Enterprise and property planning
Property planning is part of the overall business planning process including the consideration of physical resources in the context of how they relate to and impact the overall business plan. A property plan addresses the utilisation of existing physical resources and identifies additional resources required to meet the goals of the business.
Building a property plan
A number of aspects should be considered when establishing a property plan including:
- Land and infrastructure
- Feed supply and demand
- Scale of operation
- Enterprise mix
Understanding land and infrastructure
Whether starting a new farm enterprise or considering changes to an existing one, it is important to determine how suitable the land and infrastructure is for the desired enterprise.
Conduct a property risk assessment, as required by Livestock Production Assurance (LPA), to further understand the property plan and its impact on livestock production. The answers to these questions will help determine what actions needs to be taken to improve or design appropriate infrastructure and how best to utilise natural resources to support the desired enterprise.
Understanding feed supply and demand
It is important to understand how well a property's feed supply matches the requirements of the livestock for maintenance, growth and reproductive performance. Producer's can build a picture of normal feed supply and demand through regular feed budgeting.
Feed budgeting enables the producer to predict seasonal fluctuations in feed supply and better judge the level of feed reserves needed to manage risk. This should also influence enterprise selection and timing. Not only does this reduce the risk of encountering a feed shortage at critical times in the production cycle, but it also ensures that feedbase usage is optimised. Tools such as MLA's Feed Demand Calculator can assist in predicting feed supply and demand.
Determining the scale of operation
The scale of operation refers to the number of stock being turned off each year. A property's stocking rate is influenced by the suitability of the land, infrastructure, feed supply and grazing strategy. While this should remain flexible, an indicative stocking rate should be indicated in the enterprises business plan.
It is important to have an appreciation of the potential stocking rate for an enterprise and there are decision support tools that can assist with this task, such as MLA's Stocking Rate Calculator. With this knowledge, it is possible to calculate the potential income that may be derived from a particular resource.
Choosing the best option
Choosing the most profitable enterprise structure and plan is a complex task involving many variables and specialist advice may be required to get the mix right. Farm management consultants or similar advisors use a range of tools and models to assess the relative profitability of a range of enterprises.
Different combinations of livestock, pasture and market data can be considered in the analysis to help ensure that the most appropriate structure and plan are applied to a particular situation.
If the planning process leads the producer to change enterprise structure, it is vital that the new targets identified through the plan be achieved as soon as possible. Management must also ensure that cash flow, business equity and financial liquidity stay within set limits throughout this transition through concise budgeting.