From adversity to opportunity

How do today’s agribusinesses turn adversity into opportunity? Whether it’s coping with climatic extremes, technological changes or shifts in product demand, survival is often about spotting problems on the horizon and acting to limit their potential damage. From moving states to thinking smart on scale, we look at four very different Australian agribusinesses whose resilience helped turn challenging circumstances into success.

Moving to greener pastures

Award-winning Angus cattle breeders the Raff family saw that climate change in South Eastern Queensland was adding to the challenges their farm already faced. As Andrew Raff explains, that precarious weather meant diversifying was almost impossible. “We were very restricted in what we could do – everything revolved around beef cattle.”

In 2015, the Raffs decided to uproot not only their entire business but three generations of their family (Andrew and wife Anna, their four children, and Andrew’s parents, David and Jill) to King Island, Tasmania. There, mild weather and generous rainfall deliver continuous green grass. “Even if rainfall decreases 10 per cent and the temperature rises five degrees, it’ll still be a very productive place.” 

Andrew points out that the move wasn’t just to a farm in another state. “It was to an environment with its own little microclimate where you have unlimited opportunity – you can diversify at any level.”

The gamble has already paid off handsomely, Andrew reports. “Our cattle numbers have doubled, and we’ve expanded beyond beef production to provide on-demand seeding services. We’ve added lamb, and egg production and farm stays in several houses.” To add even more value, the farm is also on track to be organically certified by 2021.

The secret to beating bigger players

Targeting your competitor’s weak spot was the key to Wangaratta-based agricultural machinery makers Burder Industries’ success. In its case, cheap machinery imports were the looming danger. 

Adam Fendyk, now CEO of Burder, realised creating a point of difference was key to the company’s survival and convinced his father to swap their traditional production line for a fast-turnaround customisation service. “These are two things our cheaper overseas competition can’t do.” Having fewer products but improving the manufacturing speed improved Burder’s efficiency and reduced its warehousing costs. Adam explains that “the term is ‘one-piece flow’ in lean manufacturing speak”.

Adam also understood that cheap imports were not going to disappear and would always take a big share of the market. His solution? Become a distributor. Today, Burder is a significant dealer of major European and North American farm machinery brands as well as a bespoke, local manufacturer. “Burder’s roughly 70 per cent local, 30 per cent import,” explains Adam. “It flattens our business out and helps us reach into non-traditional front-end loader markets like broadacre farming.”

Planting smart for improved production

While their father understood that providing for nine children on a Queensland sugar cane holding meant scaling up the family’s acreage quickly, later generations of Russos – of Russo Farms – have had to think more laterally.

For Joe Russo, the current challenge is building a business that can withstand regular price and weather fluctuations. To help keep the cash flow on an even keel, Joe added peanuts to the family’s cane crop rotation. “They’re the green manure crop that pays in two ways,” he explains. “As well as providing a stable cash crop, peanuts are a great nitrogen fixer that gives us a 15 to 20 per cent improvement in the following cane yield.” 

Today, of his four sons, one runs the sugarcane, peanut and barley production while another looks after the harvesting business. He adds with pride that “the boys have also diversified heavily into macadamias. They’ve currently got about 30,000 trees, and they’ve done that in the last two to three years.” 

It’s a fundamental change in business focus for the fourth-generation Russo farmers that gives Joe confidence in the future. “I suppose they’ve left me behind. My way of farming was a lot of brawn, but it’s all about numbers today.”

Thriving thanks to the economies of scale

For generations, Bega Valley-based Parbery Pastoral has sold its milk exclusively to Bega Cheese.

In the mid 20th century, Herb Parbery acted on the received wisdom that bigger is better. He took every opportunity to buy up farms in the Bega Valley and increase his dairy herd to around 1,000 head. However, the current generations have had to adjust their thinking and scale to reflect changing realities in the dairy industry. 

In 2002, when the industry was deregulated, and milk prices crashed, the Parberys reduced their herd to around 450. This allowed them to cut operating costs so they could invest in new technologies and land improvement. Since then, Herb’s son Gavin has gradually regrown their herd to its original size, but on four farms that operate much more cost-effectively.

“I knew that we had the infrastructure,” explains Gavin, “so over about two years, we bred all the extra cows internally.” This took milk production from around 3.5 million litres a year to over six million. And it’s still all sold to Bega Cheese.

Supporting Australian farmers

“Our clients’ resilience and ability to turn adversity into opportunity never ceases to amaze and inspire us here at NAB,” says Julie Rynski, Executive, NAB Regional and Agribusiness.

“It makes us proud to support agribusinesses through their challenging as well as easier times.”

NAB has supported Australian agribusinesses through challenging times for around 160 years. To speak to us, contact your local Agribusiness banker, or our team on 13 10 12.

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