All Farmers must produce good budgets to access scarce bank finance

It’s budget season – but in the midst of the global financial crisis banks are trying to reduce their own risks, making it more challenging for farmers to raise finance for working capital.

Robust business budgets that can incorporate different scenarios are now essential in successfully raising finance for farm businesses, according to David Warburton, Managing Director of the Australian agricultural software company Agrimaster and a sixth generation WA farmer.

‘Having a good and accurate cashflow management process is critical in uncertain times – and essential when approaching banks for finance,’ he says. ‘Most people financially live in the past, keeping records for compliance reasons. To survive farmers need to proactively forecast on a regular basis.

Developed nearly 30 years ago Agrimaster helps farmers manage their increasingly complex businesses, plan for different scenarios and approach banks and finance institutions with professional budgets.

Paul McKenzie, Farm Management Consultant with Agrarian Management, says now is the right time of year for farmers to use Agrimaster to budget and manage their cash flow, income and expenditure, before they get too busy with other farm activities.

‘Agrimaster makes it easy to find out whether your farm business is building your wealth or eroding your wealth,’ he says. ‘Liquidity is the lifeblood of every business, and farm businesses need to manage cash flow so they can operate within financial limits.

‘For farmers, I believe Agrimaster does this better than any other program. Using Agrimaster in conjunction with long term crop and grazing production records allows one to examine how different variables will affect your individual farm business. It allows astute farm business managers to construct strategies and quantify the expected outcomes. For example, “no-go” zones, where after a certain date seeding will cease unless there is adequate soil moisture.’

Paul says that in Western Australia, many farmers make 80% of their profit during 20% of the seasons – that is, during two years out of every ten.

‘When the big opportunities arrive, you need to have finance in place to take advantage of the opportunities,’ he says. ‘You also need good strategies for the other years that are break even or loss times, where the conservation of capital is more important than putting capital at risk.

Some luck is needed in farming. Luck is where preparation meets opportunity. Agrimaster properly used ensures adequate preparation.

‘Agrimaster is the best tool to help a farm manager understand the impact of his or her business on net wealth and the future liquidity requirements. It also helps farmers produce powerful and professional finance documents that include all the income and expenditure assumptions and are invaluable when dealing with banks.

‘Agrimaster is easy to use, even for farmers who don’t use the internet. It’s the top tool around for professionally managing a farm business.

Agrimaster offers online demonstrations and seminars for growers who have not yet used the software product and comprehensive training for Agrimaster users.

‘Growers who haven’t used Agrimaster can log on to www.agrimaster.con.au and request a free online demonstration or call Agrimaster direct on 1800 110 000 and ask for Colin,’ says David.

‘Agrimaster is simple to use and has extensive on the phone, on-line and in-person support. It doesn’t predict the future, but it helps producers plan for the future.’