Know your position: feed, water and cash

A dry year rarely arrives on one day. The feed goes a bit faster than planned, the dams drop a bit lower, and the bank balance slides. The families who get through best are the ones who count early, while there's still time to choose.

This lesson is about three numbers: feed, water and cash. Write each one down, with the date you counted it.

Feed

Count what you have on hand: hay, silage, grain and any standing feed your adviser thinks is worth counting. Then work out how much each mob eats a day. Your nutritionist, vet or agronomist can set the ration. We don't give nutrition advice, but we can turn their ration into a budget.

Feed on hand divided by daily use gives you days of feed left. That one number tells you how long you have before you must buy feed, move stock or sell.

Water

For each paddock, note where the stock drink and how long that water will last if it doesn't rain. A dam that is half full in spring can be mud by summer. If carting water is the backup plan, find out what it costs now, not when every carrier is booked.

Cash

Cash headroom is how much more you can spend before you hit a wall. Work it out like this:

• Start with your overdraft limit (the most the bank lets the account go below zero).
• Take away what is already drawn.
• Take away the loan repayments and big bills due in the next six months.

What's left is your buffer for feed, freight and lower sales. If it's small, that's not a reason to panic. It's a reason to talk to the bank sooner, which we cover in lesson 4.

Put it on one page

Our drought money plan checklist puts feed, water, cash and trigger dates on one page. Fill it in while it's still green, then update it every few weeks as the season changes.

You can also run your figures through the season stress test. It shows what a poor season does to your overdraft, so you can see the low point before you reach it.

Counting takes an afternoon. It turns a vague worry into a set of numbers you can act on.