[{"data":1,"prerenderedAt":97},["ShallowReactive",2],{"insight-drought-risk":3},{"id":4,"title":5,"author":6,"body":7,"ctaDescription":75,"ctaTitle":76,"description":77,"draft":78,"extension":79,"eyebrow":80,"meta":81,"navigation":82,"path":83,"publishedAt":84,"readingTime":85,"related":86,"reviewedAt":88,"seo":89,"showAuthorRole":82,"stem":90,"tags":91,"type":95,"__hash__":96},"insights\u002Finsights\u002Fdrought-risk.md","What a drought would do to our strategy","Mark Lowrey",{"type":8,"value":9,"toc":67},"minimark",[10,14,19,22,25,31,35,38,41,45,48,52,55,62],[11,12,13],"p",{},"Ask the manager of any agricultural fund about drought and you will usually get an answer built on\nlong-run averages. Averages are comfortable, and they are also beside the point. The question a\nserious investor is really asking is a different one: what does a bad year actually look like in\nthis strategy? It deserves a direct answer, so here it is; traced through the three places a season\ncan hurt us: before capital is deployed, inside a cycle, and between cycles.",[15,16,18],"h2",{"id":17},"the-decisions-made-before-a-single-animal-is-bought","The decisions made before a single animal is bought",[11,20,21],{},"Our first line of defence is not a reaction to drought at all; it is the way each program is set up.\nEvery property in our program is fully irrigated, which materially reduces our dependence on\nseasonal rainfall. On top of that, stocking decisions are made against rainfall profiles and\nmeasured pasture condition, not hope. If the feed base is not there to support a full program, we\nrun a smaller one, or none that season.",[11,23,24],{},"That last sentence matters more than it may appear. Because our capital cycles run roughly 100 days\nrather than years, no deployment decision reaches far beyond the conditions in which it was made. We\nare never locked into a multi-year exposure that was decided in better times.",[26,27,28],"blockquote",{},[11,29,30],{},"“A drought year for this strategy should look like lower deployment and thinner program volume,\nnot stranded assets or forced selling.”",[15,32,34],{"id":33},"when-the-season-turns-mid-cycle","When the season turns mid-cycle",[11,36,37],{},"Inside a cycle, the discipline is about seeing stress early enough for it to be a management\ndecision rather than a season-end surprise. Water-point telemetry and daily weighing surface trouble\nas it develops: falling gain rates and water constraints trigger defined escalation pathways. Our\nown cropping programs, oats, for example; offset feed costs when pasture tightens.",[11,39,40],{},"And if the right answer is to end a cycle early, the strategy’s structure changes what that decision\nmeans. Because sale pathways are pre-committed, turning stock off early is an economic calculation\nagainst a known price, not a distressed sale into a falling market.",[15,42,44],{"id":43},"what-insurance-does-and-what-it-honestly-doesnt","What insurance does, and what it honestly doesn’t",[11,46,47],{},"Livestock are insured for mortality, transit and theft; specified events. Insurance does not cover\nslow weight gain, higher feed costs or thinner margins. Those are performance risks, and they are\nours to manage. We would rather say that plainly than let an insurance line imply more protection\nthan it provides.",[15,49,51],{"id":50},"the-honest-bottom-line","The honest bottom line",[11,53,54],{},"Drought cannot be eliminated from an agricultural strategy. It is a core risk of this fund and\nreturns in a failed season would be materially affected. What discipline changes is the shape of the\ndownside: measured early, capped by short cycles, cushioned by transparent pricing and never\ncompounded by land-price exposure or long lock-ins.",[11,56,57],{},[58,59,61],"a",{"href":60},"\u002Fgovernance-risk","How we govern risk →",[26,63,64],{},[11,65,66],{},"This article is general information only, prepared without regard to your objectives, financial\nsituation or needs. It is not financial product, legal or tax advice. Ferguson Hyams Investment\nManagement Pty Ltd, AFSL 490023.",{"title":68,"searchDepth":69,"depth":69,"links":70},"",2,[71,72,73,74],{"id":17,"depth":69,"text":18},{"id":33,"depth":69,"text":34},{"id":43,"depth":69,"text":44},{"id":50,"depth":69,"text":51},"The Strategy Brief sets out the key risks and their controls in detail. Wholesale investors only.","Read the full risk framework","The season is the biggest single variable in any agricultural investment, and nobody controls it. Rather than wait to be asked, here is how our strategy is built to behave when the rain doesn’t come.",false,"md","Risk & operations",{},true,"\u002Finsights\u002Fdrought-risk","2026-08-31","3 min read",[60,87],"\u002Finsights\u002Flamb-supply-cycle",null,{"title":5,"description":77},"insights\u002Fdrought-risk",[92,93,94],"drought","risk","operations","article","TMW6IhePZK1Hjeqm0IznwM0TvhJgW-jpXdAD6anXCts",1789975789152]