Use Case
How to Plan for Drought on Your Farm
Drought is inevitable in Australian agriculture. The question isn't if — it's when. P2PAgri helps you model the financial impact of drought before it arrives, so you can make decisions early and protect your business.
What Happens to Your Farm Finances During Drought?
Drought doesn't just reduce yields — it impacts every part of your farm business. Cash flow tightens as income drops and costs continue. Livestock may need to be destocked or fed at higher cost. Loan repayments don't pause. And without a plan, decisions get made reactively under pressure.
The farmers who weather drought best are those who've already modelled the scenarios and know their trigger points. They know at what point they need to destock, when to lock in grain sales, and how long their cash reserves will last.
How to Model Drought Scenarios with P2PAgri
Build drought scenarios before the season starts and compare them against your base plan.
Model Reduced Yields
Adjust crop yields and pasture growth to reflect drought conditions and see the impact on gross margins.
See Cash Flow Impact
Watch how reduced income flows through your monthly cash flow and identify when shortfalls occur.
Project 5 Years Ahead
See how a drought year affects your balance sheet, equity, and loan ratios over the next 5 years.
Compare Side by Side
Run your base plan alongside a drought scenario to see exactly where the differences hit.
Steps to Build Your Drought Plan
- Clone your current season as a starting point for a drought scenario
- Reduce crop yields by 30-50% to reflect poor rainfall conditions
- Adjust livestock numbers — model destocking or increased supplementary feeding costs
- Review your monthly cash flow to find when shortfalls begin
- Check your key bank ratios under drought conditions
- Compare the drought scenario against your base plan side by side
- Identify trigger points — at what yield does your cash flow go negative?
- Share your drought plan with your bank or adviser to demonstrate preparedness
Banks Want to See You've Planned for Drought
Lenders increasingly expect farm businesses to demonstrate risk management planning. Presenting a drought scenario alongside your base plan shows your bank that you've thought ahead and have a plan if conditions deteriorate. This can directly impact the terms you're offered.
Test Your Farm Business's Resilience to Drought
“A few years ago, we contemplated expanding our farm. Mike Krause used Scenario Analysis to simulate the impact of two droughts. The analysis confirmed we'd be financially stable, so we bought the land. Despite facing droughts as predicted, we remained financially resilient.”
Mark Branson
Farmer, Stockport, SA
Start Building Your Drought Plan Today
Model drought scenarios, compare outcomes, and present your plan to your bank — all with P2PAgri.
No credit card required. Start with our free Essentials plan.