By Peter Falconer, West Australian farm management consultant
After 40 years in the field, Peter Falconer reflects on some of the mind-sets that he has seen influencing farmers" fortunes.
The requirements to successfully manage a farm business have changed much in the past 40 years. With many farm businesses now involving capital of $5 million to $10 million and more, different skills are required by both farmer and consultant.
Farm operating costs of 60 to 70 percent of gross income involve different risks to when the costs were only 40 percent of gross income. The technical advances which have resulted in dramatic production increases have made it even more difficult for individual farm business managers to have all the necessary knowledge for good decisions.
Also, much of the information which bombards farmers through radio, TV, fax, email and phone calls can often create as much confusion as provide answers.
Consequently there has been an explosion in the number of specialist advisers, particularly in the agronomy and marketing areas.
Many agronomists are employed by, or are commercially affiliated with, merchandising firms and are not always in a position to give the same independent advice on which the consulting profession used to be based.
Nevertheless they still provide valuable input to agriculture in spite of the potential for bias.
In crop production particularly, there has been remarkable progress in agronomic research. Development of weed control techniques to allow earlier sowing, new crop varieties to take advantage of this, and higher yields justifying increased fertiliser usage have resulted in many farmers increasing wheat production by up to eight-fold.
Yet during this same period we have seen numerous farm businesses fail while their neighbours succeeded and expanded.
Both groups were exposed to the same climate, same prices and costs. And both groups were exposed to the same technical advances and the same research benefits.
Why then did some succeed and others fail? Having had considerable experience with both groups I am convinced that the answer lies in two words: attitude and management.
Neither good attitude nor good management are easy to learn and some would say they are inherited rather than acquired.
But there is no doubt that both can be improved by the willing, with a combination of professional counselling and tuition.
The first farm advisory service in Australasia was established at Lincoln College in New Zealand and resulted in the establishment of the first tertiary education course in the business of farm management in this part of the world. The Diploma of Valuation and Farm Management had a huge impact on the development of advisory services in both government and private fields.
The emphasis in the course was on management rather than agronomy or husbandry, and honed the thinking of graduates to also consider the important personal factor.
Thus while clover varieties, fertiliser rates and stock nutrition were recognised as important, so too were land prices, borrowing limits, the balance of machinery/labour, price hedging, farm succession and staff management.
Unfortunately, failure to recognise the importance of attitude and management tends to restrict attempts by authorities to contribute to these areas.
Let me use machinery investment as an example. On many broadacre farms in Australia the total cost of cropping machinery is 50 percent greater than the next biggest cost - fertiliser - and double the expenditure on weed control.
In spite of this, and the fact that a 10 percent saving in machinery costs would have more effect than a 20 percent saving in weed control, there is little encouragement given to machinery research.
Other evidence of the potential from machinery research is clear from the annual Farm Business Survey of 400 farms in WA.
The machinery investment on surveyed farms shows that most farms have between $200 a hectare and $500/ha invested, and some more than $700/ha of crop.
Those with, say, an extra $200/ha invested in depreciating farm machinery have no greater production or income but have lost the opportunity to invest the same dollars in a 20 percent expansion of their farm and a 30 percent increase in income.
The explosion today in the number of specialist advisers is a reverse of the early trend in the consulting profession but this may actually make it necessary, rather than just advisable, to make use of the general practitioner.
From a research point of view, it is important to recognise the limitations to the adoption of good agronomic research if a good management capacity is not in place.
For more information: Peter Falconer, firstname.lastname@example.org