), the problem will not yet be solved. There are many theories being put around by very articulate thinkers as to what the actual root cause is. Your assessment is better than mine as to what is what, but I know for sure I am yet to see a clear linkage between any of the suggested root causes and the proposed action of a huge financial bail-out. Treating symptoms will not work. So, in the absence of a clear resolution of the underlying problems, what can we expect?

The future of rural land values intriques me. Will urban based people forsake paper dollars (thereby re-rating many underlying 'asset' values) and choose rural land as a 'real property' hedge, thereby maintaining much of the current value of rural land in the market place, or will it be that all boats rise and fall with the tide, and like other assets, rural land values will be re-rated (Note: when prices are going up, the term used is 'revaluation'. When they are going down, the term used is 're-rated').

The simple answer is: None of us know, but I'd be considering the golden rules: 'deal with the known' and 'assume you could be wrong', I'd be doing all in my power to reduce exposure to debt. It is the 'safe' option. I was talking today to a lady who steps in to aid the transition when companies 'let people go'. She told me there are five people in her team, and they are each currently meeting up to 30 retrenched people per day. These are people from a wide range of industries, not just finance.

And one more thing. If there is a global recession, expect markets to contract, even despite ever increasing population and the confident 'talking it up' that is going on at the moment. The big powers will likely develop a reluctance to feed the world's poor. I reckon a whole range of seemingly stable market relativities will be shaken to the core.

Social change
I suspect this will be the biggie. In the Great Depression, the records show huge numbers of city residents moved into the bush. There they could get a feed, a bit of work, somewhere to sleep, and some understanding. And, in the main, they were polite. They "dipped their lid (hat)" to the ladies. The disconnect between the city and the bush is now so great that I doubt they will want to move from the city. And if people find they do have to move, they will not be polite. They may be angry and aggressive, lacking in understanding of the purpose of the bush, and for the most part technically and emotionally unable to adapt to the rural environment. They may feel that life is inequitable - asking how it is that landowners retain their asset, and feeling that they are entitled to some of it. It might get ugly.

Political change
The usual pattern of human behaviour when things go wrong is to regulate, regulate. We know it will happen again. Must happen again. It is the only outcome that conventional human decision-making can lead to. Conventional decision-making is directed to achieving multiple goals or objectives, rather than a holisticgoal. I would expect all sorts of perverse political changes, especially in relation to the environment, because side by side with the possibility of financial disruption is the certainty of ecological disruption in the form of climate change, which also is seen as a problem, when it is actually a symptom of conventional human decision-making.

If you harbour doubts about the reality of climate change, please invest $15.95 and purchase Quarterly Essay No 31, Now or Never - a sustainable future for Australia. It is real, and coming to a farm near you. What is more, Flannery devotes seven pages to managing holistically, and concludes it offers the only hope for managing the dry rangelands. "In the last 200 years", he says, "200 gigatonnes of CO2 has been placed into the atmosphere". He shows that globally, changing management of the rangelands could consume up to 800 gigatonnes from the atmosphere, more than 4 times the current problem. Which leads us to ecological change...

Ecological change
Flannery has given us a lead. You can hear his talk on Australia Talks by clicking here. The planet, according to Flannery, has passed the so called 'tipping point' and is within only a few years of the much more important 'point of no return', when no matter what we do, it is too late. A mechanism that reverses climate damaging gas accumulations must be put in place. Flannery argues that it might not even be necessary to have a Carbon Pollution Reduction Scheme. He suggests that governments could, if they had the moral will-power, simply legislate ever increasing constraints on production of the offending gases into the atmosphere.

WHAT TO DO - AT HOME IN YOUR BUSINESS
I think there are a few relatively straightfoward things you could consider, and/or do. They include:

1. Do not delude yourself into thinking that, economically, things will be the same as they have been in the past. They won't be!
   Remember: For every action there is an equal and opposite reaction!
2. Expect the unexpected - especially loss of markets
3. Make solid plans (financial, social, grazing and land) that are in harmony with your values
4. Make decisions early, and towards your values (be VERY alert if you are also running into seasonal problems)
5. Get rid of debt. If needs be, forget capital gain, in order to avoid capital failure
6. Get back to a low cost of production model. Now would not be too soon!
7. Look at economies of scale. Perhaps you can achieve this by:
   i. Merging your business with a like-minded family, so that you jointly enjoy lower overhead costs, and most importantly, together actually increase the rate of biological improvement within your combined land base. In these uncertain climate times, no single improvement is more important than increasing the biological health of your land
   ii. In some cases, leasing additional land, thereby lowering overheads per unit of production, might work.
   IMPORTANT: Before you commit to action, make sure that lower overheads per unit of production (eg per kg, or per tonne, etc) really will be the outcome, because you must also consider the possibility of severely reduced commodity prices
8. Upskill. You may need a whole new level of management skills in order to rapidly move to a higher biological plane whilst simultaneously remaining economically sound as well
9. Make moves to explore local community markets
10. Support the people who are working hard for Soil Carbon to be included in the Australian Carbon Pollution Reduction Scheme
11. Do what is required to ensure that FAMILY FUN is never a casualty of change

4. Update your Diary
COACHING:
With economic uncertainty now the 'new certainty', is there a more important time to take action than right now? I recommend you revisit your holisticgoal, graze plans, land plans and especially your financial plan. If you would like a hand, call 02 9929 5568 or send me an email.

SUPPORT DAY:
The Holbrook group will be meeting at Deltroit Station, Adelong on November 20.

2nd ANNUAL CARBON FARMING EXPO:
To be held in Orange, NSW on November 18 & 19. Michael and Louisa Kiely have again boldly arranged a powerful range of speakers for this years conference, and they would very much appreciate your support.
For all the details click here.

5. Books and Materials you can use
Quarterly Essay No. 31: "Now or Never" ISBN 978-1-86395-271-2
Tim Flannery

Published last week, No 31 in this series sets out the seemingly irrefutable case towards climate change. Just 25,000 words long, the story is succinct. Much of the book is given to methodolgies for addressing the problem. Importantly and encouragingly, Flannery publicly recognises the potential of Soil Carbon to be consumed into the rangelands of the world. He quantifies two things: (1) The existing atmospheric problem is 200 gigatones (ie 200 billion tonnes) of CO2, which has been placed into the atmosphere during the last 200 years; and (2) The global potential is to consume up to 800 gigatonnes of CO2 from the atmosphere following changed management of the rangelands. He closing, Flannery specifically states: 'For the world’s dry rangelands there seem to be few, if any, cost-effective alternatives to holistic management'.

Comeback Farms ISBN 0-9721597-3-8
Greg Judy

This is Greg Judy's latest book, released a couple of months ago. In it he details many of the things he has learnt in putting together suitable leases, and in managing his leased and owned land using 'Ultra High Density' holistic grazing. His outcomes are nothing short of impressive. I have enjoyed reading this book, although for people already doing their grazing planning it is something of a 'primer'. But you only ever need one good, new, idea to pay for a book, and there is more than one good idea in this book. It has some handy drawings and photos, and a certain homeliness in its writing.

A caveat: Before you read this book, please make sure you have also read the supremely important article written by Jim Howell, in Holistic Management International's "In Practice No 121". Call me on 02 9929 5568 if you have not received or read your copy of the article. Why this warning? Well, whilst Greg Judy is leading the pack in the US in the area of very high densities, he is doing so in an environment low on the brittleness scale. If you live in a 'brittle-tending' environment and enthusiastically forget some of the basics, you might fall fatally into what might be termed 'long recovery period rotational grazing'. Remember, just one rigidity (eg: a fixed recovery period rather than one that varies with conditions; movement through a constant number of paddocks; or a repetitive sequence of moves etc, etc) can put you at risk.

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

6. Quotes that mean something

"Ultimately there are no global issues. They are all local issues".
-- Wendell Berry
"Somewhere, something incredible is waiting to be known."
-- Carl Sagen

"Everything can be taken from a man but ...the last of the human freedoms - to choose one's attitude in any given set of circumstances, to choose one's own way."
-- Viktor Frankl (Man's Search for Meaning)