Training resources
Financial intelligence webinars
The Department of Primary Industry and Regional Development's Sheep Industry Business Innovation (SIBI) project developed a series of webinars on financial management. The webinar series has been designed as a package and to gain the full benefit it is advisable to watch each webinar in numerical sequence.
Each webinar has a home practice activity and all webinars except Webinar 2 have notes to assist in completing this activity. Supporting documents are found in the sidebar (right).
SIBI is interested in any feedback to assist in future events so please use the contact details listed on this page.
By the end of five webinars you will understand how to:
- use basic financial information to inform essential business decisions
- interpret the three key financial statements
- use strategies and tools for monitoring and evaluating your business's financial position
- conduct a financial health check and act on the results
- make short term decisions aligned to your medium to long term goals
- be proactive rather than reactive
- benchmarking yourself not others
- work collaboratively with your bank
- understand your tax return.
No financial knowledge required, but access to your farm’s financial information will support the key learnings of the program.
Titles
Webinar 1: Financial basics
Webinar 2: Longer term financial decisions
Webinar 3: Medium term financial decisions
Webinar 4: Short term financial decisions
Webinar 5: Managing financial risks
Other resources
- Targeted training to improve business management provided via the department.
- Information from the Grains Research and Development Corporation including the Farming the business manual, management fact sheets and a farm gross margin and enterprise planning guide including a spreadsheet for livestock.
- Information from Making more from sheep (Meat & Livestock Australia and Australian Wool Innovation).
- General business templates and planning guides from the Small Business Development Corporation.
Profit drivers and achieving goals
A component of improving farm business skills is to obtain a deeper understanding of profit drivers and develop strategic and tactical management plans to meet goals. Our Generating more profit from your farm business report discusses the key drivers of profit and suggests some management strategies to boost profit.
The department’s Sheep Industry Business Innovation project aims to support the WA sheep industry to capitalise on growing markets for sheep products. This includes a focus on increasing business performance by improving farm business skills and increasing access to investment by increasing confidence and promoting alternative business models.
The project has conducted a number of studies to help farmers better understand their costs and income base, and the costs and risks associated with adapting farming systems under increasingly variable operating conditions.
Contributors to profitable sheep businesses
Three studies were commissioned that examined economic research and analysis on components of the sheep enterprise that contribute to profit.
The following studies are summarised in Contributors to profitable sheep businesses, which also has links to the complete study reports.
Comparative analysis of gross margins for grain and sheep enterprises in the central and high rainfall regions of the WA Wheatbelt 2016
Average 2011-2015 crop gross margins were significantly higher than sheep gross margins in both regions. There was less difference between sheep and crop average gross margins in the high rainfall zone than the cereal-sheep zone. In any one year the between-farm variation far exceeds any difference between the enterprises. The good seasonal conditions of 2016 with the strong sheep and wool prices meant that the projected sheep gross margins in both regions were significantly higher than the 2011-2015 averages.
The 2016 projected gross margins of four different sheep enterprises in the high rainfall zone were found to have only small differences in profitability, and there wasn’t a demonstrably 'most profitable sheep enterprise'. Profitability is highly dependent upon a wide range of variables that are equally variable between individual producers and enterprises.
Opportunities for producers to expand their sheep enterprise
This study discovered from current relativities in sheep and crop margins for the H4, M4 and L4 agricultural zones of WA that the sheep enterprise can generate an equal or better margin than the crop enterprise. This may represent an opportunity for producers to profitably expand the pasture area to run more sheep and gain the rotational benefits of weed control, nitrogen fixation and disease control.
In the cereal-sheep zone, comparison of key performance indicators (KPIs) with high rainfall producers, allowing for rainfall, suggest low rainfall producers may have opportunities to expand their sheep enterprises. The priority for cropping in this zone will likely see a maintained focus on running sheep as ‘easily’ as possible, rather than maximising stocking rates.
The cost of getting back into sheep
This study found that modelling with current prices indicated that the most cost-effective option to increase flock size in the high rainfall zone from 1000 head to 2000 head, with moderate debt and a reasonable time to achieve debt payback, was to increase the lambing percentage from 90% to 105%. By improving ewe management, a farmer would be able to increase his sheep enterprise without purchasing ewes when the market was high.
This option compared favourably with buying ewes into an existing enterprise, retaining older ewes, increasing the number of ewe lambs retained, or starting a new sheep enterprise including acquiring essential sheep infrastructure.
Other sheep business studies
Further economic research and analysis into broader aspects of the WA sheep industry was commissioned. Each study summary below has a link to the complete study report.
Out-of-season lamb price signals
Carryover lambs incur costs associated with increased death rates (due to a longer time retained on-farm), feeding and management including shearing and husbandry treatments. Longer wool can be a source of income from carryover lambs.
Modelling found that in order to maintain profitability from turning off lambs one month later, farmers needed to receive a price increase from $0.15 to $0.51/kilogram dressed weight/month. This is greater than the five-year average of $0.16/month.
For more information refer to Out-of-season lamb price signals study summary.
Vertical integration - an alternative business model for the WA sheep industry
Agribusinesses looking to increase the profitability of sheep production may look to novel business structures. Options that were modelled include joint venture finance, vertically-integrated companies, livestock leasing and pasture development.
A vertically-integrated model that used joint venture finance was found to meet objectives of economies of scale, productivity, capital attraction and the development of new value chains.
For more information refer to Business models study summary.
Prices, patterns and profitability of feedlots: investor-ready sheep feedlot report
Confined feeding of sheep in commercial feedlots could benefit WA producers and processors. The WA lamb supply is seasonal, with a strong supply of lambs finished on green feed during spring. If profitable, finishing sheep in feedlots could be an alternative to even out supply to processors and to increase liveweight of lighter animals when there is limited green feed available.
Analysis indicated that feedlotting profitability is generally negative or low, based on the input values analysed and regardless of feedlot size or throughput. Small profits were possible when the restocker/feeder price in cents per kilogram (c/kg) was 86% or less of the trade price eight weeks later. Changes in ration cost have a smaller impact on profitability than the lamb purchase and sale prices.
For more information refer to Sheep feedlots study summary.
Lamb backgrounding report
Currently in WA there is a large supply of finished lambs in the spring, and a much reduced supply during summer, autumn and winter. While prices vary on a seasonal basis to reflect the seasonal supply of lamb, they currently do not allow producers to profitably background and finish lamb in their own location, mainly in the Great Southern using grain or cereal stubble to background lambs. This is a similar position to that of the Victorian industry 20 years ago; lamb backgrounding is now established in that state.
Comparison with the Victorian industry suggests that there is some potential for the high rainfall south-west region in WA to background lambs. This could significantly grow the lamb industry in WA due to better supply management through the year but also make the industry much bigger in total and more profitable. Forward contracts would have a role in profitable lamb backgrounding.
For more information refer to Lamb backgrounding study summary.