Agricultural Consultant. Bendigo. 3550
The farm office is as important as the bridge on a ship. It is the place where major decisions will be made. It is the location where the changing course of the family business will be planned and monitored. It is now timely to get out of the tractor seat and get into the office seat.
This change from "muscle to mind" is necessary to cope with the demands now being placed on farm managers. Production, marketing and financial management of the business needs to be of a high standard to cope with high risk and tight profit margins in the farming business.
Consider the new words which have crept into our farming dictionaries in recent years: Integrated Farming Systems, Crop Sequencing, MEY-Check, Water Use Efficiency, Nutrient Audits, Herbicide Resistance, Futures, Options and many more. This is modern farm management - monitoring, analysis, planning and action. Most of these tasks are related to jobs which must be performed in the farm office.
Investment in today's farm office should be just as important as investments in the soil or machinery resources of the farm. It should be comfortable and well equipped. For the ideal farm office a price tag of $10,000 for furnishings and equipment would not be unrealistic. Contents should include:
2 desks with comfortable chairs, one as a work station and the other for the farming partner, family members or visiting farm secretary;
a 486 DX66 personal computer with plenty of memory and storage and a bubble jet printer; a modem is optional;
telephone, with answering system now compulsory for farmers;
recent model fax with poling and copying facilities;
lever arch folders and filing cabinet systems;
appropriate shelving for books and the farm reference library;
air conditioning, reverse cycle;
large bin for filing rubbish.
The office is the farm's shop window. It should be the place to welcome business visitors, in person or by phone. The phone on farms needs the utmost attention. To be serious about marketing the phone should be answered politely at all times. This is in line with good business practice. The answering system should always be on during business hours if the house is unoccupied.
To reap the value of such an investment in the farm office the family must want to embrace an enhanced approach to farm management. The 'super' office is only for those in the top 20% or who aspire to be. There are now demands on farm managers to do 'mind' work. Monitoring, marketing and making money are worth considering.
We have no control over climate and little control over prices. The only rapid way for Australian farmers to beat these challenges is to improve their risk management options. This can only be done by having better knowledge of the factors which limit production and potential profit. If these are understood then we can be successful even in the toughest times. Whilst many complain bitterly about the current environment, others are quietly making excellent profits.
Very few cropping farmers have the ability to go back 10 or 20 years and study changes in nutrient status, pests and
diseases, losses from waterlogging, yields linked to quality, water use efficiency and profitability. Every farm has top and bottom paddocks. If those bottom paddocks could be moved towards the top the gains would be substantial. Equally, greater historical knowledge would confirm that some paddocks, especially when cropping economics are poor, should not be cropped. Their soil characteristics are such that they will never yield consistently to provide acceptable profit levels. Such paddocks should be assigned to perennial pastures, tree plantations or sold, just as we would sell a crook mob of sheep!
A research program called FAST (Farm Management 500 and Sustainable Technology) is defining the financial penalties associated with 'bottom paddocks'. Monitoring is currently being conducted on 10 farms in the Victorian Wimmera. Of greatest interest will be the estimate of the amelioration cost of fixing them up. The study already suggests that good ground is relatively cheap to buy and bad ground is expensive. The message for those who aspire to be successful cropping farmers is to monitor, analyse and act.
We are constantly reminded that we are now in the 'information era' and that knowledge is wealth. To understand this we need to compare it with another process we all understand very well, that is manufacturing. The similarities are:
Manufacturing a product
Mine raw materials
Monitor to gather raw data
Process to a metal
Process data into relevant information
Create a profit
Analysis provides knowledge for action
Sell for a profit
In the 90s, knowledge is wealth
Steps to better monitoring are:
• collect and understand your own farm information;
• store and analyse on a computer;
• compare your farm financial results with your peers, identify where you sit and aspire to do better;
• compare one paddock with another on your own farm. Identify the limiting factors on bottom paddocks, fix them up or get rid of them;
• monitoring provides information, analysis provides knowledge. In the 90s knowledge is wealth.
If we are to take advantage of the 'information era' then we must make sure that we have the working environment and equipment to do the job - the modern farm office.
If farmers aspire to be good at marketing then they must understand that the farm office will play a crucial role in the adoption of marketing excellence. The principles of marketing are simple. They are firstly, to identify, create and satisfy customer needs whilst being able to do it better than your local or global competitors; secondly, to secure good prices which lead to an acceptable profit margin. There are five key components:
• knowing your products
• knowing your markets
• knowing your customers
• satisfying customer needs
• securing an acceptable profit margin
The adoption of sound marketing strategies will be developed in the farm office. It goes further than the principles outlined above. There is also a need to form good networks, improve negotiating skills and, above all, excel in communications. This applies to receiving good market intelligence via the phone, fax or modem as well as speaking with the 'trade'. Remember, if you are serious about marketing you must be accessible in some way. For the moment the answering system can play an important business role. At least your phone will be answered during business hours, which is exactly what those in business expect these days.
Most farming families aspire to generate a level of disposable income which meets their farming and family needs. In recent years this has been more difficult.
Despite these tough times some families have been able to make progress whilst others are clearly failing. We are at a watershed where some businesses will continue to increase in scale and more traditional farmers will need to rely increasingly on intensification or off-farm to remain viable.
Plotting a course for the farm and the family is not easy and the battle has to be fought and won in the office. The issues are complex and rural adjustment will be slow but inevitable. Having a good knowledge of the business and how it compares with others is very important. Once you know where you are you can do something positive to change for the better.
The Farm Mangement 500 FAST project is linking farming systems to profitability. Farmer members have been concerned about the selection of the most appropriate farming system. Which systems are sustainable and economically viable by soil/climate zones? FAST is looking at the performance of 80 farmers over 7 years in the Victorian Mallee and Wimmera. A further 40 farms will be studied in southern NSW this year. To date the emphasis has been on productivity. This leads to a healthy operating surplus per hectare and should also encourage optimum water use efficiency. However, FAST is demonstrating that productivity alone does not guarantee family viability. Structural issues which need to be considered are:
• farm financial scale;
• cost of servicing debt;
• ability to earn and access off-farm income;
• dependent families per business and level of drawings;
• management of machinery and stewardship investments.
These issues will need to be included on any agenda which relates to the viability, hence sustainability, of the family farming business. The adoption of sustainable farming systems must embrace good business management principles.
Farm business management begins in the office. We can look forward to a new approach to management. Farmers are starting to realise that it is in the office where the money will be made. They are also engaging contractors and casual labour to release more time for monitoring, analysis and action. They are starting to realise that information is power and knowledge is wealth. This is the 'new harvest' for farming families.