Introduction

The 2001-04 drought has many features which make it different from previous droughts, and this has meant that the drought planning and management techniques typically used during drought events have not been as effective for this drought. However, it is important to understand that these drought planning and management techniques and strategies may be effective in other circumstances.

The features which make the 2001–04 drought unique are as follows:

• It was preceded by widespread flooding in March 2001.
• There was a record series of frosts during the winter of 2002.
• From March 2001 to September 2002 there was an 18 month period of historically low rainfall.

It was argued in the Exceptional Circumstances applications that, while any one of these conditions can be encountered in agricultural production in the region, the combination and sequence of adverse climatic conditions experienced were exceptional and beyond the scope of normal risk management:

• There was a pasture and water drought.
• Producers suffered income losses from early forced sale of stock.
• Dairy farmers in particular had to buy fodder and supplementary feeds at grossly escalated prices, if they could buy at all.
• Furthermore, the fact that drought conditions extended over such a large area of New South Wales and adjoining states meant that the drought management strategy of agistment was not available.

A large proportion of producers are in their late 50s to early 60s. Most believe that they will never again experience a drought as long and severe as the 2001–04 drought.

The insidious nature of droughts makes it very difficult to make decisions, as farmers are eternal optimists — ‘it could rain tomorrow!’. There are certainly lessons that have been learnt from the experiences of the past couple of years. Typical drought management strategies, and how successful they have been in this drought, are discussed in more detail below.

Beef industry

A group of Northern Rivers beef producers involved in a pilot benchmarking group recently reviewed the issues considered and the decisions made during the 2002–03 period of the drought, and the impact these had on their businesses.

Issues

• To feed or sell?
• Production feeding or maintenance feeding?
• What to sell?
• Setting a timeline for actions
• De-stocking
• Early weaning/selling calves
• Agisting
• What to feed and how/where to get the feed
• Deciding which feed gives the best value for money
• Not being sentimental about your cattle
• Managing cash flow

What worked

• Having a timeline for decision making and, most importantly, sticking to it.
• Making critical decisions in consultation with other family members.
• Acting early in regard to stock number reduction.
• Feeding as a last option because of expense (feeding hay was too expensive).
• Securing agistment early if it is available.
• Weaning/selling calves, because feeding cow/calf units can be unproductive and expensive.

Planning

Producers who survived the drought reasonably well reinforced the need to develop a written drought decision plan that incorporates de-stocking, feeding, and financial budget strategies. The following are comments made by a beef producer west of Casino, running 350 self-replacing breeders on 480 ha:

‘Have a plan and stick to it. My plan was to constantly check cows. Take calves off cows that were getting too low in condition. Feed calves on light grain ration for very young calves. Older ones received molasses and cottonseed meal. Survival ration only.

Started to wean calves 21-8-2002. Approximately 60 calves in each small paddock. They received one bag cottonseed meal and urea, mixed with molasses, twice a week in two half 44-gallon drums.

The cows received dry mineral supplement.

Cull heifer calves on cows had access to creep feeders and sold as light veal approximately September to November 2002. Maximum 200 kg liveweight. All that were weaned were replacement heifer calves.

All old cows were sold. Also late calvers were sold as a cow and calf unit.

After break in weather conditions, steer calves sold mid March 2003. Twenty-five small calves held back until May and sold mid May.

Cow calving in very good condition — 25 cows with calves left on them were fed molasses and cottonseed meal. Pregnancy tested after break in weather; half were empty.

Be careful not to commit yourself to high costs. Be positive at all times. Don’t be afraid to discuss your situation with neighbours and friends.’

However, advisory staff noted that most farmers do not undertake this planning activity despite regular advice to do so. There appears to be a complete breakdown in the decision-making process, brought on by the drought and the extra physical work, which takes priority over consultation, discussion, information gathering and ultimately good planning and timely action.

This hiatus in decision making and action is compounded by the farmers having doubts about what may happen in the future, for example:

• ‘What if it rains next week after I have taken this action?’ (such as early weaning, selling etc.)
• ‘Things have to get better soon.’
• ‘Is the Government going to offer more drought relief assistance?’
• ‘If I act too early I will miss out on the assistance.’
• ‘The Government will “come to the party” in due course as they always have in the past.’
• ‘We have to protect the core breeding herd.’

In recent past droughts, unlike the 2001–04 drought, there was the opportunity to obtain agistment. Many producers believe that they will never again experience a drought as long and severe as the 2001–04 drought; this may have relevance for future extension programs relating to drought risk management.

De-stocking

The lessons learnt about de-stocking strategies are summarised below:

• Recognise that conservative stocking delays the onset of drought effects. It tends to conserve forage which is invaluable when supplementing stock with molasses and protein meal. Maintaining more than 95% ground cover conserves soil moisture, and pasture is more responsive to small falls of rain. Many producers believe that prior to the drought, stocking rates were ‘on the high side’. In the short term many beef producers have indicated their intention to keep breeder numbers below their 2001 level.
• Identify and keep your best young cows and heifers, otherwise ‘you can end up buying other peoples’ rubbish when the drought breaks’.
• Most producers practised a commonsense stock management schedule:
  • sell steers first;
  • sell local trade calves;
  • sell light-weight veal calves;
  • wean early;
  • sell old cows (mouthing) and other poorer performance cows;
  • supplement a nucleus herd.
• A gradual de-stocking is better than a mass de-stocking. A mass de-stocking is usually initiated by little forage being available. Yardings of 3000–4000 head at the Casino saleyard and elsewhere forced prices down. People adopt a ‘group-think’ mentality in the drought. When it is getting dry, sell some cattle classes before the prices collapse.
• Generally, you cannot feed for production because of high grain prices. ‘When you start supplementing cattle that should have been sold earlier, with purchased forage (hay, silage), you can end up with two losses.’

Despite the severity of the drought and the common sense of the above approach, many producers demonstrated an absolute reluctance to reduce stocking numbers. Financial counsellors reported a complete unwillingness among many clients to sell stock, either because they hoped it would rain or because, with time, the cattle became virtually worthless. Equally the clients were not in a position to purchase feed because of the expense. The survey of producers for the Exceptional Circumstances submission indicated an average reduction in stock numbers of only 10% despite this being the worst drought in 100 years.

Drought feeding

Some lessons learnt about feeding stock in drought include the following:

• White cottonseed reached well over $300 per tonne ex Brisbane. Cottonseed meal provided better value per kilogram of protein than white cottonseed. It was also easier to handle than white cottonseed, and the freight costs were lower. Beef producers are now better able to calculate the costs and livestock requirements of protein and energy.
• Buying forage is ‘not on’ — it can only be justified for maintaining a high-quality nucleus herd of breeder cattle.
• A molasses quota (along with the storage and handling facilities) was valuable for a short period (until the molasses ran out).
• The long-range weather forecasts were fairly accurate. In future decision making, more notice needs to be taken of such weather forecasts.
• The drought feeding guides were widely used. However, many producers rely on stock and station agents and rural merchandising agents for advice on drought feeding, and this advice can be quite variable in its usefulness.

Financial impacts

A group of producers from the Casino and Grafton areas have been comparing the physical and financial aspects of their businesses in a joint NSW Agriculture (now NSW DPI) / Meat & Livestock Australia benchmarking project for the 2001–02 and 2002–03 years.

Average operating profit for the group members fell from a break-even point in 2001–02 to a huge loss of $70,000 in 2002–03. Interestingly, the top 20% of producers in the group managed to still maintain a slightly positive operating profit in 2002–03 despite also sustaining a big drop. The most significant factor contributing to this loss was the cost of purchased feed — the average cost of purchased feed per property for 2001–02 was $10,400 and for 2002–03 was $32,000. Again, though, the top 20% of producers were able to contain that cost to $5000 in 2001–02 and $6000 in 2002–03.

Many producers found off-farm income was very important in assisting them to survive the drought. They were grateful also for the assistance provided by the Rural Financial Counsellors — ‘You need a good education to fill out all the forms.’

The level of usage of the Farm Management Deposit Scheme is unknown (the Farm Management Deposit Scheme refers to the practice where pre-tax income is set aside in profitable financial years, and is drawn on in low-income financial years). It is suspected that knowledge of this facility is poor amongst beef producers. This may be because they rarely have much surplus cash, or when they do, they prefer to invest elsewhere.

Conclusion

The top beef industry producers had a plan and stuck to it. This meant making timely decisions such as early weaning of calves, culling low-productive stock, selling early and targeting supplementary feeding towards stock that were going to give a positive financial return.

The important conclusions are to:

• get good advice
• develop a plan early
• review the plan regularly
• act decisively.

Dairy industry

Fodder and grain

The comfort zone in previous droughts, that is, being able to source fodder and grain from outside the region, failed during this drought because the drought was so widespread. Supplies of fodder and grain (varying quality) were very expensive, and hence purchasing feed supplies resulted in long-term consequences for farmers’ finances. This impacted particularly on the dairy farmers who had no choice but to maintain production.

Contracts for the supply of grain and hay were not met due to the widespread nature and the length of the drought. Some commercial feed suppliers were not able to take on new customers or even service their existing customers as time wore on. The shortages were highlighted by the widespread use of sugarcane tops as forage, despite its low nutritive value.

A drought management strategy that proved to be beneficial was the making of hay or silage during the very rare occasions when there was a small to medium feed surplus, particularly if some nitrogen fertiliser could be used to increase the growth rate of tropical grass pasture following the fairly rare good-rainfall events or irrigation applications. This strategy enabled dairy farmers to make the best possible use of the pasture growth that resulted from the limited rainfall or irrigation. Farmers who made hay or silage naturally fared better, because they were up for less expense in the hand feeding of stock for both milk production and heifer growth during the worst stages of the drought.

A number of dairy farmers are attempting to implement longer-term fodder conservation through the use of silages (not wrapped bales), so that over the next two to three seasons (to fit in with cash flow) it is planned to build up some 12–18 months’ feed reserves.

Contract rearing

Some dairy farmers send their heifers away for rearing, thus reducing pressure on the dairy farm itself. Where this was the case, contracts were not always honoured because of pressure on the agisting property, and so heifers were returned, which placed additional strain on already stressed dairy farms.

Irrigation

Irrigation has long been considered an effective drought management strategy. The former Department of Land and Water Conservation (DLWC) advised that the period October 2001 to September 2002 had the lowest stream flows of any year on record for all stations except Glenreagh, which had the third lowest on record. All had flows of 25%, or less, of the normal median annual flows.

The low flows in most streams saw the imposition of restrictions and suspensions at the very beginning of the irrigation season after a well below average irrigation season the preceding year. DLWC adopted the approach of bringing in restrictions earlier on most streams and suspending pumping earlier in catchments in an effort to protect town water, stock and domestic water supplies, and environmental flows. This approach meant an increased burden on landholders who had traditionally been permitted to irrigate when flows were at much lower levels.

Even if these restrictions had not been in place, the tidal salt in the lower parts of the rivers means that irrigation is not an option in these areas. With the low river flow rates, this salinity reached even further up the river and prevented some irrigators from drawing water from the river.

Having said that, the landholders that were less affected by the drought included:

• those who were the more efficient users of irrigation water and who had better supplies of irrigation water;
• those who made good management decisions and grew the more water-efficient crops (e.g. maize) for silage, with the assistance of high nitrogen fertiliser levels to facilitate higher yields — these landholders made the best use of limited water, whether from irrigation or rainfall;
• the very few landholders who had off-stream irrigation-water storage did benefit, but the drought was of such long duration that it did not solve the problem completely.

Most of the dairy farmers with irrigation now realise that their farms are not ‘irrigated farms’ but ‘farms with irrigation’, and that if they wish to secure that potential for using irrigation water when restrictions are in place, and hence improve their drought tolerance, then they need to look at installing off-stream water storages.

Stock water

Stock water was an issue. There were many reports of ‘permanent’ creeks, springs and waterholes which stopped running or dried up. In some areas these levels are still a long way below capacity. Substantial rain has not fallen across the region and the ground water has not been replenished. Those farms that had reticulated stock water supplies in place were better able to control stock movement and implement controlled hand feeding compared with those areas where stock only had access to creeks and/or dams. Dams became a problem when water levels reached record lows, as stock were becoming bogged.

De-stocking

Dairy farmers in the worse affected areas undertook recommended stock management practices of culling the less productive animals (based on age, production, disease, reproductive performance etc.), and concentrated on smaller herd sizes. The Dairying and Drought publication, which outlines the pros and cons of the various strategies, was well accepted by those who found themselves being forced by the circumstances to make a decision.

De-stocking occurred to a point where, after selling culls, stockowners were forced to sell breeding and high-producing animals onto a declining market.

Planning

All advisory officers stressed the need for landholders to plan. One advisory officer noted that the landholders who were less affected by the drought were those who included good feed planning, including timely sowings and/or feed conservation.

Financial impacts and assistance

The dire financial situation of most producers will not be alleviated in the short term by rain. To see some financial stability back in the dairy industry will require some good seasons with favourable prices.

In autumn 2004, morale was still not good as we appeared to be drifting back to a dry-season situation again, which was heightened by the loss of early pastures by pasture pests. There has been a lot of re-sowing of annual ryegrass paddocks. This was financially difficult for producers, as their financial situation had worsened due to production being down on the previous year, together with decreased milk prices.

The fodder freight rebate was of extreme value for dairy farmers, as much of the feed requirements had to be sourced from interstate (South Australia and Western Australia). One problem encountered was that as a result of deregulation and the subsequent general increase in herd sizes, larger farms exceeded the $20,000 limit within 6–8 months.

The ‘dairy family BBQs’ worked very well and were very well attended. They gave families the opportunity to get off the farm, mix with friends/colleagues, and temporarily ‘forget’ about the farm.

The drought support workers played an important role, their effectiveness to some degree being compromised by the size of the area they had to service. That the drought support workers could be directed to areas of most need and/or to individuals considered at risk was very helpful.

Acknowledgments

This report has been prepared by Sally Pearmain and John Williams from submissions from front line extension staff. The contributions of Bill Hoffman, Bede Clarke, Jan Bruce, Kerry Moore, Col Griffiths and Ross Coomber are gratefully acknowledged.