Managing farm risk with good decisions

Author: Will Martel | Date: 20 Apr 2015

Image of Will Martel, GRDC northern region panelist, Wellington.

By GRDC northern region panellist Will Martel, Wellington

Risk management is an essential skill in Australian agribusiness if growers are to effectively combat the challenges of input costs, market volatility, seasonal conditions and production constraints.

Over the years, agribusiness’ have become adept at managing these challenges through diversification of crop type and enterprise mix, lowering the operational cost structure, utilising professional agronomy and business advisory services and investing off-farm.

However the underlying key to managing risk well is making good decisions within the business. For many growers decision making is reliant on instinct and experience, technical information and rules of thumb.

Geelong-based farm consultant Cam Nicholson, Nicon Consulting Services, discussed the key elements of good decision making during a presentation to growers and advisors at the recent Grains Research and Development Corporation (GRDC) Grain Research Updates at Coonabarabran and Goondiwindi.

He said a “good decision” was an informed decision where growers had an appreciation of the consequences of various actions, particularly potential losses.

His point was that growers can’t know everything and for the most part use intuition and rules of thumb to make operational and financial decisions.

Intuition is formed primarily through experience. It helps us make quicker decisions because it bypasses rational processes and relies on past experiences and knowledge - both good and bad - to influence what happens in the future.  Intuition is gained progressively and its quality is largely influenced by the scope and quality of past experience and knowledge.

Rules of thumb are similar to intuition in that they can be useful in bridging gaps in knowledge and allow decisions to be made quickly without extensive analysis. That is, as long as they are backed by credible science and/or practical calculations.

According to Cam Nicholson, the main difference between intuition and rules of thumb is their tangibility – rules of thumb are more easily learnt, taught and transferred whereas intuition is not.

When it comes to decision making on an operational level, both instinct and rules of thumb are important contributors but they are only a guide.

In the case of the northern grain industry, organisations like the GRDC have a massive bank of data collated from 20 years of trials and extension work that can help growers make ‘good decisions’ on ‘crop and farming systems management.

This is available through a variety of channels such as the National Variety Trials (NVT) projectGRDC GrowNotes and eXtension AUS.

Making an informed decision backed by sound science and accurate interpretation of data can make a significant difference to a business’ bottom line by maximising crop gross margins.

When those decisions are positively enhanced through experience and intuition, the capacity to turn good decisions into great ones is endless.


Caption: Will Martel, GRDC northern region panelist, Wellington.

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Will Martel, GRDC northern region panelist, Wellington
0427 466 245


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0418 152859

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Region North