Farm business management challenges same all over

I recently attended the International Farm Management Association 2019 Congress in Launceston, Tasmania, in Australia.

Sessions and presentations were focused on addressing global issues and opportunities, such as demand for food, capacity to increase supply to meet the demand, future issues and roles of government. Then the sessions drilled down into the implications of new technologies, farm management, people and branding.

As I listened to the discussions, it appeared to me that the talks could easily be about Canadian agriculture.

IFMA hosts congresses every two years in various countries. The event in Tasmania attracted more than 300 participants from 20 countries.

I submitted a paper on farm business management and was asked to attend and present my paper. As it worked out, I was also asked to make a presentation on and lead a discussion about strategy and its implications to farm business management in general and specifically to Tasmanian agriculture.

The Tasmanian state government has set out a vision for the future — a 10-fold increase in the annual farmgate value of agriculture by 2050. A review of the Tasmanian Agri-Food Scorecards in 2005-06 and then again in 2015-16 revealed an increase in the farmgate value of $0.94 billion. Extrapolating that rate of real growth to 2050 results in a farmgate value of $5.94 billion. This translates to a 379 percent increase; well short of the 10-fold goal.

A great investment will have to be made to even get close to that rate of growth. Financial investment for sure but perhaps even more importantly, a human investment in terms of people’s time and effort will be needed. Traditional approaches to farm business management are going to have to be challenged to achieve growth of that magnitude.

Time will tell if it is possible, but one thing is certain — Tasmanian agriculture is going to challenge the status quo.

According to Mark Allison, a presenter at the congress, productivity growth in Tasmanian agriculture has slowed considerably in the past few years, global market share is shrinking in relative terms and there has been under investment in research and development. It’s not the most optimum position from which to begin.

However, for Tasmanian agriculture that thinking is rear-sighted and definitely the vision now is to the future.

What does this mean to Tasmanian farmers? It is evident that they face similar challenges to Canadian farmers. There are environmental concerns relative to weather patterns and climate change. Droughts are common.

Costs — both operating and capital — are increasing. Land values are increasing and are not that much different from Western Canada, depending on locations. Prices are lower. Margins are lower. Labour is difficult to come by.

Also, the challenges Tasmanian farm families face with the intergenerational transition of ownership and management are similar to that faced by Canadian farmers.

I was able to spend a day with a large agricultural lender. The morning included a session with bank personnel, who had expertise in commodity risk management. Eight farmers attended. Seven of the farmers were classified as “consumables” (farmers with operations that consumed the grain produced for feed) and “arables” (farmers growing the grain).

In the afternoon, I was taken to a smaller to medium sized dairy (350 milking cows). The operation was a share-farming arrangement with an owner and a manager working together and sharing revenue and expenses, similar to a crop-share arrangement in Canada.

Interestingly, the young farm manager was from Alberta and had been living in Tasmania for eight years. His plans are to remain there and eventually get his own farm — something that was not likely to happen in Canada.

There is a saying that says the more things change, the more things stay the same. Here I was half way around the world and as I listened to the discussions, I could have sworn that I was in Canada, if not for the accents.

Terry Betker, P.Ag, is a farm management consultant based in Winnipeg. He can be reached at 204-782-8200 or terry.betker@backswath.com.

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