Rural professionals need to cut through the noise
Rural professionals need to cut through the noise to boost farm success
As agricultural debt passes $60 billion set against the backdrop of continued market volatility and regulatory pressure, successfully managing a farming business in New Zealand has never been more challenging according to Crowe Horwath’s Head of Agribusiness Neil McAra.
A farm owner himself, McAra serves on advisory boards for several large farming operations and stresses that farming, now more than ever, carries significant levels of financial risk, especially for operations with high debt levels, but there are also great rewards to be had for good operators under the right conditions.
McAra says, “It’s about farming smarter. As the industry continues to become increasingly complex farmers need to continue to evolve, seek the right advice and embrace innovations in both technology and farming practice.”
McAra cautions that despite continuing optimism in the dairy sector around improved payouts going forward, the business risk associated with increased debt levels incurred over the last few years needs to be mitigated carefully and will take time to rectify. We are not out of the woods completely just yet.
“The challenges the sector has faced over the years have forced adaption: farms have generally become larger and the typical dairy herd has also grown to an average of over 400, farmers have implemented new technology and farming practice, increased yields and generally improved at doing more with less,” says McAra.
He references the fact that the sheep meat sector was producing the same tonnage from 30 million sheep as it did from 70 million due to on-farm and processing improvements.
After coming back in from the paddocks McAra says, “Out of necessity farmers have become ever more businesslike in their approach and with a continued barrage of legislative and regulative change in areas such as employment law, health and safety and the environment along with rapidly evolving business and technological ecosystems, they are spending more and more time dealing with these behind-the-desk challenges.”
With so many challenges to face and change happening at such a rapid pace there is no shortage of advice and people willing to both support and profit from the farming sector.
McAra advises that the sheer volume of information and communication associated with doing business in the rural sector now can be overwhelming for farmers, leading to many simply putting their heads in the sand and carrying on doing things the way they always have done.
McAra notes research from the Red Meat Profit Partnership has shown the average farmer has over 60 contact points in any given year from suppliers to financial and farm advisers, and it can be quite a task just keeping on top of these.
The same research showed many farmers simply relied on their family or those over the fence for their advice which can be both positive and negative. Aside from neighbours and vets, farmers looked to their accountants and business advisers for counsel and it’s vital that these advisers have the right knowledge and are providing the correct advice.
“The industry needs to recognise this and adapt accordingly. We can’t continue to overwhelm farmers with more contact noise. We need to make it simpler, but at a more detailed level of advice and support in recognition of the complexity of doing business now in this sector,” says McAra.
“At Crowe Horwath, we realise this challenge and have setup what we call the ‘Farming Family Office’ which enables our clients to have a number of their business needs such as human resources, accountancy, payroll and risk insurance serviced by one trusted adviser who knows their family and their business intimately. This adviser is supported by experts all over New Zealand from our wider team,” concludes McAra.