27 June 2007

Farmers know that keeping their eggs in more than one basket is still a good way to reduce financial risk.

However, the "mix" on mixed farms has changed dramatically over the past 10 years, with cropping increasing and livestock disappearing - or becoming a minor enterprise - on many farms. Finding out whether this is the best way to go is a high priority for the national Grain & Graze program.

A collaborative partnership between Meat & Livestock Australia (MLA), Australian Wool Innovation (AWI), the Grains Research and Development Corporation (GRDC) and Land & Water Australia (LWA), Grain & Graze aims to help mixed farmers increase the profitability of both their cropping and livestock enterprise and simultaneously better manage natural resources.

In-depth interviews with 50 producers around Australia, under the national Grain & Graze Social Research Project, revealed that, while most farmers recognise that sheep are an important part of a mixed farming system, one notable finding was the difficulty some farmers face keeping sheep in their mixed enterprises. They are considered labour intensive and less technological for a start. In reality, however, there have been many changes in the sheep industry

On the other hand, cropping is seen to be "sexier". It is full of innovative technologies like more sophisticated machinery and reduced, or zero tillage. Young people are generally more "turned on" by machinery than by livestock.

Like many others in his line of work, Brian Ashton, a Senior Livestock Consultant with Rural Solutions SA (a business unit of Primary Industries and Resources SA) at Port Lincoln in South Australia, asks why so many people have underestimated the value of the role livestock play in a mixed farming system.

Mr Ashton is working with Ed Hunt and Brenton Lynch, two consultants on Eyre Peninsula contracted by Grain & Graze to examine the effects of changing the percentage of farm cropped. The aim of the work is to increase farmers' ability to find the best enterprise mix for their properties.

"Most agronomists and salesmen promote more and more cropping, and it is true crops give great returns in good years," Mr Ashton said.

"But when Ed and Brenton selected case studies from their successful clients and used a spreadsheet to simulate changes in levels of cropping, they found:
� in the first example, increasing cropping from 50 to 80 per cent of farm area delivered similar profits, but costs rose dramatically with more cropping;

� in a second example, profit was not greatly affected as cropping moved above 50 per cent but, again, costs increased dramatically with more cropping; and
� in a third example profit actually fell as the farm moved above the 50 per cent cropping level while costs still increased dramatically.

"Put simply, the consultants found that as you increase the percentage of cropping, you increase your risk for not a lot, if any, gain," Mr Ashton says.

"The cost of machinery must be included when comparing enterprises - gross margin analysis is not enough. Over the past five years records from consultants show that investment in machinery has gone from $165 to $250 per tonne of grain, dramatically increasing farmers' exposure to risk. The consultants also say the common idea that cropping more land will increase machinery efficiency is a "furphy". People invariably upgrade their machinery to cope with the increased area cropped.

"Ryegrass resistance, the increasing cost of fertilizer and fuel, and poor seasons all work against intensive cropping.

"We can show that you can maintain your profit with more livestock and reduce risk at the same time, especially in years of low crop yield or price. Well run livestock usually return more than the break crops. This is no doubt influenced by sheep prices, which about doubled in 2000."

The Grain & Graze team say the ideal enterprise mix will be different for each farm. It will be heavily influenced by personal skills and preference, level of investment in machinery, level of ryegrass resistance and crop diseases, stocking rates and soil types.

But finding the right balance will have major benefits to your whole farm business and it may be very different to what you currently do.

For further information about Grain & Graze in the Eyre Peninsula Region, contact Regional Coordinator, Alison Frischke on 08 8680 6223 or visit www.grainandgraze.com.au. Also contact Alison for your free copy of the latest edition of the Eyre Peninsula Farming Systems Summary which includes up to date information about risk management, grazing cereals, controlled traffic, plant available water, suppressive soils, livestock management and more.

Grain & Graze Regional Coordinators

Avon Region - Linda Leonard - 08 9690 2191
Border Rivers Region - Rachel Charles - 07 4671 7900
Central West/Lachlan Region - Jodie Dean - 02 6895 1015
Corangamite/Glenelg-Hopkins Region - Cam Nicholson - 03 5258 3860
Eyre Peninsula Region - Alison Frischke - 08 8680 6223
Mallee Region - Zubair Shahzad - 03 50 219 103
Maranoa/Balonne Region - Stephen Ginns - 07 4620 8122
Murrumbidgee Region - Katrina Sait - 02 6924 4633
Northern Agricultural Region - Philip Barrett-Lennard - 08 94750753