2022 brought with it a variety of different challenges for primary producers. With a prospect of El Niño in 2023, the time to plan for drought is now.
The Bureau of Meteorology (BOM) has updated its latest outlook, which suggests La Niña may be easing after three years.
Whilst this is a welcome relief for primary producers across NSW, the BOM has indicated there is a chance of a hot and dry El Niño returning.
A hot and dry El Niño system could see an increase in the chance of drought and ideal conditions for grass and bushfires. The best time to prepare is now, when dams, feed reserves and bank balances are ideally favourable.
Common drought issues
Farmers in NSW are well aware of the challenges presented by droughts. As fodder runs low and the condition of stock deteriorates, ongoing access to working capital can cause significant financial stress.
Planning is the best defence against drought and your local Rural Financial Counsellor can work with you to develop a free Drought Management Plan. We will help you consider your drought-related risks and put in place an action plan to respond to drought-related triggers.
Start mitigating your risk now by exploring ways to:
Minimise debt:Pay down your debt during good years. Banks are more likely to look favourably on requests for increased funding in times of need. Paying down debt also reduces your interest payments. Need some extra help to get clear on where your business is at? Call RFCS NSW on 1800 319 458 and book a free consultation with your local Rural Financial Counsellor to start mitigating your drought risk.
Review your interest:If your equity position has improved, ask your bank to conduct an interest review. Your improved position may allow the lender to reduce your interest risk margin, and therefore your loan interest rate, saving you money.
Improve infrastructure:When times are good, make farm improvements and build physical resilience. For example, build new silos and improve water infrastructure.
Consider off-farm investment:If possible, diversify your income so you can supplement farm income when it is low. This is also useful for retirement and succession planning.
Conserve now for later:Conserve fodder and/or grain for use during drought periods. Likewise, Farm Management Deposits can be used to put money away now for use in low-income years.
RFCS NSW is a free service that provides you with access to a professional team of financial counsellors with knowledge across agribusiness, banking and a broad range of other industries.
We can guide you through reviewing your current financial situation and any existing plans, identifying options for your business and developing drought and business plans to help you achieve your goals.
Talk to your local Rural Financial Counsellor to develop your Drought Management Plan. It’s free and confidential. With nothing to lose and plenty to gain, call 1800 319 458 to set up your free, confidential meeting today.