Adapting to changing weather and economic conditions

Adapting to changing weather and economic conditions

Staying ahead of the curve is essential. As we continue to witness the impact of changing weather patterns and economic fluctuations on farming operations, it becomes increasingly clear that adopting smart financial farming strategies is not just beneficial - it's crucial. In the ever-changing landscape of agriculture, it's not just the predicted El Niño weather patterns that we need to consider. While El Niño can certainly impact our region, the variability of weather in general is something farming depends on profoundly, in addition to market conditions. Let's take a look at the bigger picture.

Navigating Weather Variability

Over the years, we've witnessed exceptional weather patterns. We declared El Niño back in 2015, but both before and since then, we've encountered a series of extreme weather events. We endured what could be classified as a 1-in-100-year drought from around 2012 through 2020. In the years that followed, we faced numerous flood disaster declarations and devastating fires. It's evident that the challenges posed by climate variability are not solely attributable to El Niño.

The Interplay of Factors

Farming is intrinsically tied to the interplay of factors that encompass climate, market conditions, and various economic challenges. In the last drought, we were supported by strong livestock and commodity prices, resilient land values that bolstered equity and facilitated additional borrowing, and favourable interest rates. Government support also played a significant role. This time around, however, it seems that the mix is less favourable, with diminishing returns and challenging market conditions. Land values remain strong, but the economic landscape has shifted significantly.

Adapting to New Realities

In light of these evolving challenges, it's imperative to consider a broader spectrum of financial strategies. This raises the prospect of more than just accounting advice and planning. Farmers might need to assess and potentially revise aspects like succession planning, wills, business goals, diversification, and off-farm investments. The farming community has faced tough times before, and resilience is a characteristic that's in abundance.

Planning for Change

Farmers in Northern New South Wales are no strangers to the challenges posed by changing weather patterns. Droughts, frosts, and extreme rainfall events can disrupt even the most well-established agricultural and breeding practices. Failing to plan in these circumstances is, indeed, a plan for failure.

Now is the time to be proactive and explore a range of options. The past has shown us that climate is rarely constant, and this means that a business plan should inherently anticipate change.

Just as we've seen droughts break and within weeks the landscape is transformed into a lush green,  your business plan should also plan for change.

To thrive in this environment, consider these smart farming financial strategies:

  • Diversify Income Streams: A diversified approach to farming can help cushion the blow of unexpected weather-related setbacks. Explore opportunities to expand your product offerings or engage in complementary activities.
  • Risk Management: Insurance is your ally in uncertain times. Comprehensive coverage can protect your assets and income when faced with adverse weather conditions or unforeseen events. Ensure your policies are up to date.
  • Financial Planning: Collaborating with financial advisors who specialise in agriculture, such as Forsyths, can make a significant difference. A tailored financial plan can help you weather storms and seize opportunities.

Economic factors can also play a pivotal role to your financial success. Consider these key factors:

  • Market Analysis: Stay informed about local and regional market trends. Understanding market dynamics can guide your decisions regarding planting, harvesting, and selling your livestock and products. 
  • Interest Rates: Changes in interest rates can impact your borrowing costs and financing decisions. Consult with financial experts to determine the best approach for your situation. 
  • Tax Planning: A well-structured tax plan can maximise deductions and credits available to your agricultural business. Regularly review your tax strategies to ensure they align with your financial goals.

     Keep financial records up to date. It’s vital to ensure you have a clear picture of your finances at all times. Using cloud based systems like Xero    
     ensures you can access accurate and real time financial information.

Smart financial farming strategies encompass the broader picture of weather variability and the dynamic nature of agriculture, which is shaped by multiple factors. At Forsyths, we're committed to helping you prepare for a future where change is constant.  Our experienced financial planning experts are here to guide you through the complexities, providing tailored solutions that align with your unique goals and circumstances.

With smart financial farming strategies, together, we can ensure that your business not only survives, but thrives.