Farm decision making checklist

The ‘Farm Decision Making Checklist’ below guides you through an objective assessment of your farm business, and is useful if you feel like the farm is in trouble. The Checklist helps you stand back and look at (and assess) options to improve the farm’s financial position.

The Checklist has been adapted from the Commonwealth Bank booklet FARM (Finance, Agriculture and Rural Management), 3rd edition, 1992.

1.	Are debt repayments a significant problem?
	If Yes, go through the following options to see what can help you and your farm.
2.	Can I reduce my debt repayments?
	Consider, for example: seeking lower interest rates; extending the period of the loan; seeking an interest-only loan; selling some less productive assets to repay some or all of the loan, e.g. the ‘back’ paddock; repay the stock and station agent; machinery that could be hired or contracted instead; livestock that could be replaced by agisted stock.
3.	Can we increase our family income?
	Consider, for example: increasing crop yield; increasing crop area; increasing livestock numbers; increasing marketing percentages; increasing growth rates; improving product quality; improving marketing; introducing new enterprises; getting a job off-farm; investing in an off-farm business; contracting or share farming.
4.	Can I reduce my costs?
	Consider, for example: minimum tillage; rationalising your machinery; reducing wastage at harvest and in storage; sharing your machinery or specialised buildings with neighbours; sell equipment under hire purchase or lease; using sires longer; reviewing feed purchases; improving fuel efficiency; reducing hired labour; lowering your sights; altering your lifestyle; reducing personal costs. If Yes, prepare gross margins for the enterprises currently on the farm, and also look at other possible enterprises.
5.	Can I now see any action that I can take to improve our situation?
	If Yes, prepare a cash flow budget for the coming 12 months.
6.	Will I now have enough cash to pay my bills as far as I can see into the future, and will this new situation offer me and my family a satisfactory life?
	If Yes, STAY WITH IT!
	If No it seems clear that farming your own land is not a viable option. Can you see any other ways of continuing to work on the land in a satisfying manner?
	Consider, for example: selling, and working for another farmer; selling, and leasing the farm land; selling, and leasing a more productive farm; selling livestock and machinery, leasing the farm to someone else, and working for another farmer.
	You would be well advised to discuss your plan with your family, your banker, your accountant and your solicitor in order to see if there are any hidden traps. If there are not, proceed as quickly as you can without unduly jeopardising the price you will receive for your land, livestock and machinery.