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Farmanco Facts – August 2024

Articles in this month’s Farmanco Facts include:

 

Part 2: Intro to Options Strategies; Soil Amelioration & Tramlining is a great investment; and Business Planning for Farmers. 

 

 

Part 2: Introduction to Options Strategies

Mae Connelly (Grain Marketing Consultant) 

  • Options provide flexibility, but at a cost.

  • They can protect against downside risk while allowing upside potential.

  • There are many different options strategies that can be designed for your view on the market outlook, and how much you are willing to spend on premiums.

  • Options have risks, including their cost, and the fact that they can only hedge the futures component of grain prices, not the entire price. Basis risk and currency risk are not protected by options, only the underlying futures component of price is covered.

 

This article continues on from Part One in the July edition of Farmanco Facts. Part One contains an introduction to the mechanics of options, and the first four strategy examples. For those with access to the Farmanco Facts App, the full article is available.

 

 

Soil Amelioration & Tramlining is a Great Investment

Rob Sands (Farm Management Consultant)

  • Soil amelioration practised by 50 farm businesses in Western Australia increased farm profit by $100/ha per year over 10 years.

  • Growers practising soil amelioration grew higher grain yields at higher water use efficiency and with less rainfall than those who did not. This increase in productivity is unlikely to be entirely due to soil amelioration, but it played a big part.

  • For the average cropping farm in Western Australia, this equates to $3.7M of extra profit over 10 years.

 

Soil amelioration requires specialised machinery to complete the amelioration, and often large tractors with high horsepower. Therefore, one may assume those practising soil amelioration would have higher levels of machinery investment. However …


 

 

Business Planning for Farmers

Ben Curtis (Farm Management Consultant)

  •  Your farm consultant can help you put together a business plan.

  • Business plans can be simple.

  • Business plans are a very useful communication tool and are vital for succession planning.

  • Planning also highlights the most important actions and helps you get organised.


A business plan acts as a roadmap that outlines your target markets, competitive landscape, marketing strategies, and operational plans, allowing you to make the best decisions and adapt as needed.

 

 

Extra:

  • Profit Series 2024 is at the printers and subscribed clients should receive in the next few weeks.

 

If you’d like your production data to be tracked against other Australian farmers (based on five-year averages and rainfall zones) visit Aglytica.com to see how that can be achieved.

 

Contact your nearest Farmanco Consultant if you’re looking to engage a professional adviser for your business and your annual production data will be included in the annual benchmarking series.

 

  • Subscribe to emailed or printed Farmanco Facts, though our website store or by calling our Perth office (08) 9295 0940 or emailing subscribe@farmanco.com.au.


  • Farmanco Facts App available via Apple Store.


 

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