Thornbury Vineyard manager, Craig Stubbs, is making a profit and keeping staff by moving into beef production. The vineyard installed two centre pivots to irrigate pasture, hay and silage production.

Farmers have long dealt with drought and flood, fire and unstable markets; now in a time of increasing market and climate uncertainty they're taking risk management by the horns.

NSW Department of Primary Industries Central West agronomist, Jenene Kidston, said farmers were taking risk management very seriously, particularly in the context of climate change.

"Flexible farmers are in the best position to ride the waves," she said.

"If one part of an enterprise slumps, whether it's caused by environmental or economic factors, the ability to shift focus and maintain an income base during that period is essential for the long-term sustainability of the farm."

When wine grape prices fell, one Mudgee vineyard took advantage of its irrigation licence, moved into beef cattle production and kept staff on the payroll.

Thornbury Vineyard manager, Craig Stubbs, said they recognised the options their irrigation licence had delivered and worked hard to get the most from every drop.

"We've managed to branch out and will turn-off 500 steers this year," Mr Stubbs said.

"We're generating income now but if the situation changes we're prepared to move out of beef production.

"The strategy is to get the biggest return we can from a megalitre of water, be it wine grapes, fattening steers, growing lucerne, producing silage and hay – we're prepared to look at almost any option."

While not every farm has water on tap, Ms Kidston said the key for farmers was to recognise a good season, even if it's short, and be able to make as much of the opportunity as they can.

"Whether it's a forage or grain crop, the ability to conserve fodder, hay or silage can help protect farms from the tough times," she said.

"This season is harsh and farmers with feed on hand are getting the best from it now."

In terms of protecting their feedbase and the environment, Ms Kidston said perennial pastures too can be a valuable investment.

"They can survive drought conditions and come back following the rains to produce quality feed much quicker than the time it takes to establish new pasture.

"Ground cover protects the soils from wind and water erosion.

"Droughts often break with a heavy downpour which can cause severe erosion if soil is left bare.

"Perennial pastures also reduce deep drainage to protect the landscape from salinity."

Contact Jenene Kidston, Mudgee, (02) 6372 4700.