Risk strategy likened to a ‘big game of chess’
GroundCover™ Issue: 121 | 01 Mar 2016 | Author: Nicole Baxter
With dry weather the biggest challenge facing the Bretts’ farm business, the family has employed several strategies for managing risk.
Charles Brett says running two properties located two hours apart allows him to spread seasonal risk and it is made relatively easy because he employs contractors for all cropping operations.
Charles and his wife Fiona have one farm at Bullarah, west of Moree in northern New South Wales, while their second property, bought almost a decade ago, is north of Toobeah (west of Goondiwindi) in Queensland.
They bought the Queensland property to develop the business and spread their seasonal and business risk.
“Our biggest challenge in the present environment is simply receiving and storing enough moisture to grow a profitable crop,” Charles says.
“We might measure 200 millimetres of rain one day and then not another drop for six months. It’s enormously difficult and challenging to manage.”
The Bretts’ main way of managing seasonal and business risk is to only crop areas with adequate subsoil moisture, but the chance of this has improved with properties in different regions.
For example, in 2013, Charles says not one grain was planted on their NSW property due to dry conditions. All production came from the Queensland farm, which averaged wheat yields of two tonnes per hectare and chickpea yields of 1.5t/ha.
The following season, 2014, was the reverse. No grain was planted on their Queensland farm due to drought, and what was planted on their NSW property was 25 per cent less than what they would plant in a ‘normal’ year; however, it was planted on a full fallow.
The decision to only sow where there was a full profile of moisture in 2014 paid off, with wheat yields on the NSW farm averaging 3.3t/ha, meaning their business overall achieved a profit.
A big game of chess
Another way that Charles and Fiona have sought to manage risk is by limiting their capital investment, relying on contractors for all cropping operations. This transfers what would normally be a fixed cost (machinery ownership) to a variable cost, which is better in unreliable seasons because it keeps costs low in poor seasons.
When Charles took over management of the farm and sought to lift income to educate his three boys, he went out of sheep and into cropping.
At that time, rather than invest in capital equipment and develop his mechanical skills, Charles made a conscious decision to employ contractors and focus on business management.
“When you have the mechanical skills I have … you don’t own machinery,” Charles says with a chuckle.
Logistics is what he enjoys most, likening the job of organising contractors for all farm tasks on the two properties to “a big game of chess”.
Charles says he is fortunate to live in an area, not far from Moree and Goondiwindi, where plenty of contractors are available, enabling all cropping operations to be achieved on time, which is paramount.
Charles has worked hard at developing positive and long-term relationships with his contractors. His sowing contractor has now worked with him for more than 15 years.
“I’ve always had a policy that I want my contractors to make their best money on my farms so I have set up the farms so they are highly efficient, with good infrastructure.”
Another way the Bretts manage risk is by waiting for a rain front before applying urea. Charles says many growers in his area traditionally drill their urea into the soil in February or March. But with less reliable rainfall he is not willing to apply the fertiliser and risk not sowing a crop. If there is some certainty of rain, urea is applied by aircraft.
With margins in cropping shrinking, Charles and Fiona have also sought to achieve a better return on their grain-growing investments by selling wheat into Asia via the container trade.
They started selling high-protein wheat this way about six years ago, when the wheat market was deregulated and bulk handlers were not set up to cater for new demands in the market.
Charles checks the market daily and considers the advice provided by his paid risk-management consultants. He is prepared to sell grain up to three years ahead, depending on price.
One of the lessons he has learnt along the way is to have a robust quality assurance (QA) program in place to make sure the grain he delivers via the container trade matches buyer specifications.
To do this, he uses grain-testing equipment to assess, on-farm, every load of grain. All the tonnages and protein contents are entered into a database. Over time, he says, buyers have become very confident in his QA system.
The extra work has proven worthwhile. Charles says selling high-protein wheat into Asia via the container trade has enabled him to achieve large premiums over selling wheat to local bulk handlers.
More information:Charles Brett,
0427 202 712,
Region North, Overseas, South
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