Stay ahead of risk in an unpredictable world

We live in uncertain times, and agriculture is right at the forefront. 

The tariff announcements from the US are just another challenge that has been thrown in front of our farmers, and this is unlikely to be the last of it.

In addition to geopolitical risks, there are climate, production, market, and personal risks that our agribusinesses are being constantly challenged with. These challenges test our health, not just our physical health but also our financial and emotional health. Australian farmers, known for their resilience, have always risen to the occasion.

They must be resilient to survive and prosper, and there are steps you can take to ensure you are best placed to continue to meet these challenges.

Focus on what you can control

The first step is to manage the things we can control, such as production. Being proactive in managing what we produce ensures we are extracting the maximum amount from our production system, in a sustainable way.

Managing price risk has become a constant challenge in a deregulated world that allows proactive farm businesses to achieve a premium over others.

Strengthen financial foundations

Financial risk and the need to manage cashflow has become so important in a world of uncertainty and increased production costs. This has to be continuously reviewed to ensure your farming business has the funds necessary to maximise its financial return. Your business adviser can play a significant role in this area, and we encourage communication with your lender to ensure any additional requirements are tabled early, as banks are taking longer than they did previously to provide additional funding.

Financial risk also includes having adequate insurance for both your physical assets and also your production. The cost of insurance has increased significantly in recent times. Our advice is to be clear about what and how much you are insuring and then be proactive about shopping around to ensure you are getting the best deal available.

Off farm assets can help buffer you from financial fluctuations.

Prepare for the unpredictable

Political risks such as the recent tariff changes are extremely difficult to plan for.  However, by staying in touch with what is going on in your industry, you can give yourself a chance of being able to adapt to any significant changes that are thrust upon us. This knowledge empowers you and puts you in control of your business’s future.

Prioritise your wellbeing

Finally, and most importantly, you need to manage yourself. Ensuring you remain physically and emotionally healthy is crucial, as it enables you to be in the best possible shape to proactively manage the challenges of a modern farming world. This includes making sure you eat a healthy diet and get plenty of exercise.

Staying emotionally healthy includes taking plenty of breaks and staying connected with those around you. In our experience, no community is more connected than a rural community.

Taking proactive and deliberate action can help you successfully manage the risks faced by a modern farming business.

FOR MORE INFORMATION

For more information, don’t hesitate to get in touch with your local RSM Agribusiness Specialist.

This article was previously featured in ACM.