South Australian grower Peter Kuhlmann can increase his profits by more than 30 per cent in one season just by moving the three critical levers of yield, price and costs - all by only one per cent.
Peter farms 14,000 hectares near Ceduna, with an average growing-season rainfall of 213 millimetres, on highly calcareous, alkaline soils - which can sometimes be as shallow as 20mm before hitting limestone.
He says the benefit of farming in what he describes as marginal, or hostile, country is that significant increases in the bottom line can be achieved when only incremental improvements are made across the business.
Three key levers
Peter has farmed the property for more than 40 years and says that, despite the many challenges he faces every season, if he remains focused on moving the three key levers by small percentages each year, the business remains healthy.
"In this type of environment, where we have not achieved average rainfall in many years, we need to bring it all back to the numbers and look at the one-percenters that we can influence," Peter says.
"We need to be grateful for what we have and focus on what we can change - not what we have no control over, like the rainfall events."
Even moving just one of these levers ... can see a major impact on the bottom line.
Sometimes, moving all levers in a difficult season can be impossible, but Peter says he has seen his overall business profit increase 11 per cent just by increasing crop yield by 11 kilograms/ha.
"This is possibly not considered much for many grain businesses," he says.
"But given the marginal region we farm in, it can be a significant challenge.
"Even moving just one of these levers, whether that is an increase in wheat price through better grain marketing, or agronomic improvements to increase our yields, or even tougher negotiation to reduce costs on inputs by small percentages, can see a major impact on the bottom line."
Big potential profit jump
If the season is kind to him and all three levers are moved favourably by one per cent, Peter's total business profit jumps a massive 33 per cent.
Like any grain growing business, he faces many challenges every season, such as wind erosion, high-phosphorus-fixing soils, regular droughts, limited domestic marketing opportunities, snails and mice, to name a few.
But he believes all these challenges can usually be overcome when his focus remains on profit.
"We have a large-scale farm with relatively cheap land, we grow something almost every year and have sheep for diversification, we have reticulated water, good-quality machinery and generic chemicals that still work in this area," he says.
"We have a lot to be grateful for."
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