Diversify to ride out tough times
13 June 2019
The reality of drought motivated Felicity McLeod’s 2017 Nuffield Scholarship research into effective business diversification strategies.
With recorded rainfall being well below the average 200mm/year for the previous five years, she was keen to investigate ways to spread business risk and explore other avenues while still maintaining a wool-producing Merino flock.
“Drought isn’t a new thing, and it’s not going to be an old thing. Livestock mixes, predation, available resources and technology are all factors that we need to consider as business operators in this environment,” Felicity said.
“With support from Australian Wool Innovation, my Nuffield research took me all over the world, with a main focus on Brazil, the US, South Africa and New Zealand.
“I learned that having diversification in the livestock mix is key to viability in tough times, as it lets you use different country types for different purposes, regardless of the season.
“Visiting a farm in north-eastern Brazil that had only recorded 150mm of rain in the past two years made this really clear to me. One of the only things growing on the place were cactuses, but the owners were still running a sheep flock, mixed with some goats.
“The goats were using their horns to knock thorns from the cactus plants, and the sheep would then eat the flesh of the cactus, which has an 8% protein content.”
Felicity's research revealed there were also gains to be realised through a focus on predation management, technology adoption and value adding to animal by-products as well.
“There are many options out there when it comes to diversification. One of the key things is to make sure that you research your options, research your markets and research the actual viability of the enterprise as it would be if it sat alongside your existing enterprise,” she said.
“Whatever way you go, the diversified activity needs to complement your existing business, your interests and the skills you already have, otherwise it can be more trouble than it’s worth.”