Diversification needs to be key consideration in farm strategy
10 Jun 2015
Diversification should be a key consideration of any farm strategy to ensure future viability and sustainability, according to Rural Industries Research and Development Corporation (RIRDC) Managing Director, Craig Burns.
RIRDC, through its www.farmdiversity.com.au website has been helping Australian farming businesses explore different enterprises that could help generate another source of farm-based income.
“Diversification makes good business sense as it helps to spread income risk and build farm resilience,” Mr Burns said. “However, it’s critical to do your homework and ensure you have the assets and adequate resources before taking the next step.”
WAFarmers CEO, Stephen Brown said for farmers in Western Australia’s central and eastern wheatbelt, there may need to be a fundamental shift in what is farmed mainly due to environmental factors.
“Greater consideration needs to be given to farming what can be sustained in any one area or region – such as reintroducing livestock or sandalwood into the dryer areas traditionally home to cropping,” Mr Brown said.
“Environmental pressures have seen four out of the last five crops fail along the central and eastern wheatbelt. However, by branching out from a farm’s core business farmers will have greater chance of bouncing back than those who farm the one commodity.”
This was echoed by Tasmanian Farmers and Graziers Association CEO, Peter Skilern, who said relying on any one enterprise in today’s agricultural landscape is not a sound business model.
“The reality is in this day and age, you need to factor in diversifying into your business model to spread the financial risk,” Mr Skilern said.
“The situation in Tasmania is by definition most farms, if not all farms, to some extent are diversified, with some of them quite heavily.
“While it can add stress, in most cases this is mitigated by the added security of having other commodities available to pick up the slack if one is not performing as well due to any number of factors,” he said.
According to the Victorian Farmers’ Federation, diversification couldn’t be more important for farmers in Victoria.
“Victorian farmers are constantly adapting and innovating to meet the challenges of climate, natural hazards such as emergent pests and diseases, and variations in markets. Diversification across a farm business – even within a particular farm enterprise – is an essential element of business sustainability,” Victorian Farmer’s Federation CEO Graeme Ford said.
Mr Burns added that while most farmers know that diversification minimises risk, there are so many options to choose from that picking the right commodity to complement the current business is not easy.
“Farmers interested in discovering which potential new enterprise or business activity would be compatible to their existing farming business should visit the www.farmdiversity.com.au website,” he said.