A recipe for creating wealth

29 July 2016

If ever there is a time to re-think your approach to farming, it’s now – in an era of strong livestock prices, according to veterinarian and beef consultant Rod Manning.

Speaking on wealth creation from agriculture at last week’s MLA-sponsored Border Beef Conference, Rod peppered the audience with sage advice borne from experience.

He encouraged producers to re-define themselves as strategic business people whose core "business" is land investment - funded and managed by best practice agricultural production.

During the past 30 years, Rod and his family’s Davilak Pastoral Company at Mansfield, has grown from a 20ha hobby farm to running 1,700 breeders on 2,024ha, both owned and leased.

Rod pulls no punches on his recipe for success.

“We aim to double the size of the business every seven to 10 years and the only way to get there is to set short and long-term goals, embrace best practice management, make evidence-based decisions and understand the true value of cost of production,” he said.

“To be a successful business that can create a platform for expansion, producers must be in the top 20% of monitor groups, have high gross margins per hectare and a high cash flow to fund borrowings.”

Rod believes cost of production is the greatest tool for managing risk with Victorian producers needing to aim for 60¢-$1/kg of beef out the gate which is substantially below the state’s average of $1.76.

The key to achieving this is economy of scale which drives down the per unit cost on labour, machinery and borrowings.

It also creates critical mass where cash surplus over and above family running costs becomes meaningful. For example, a $100,000 surplus can enable borrowings up to $2 million at a 5% interest rate.

“It’s important to set business up in good times, so you can exploit the bad,” Rod said.

“Opportunity knocks softly.”

Contact: Rod Manning T: 0438 752 481 E: vetmansfield@bigpond.com

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