Beating the odds to buy a large hunk of Oz

Sunday, 1 August 1999

Tony Boyd
Kalamurina Station
Outback SA

SA farmer, Tony Boyd, knows a lot about casinos.

As a statistician dealing in probabilities he spent twenty years advising some of the world’s most lucrative money spinners on the odds of being rolled out of business.

For the past six years Tony has successfully dealt his hand to play the fortunes of climate on his property in outback SA – all from the comfort of Todd Park nestled in the Adelaide Hills1000 km south.

Tony was raised on a farm before his foray into casinos. Comparing both worlds, he is convinced the odds favour farming more than many people think.

“Most farmers are able to work on long term returns of five to six percent, whereas many casinos run on a 1 percent margin,” he explains. “With climate forecasting tools reducing the guesswork, we can tip the odds towards farming.”

Tony’s first major break into climate forecasting began six years ago when he took the plunge to purchase a massive station in SA’s far north.

“I was looking to buy a large property coming out of drought and one that didn’t require much capital investment. Timing the purchase was critical and I wanted to be sure the odds were stacked my way,” he says.

At the time (1994), Central Australia was in severe drought. A Singaporean climatologist, however, advised Tony that the area would enjoy six to twelve months of wet weather based on precipitation indexes in the atmosphere over the Indian Ocean. When another reputable climatologist concurred that sea surface temperatures over the Indian Ocean were telling a similar story, Tony took the punt of his life and has never looked back.

“We found a place and two days after signing the contract, heavy rains bucketed down. Soon it was looking like a golf course and we were able to stock the property and turn over an income.

“It was a big decision and a big purchase, but the information to help us make a sound decision was available to be used. We were prepared that the rains could be delayed and it was a bonus to get off to a good start.”

Kalamurina Station spans 6500 square km in a strip wedged between the Simpson Desert and Lake Eyre. In average years it supports about 3500 beef cattle.

Like most climate-aware farmers, Tony has a flair with computers and with a few strokes of the keyboard, he can pull up a variety of historical records, computer packages, relevant web pages and satellite images.

The battery of climate tools are such that he can make strategic decisions about the property a world away on the leafy green slopes of the Mount Lofty Ranges abutting Adelaide where he finishes off some of the Station’s cattle.

However good the tools are, he is quick to add a key plank to his success lies in the local knowledge of Station Manager, Trevor Edwards, who he describes as having `the country in his fingertips’.

“The sheer size of the property makes it hard to know the exact distribution of feed on the ground. But with the vegetative index pictures that I can download from the web, Trevor and I can bounce our ideas around. We meld his local knowledge with the visual pictures so we can move cattle towards pockets of green feed and steer them away from land where the feed is rapidly diminishing.

“The theory is great, but it’s even better when I tap into Trevor’s years of local knowledge to bring about a better synergy.”

Tony believes many people underplay the significance of climate tools and strongly supports the Masters of the Climate initiative.

He remembers 1997 as a year when the media had panicked farmers about a monster El Nino developing in the Pacific, but they had failed to notice the sea surface temperatures over the Indian Ocean. In the wash, he was right – by the end of 97 rain had picked up and ’98 turned out to be a wet season.

“From where we sit the El Nino only has a two percent effect on the rain we get. The patterns over the Indian Ocean as revealed through precipitation indexes and sea surface temperatures have a much greater bearing on our climate. The media is overdue for a lesson on these.”

However, Tony acknowledges the El Nino and SOI effects come in handy since tributaries 2000 km North West of the property in Queensland feed the Warburton River that weaves its way through the station on its way to Lake Eyre.

Though the property can be in drought, he has seen `walls of water’ churn their way through the station three months after heavy rains in Queensland. Once every four years the River breaks its banks, carrying a flush of green growth.

“Climate is the engine driving the profits of farming,” he says.

“The beauty of climate tools is that we get three months advance warning as to the shape of the season, allowing us to make better financial decisions down the line.

“We look to destock when the outlook is grim, before everyone else jumps in. When the outlook is bright we quietly source stock three months in advance at reasonable prices.”

When it comes to buying and selling, Kalamurina Station has the pick of Queensland, Northern Territory, NSW and South Australian cattle markets.

“Whatever happens, we are going to have drought but advance warning means we can reduce our exposure. On the other hand we can foresee opportunities: expanses of green feed mean nothing if they are not used.”

Tony’s weekly climate habit involves checking sea surface temperatures over the Indian – from NOAA (National Oceanic Atmospheric Administration), visits to the James Cook University climate web site, a review of precipitation indexes in the atmosphere and the green vegetation index. He also updates monthly pictures of the precipitation and sea surface temperatures so he can compare his predictions against reality.

“I need a `wrong’ year to learn where my weaknesses lie in interpreting the tools. I keep in mind that probability is a numbers game, throwing up the odd event. We must be prepared for these.”

Tony has deliberately structured the business to deal with such vagaries. Capital costs are kept low, labour is bought in during peak periods and currently he is looking at breeds of cattle better adapted to the environment. While Herefords are the traditional breed, Tony says they are particularly prone to eye cancer. He has results to show other breeds may return higher growth rates and cope better with the searing summer heat.

“I am sure that if we were going blindly into our business plans we would have made many unprofitable decisions. I can’t imagine living without climate tools now.”