Farm advisory boards make better decisions

GroundCover Live and online, stay up to date with daily grains industry news online, click here to read more

Faulty decision-making can be more damaging to a farm business than faulty equipment. Establishing a farm advisory board provides a formal and regular meeting routine to guide farm management decisions

Photo of seed deposit

PHOTO: Paul Jones

Why should a mixed farm enterprise establish a farm advisory board?

A mixed-farm operation handles different enterprises (such as sheep and cropping). An advisory board can assist with making major decisions integrating all enterprises.

Most businesses outside of agriculture use a regular formal meeting process to guide tactical and strategic decisions, yet less than one per cent of family farms, many of which regularly turn over millions of dollars, do the same. While many small farm businesses have regular discussions with a cropping adviser or a financial adviser such as an accountant, these meetings are often held separately and do not involve all members of the family business.

Farm advisory boards enable all family members and advisers connected with a farm business to be at the table at the same time and allow decision-making and discussion to occur on a more formal and regular basis. Often meetings are only held in times of crisis such as an immediate succession issue that needs to be dealt with, a cashflow crisis caused by drought, or at times when major investments are being considered (such as the purchase of land).

Board meetings provide a structured, disciplined platform to deal with the many production, financial and personal issues that need to be considered in running a farm business. They provide a regular opportunity for communication between all business partners and for the sharing of visions and goals, as well as planning for the future.

Successful boards use independent chairs with the skills to facilitate discussion in a way that includes all parties. It is important that the usual leader of the family farm does not take on the chairperson role. Establishing an independent chair enables family members to step back from running the meeting and think strategically about the business.

An effective chairperson has the following characteristics:

  • high-level facilitation and interpersonal skills;
  • a good understanding of decision-making processes;
  • ability to recognise the influence of bias and prejudice;
  • possession of relevant business skills (for example, finance, crop production or human resource management);
  • understanding of the personality types of all the people on the board and can identify and exploit each member’s strengths; and
  • allows all members to have their say while moving the discussion towards a consensus.

A farm advisory board structure can be used to develop skills or employ those with the skills to use decision-support systems to assist analytical thinking.

Decision-support systems provide opportunities to explore a range of ‘what if’ scenarios, such as the financial impact of a
run of dry seasons or how to best invest income from a run of good seasons.

Used properly, decision-support systems enable management decisions to be made proactively without the stress and mistakes associated with rushed or pressured decision-making. 

Grain marketing decisions

Having a farm advisory board in a mixed farming system is an opportunity to avoid the ‘it’s all your fault’ method of grain marketing. A regular check on season performance and yield and quality expectations for the remainder of the season can help reduce the stress of selling grain.

This means the person who is responsible for the grain sales has at least some direction and buy-in from everyone at the meeting. They feel more confident in what they are doing knowing they have the backing and understanding of the rest of the group.

Photo of smiling man with poster of sprayers behind

PHOTO: GRDC

Value of group discussions: Bill Long

“One of the major benefits I have observed about the advisory boards I work with is that the individual discussions that were previously being had between individuals are now being reported to the management group in a structured way. Everyone is kept informed at regular intervals.

“Farm advisory boards have been really powerful for businesses I’ve worked with. Some have changed business structures and communication between all business members has improved.

“People feel more informed, more engaged and more able to offer an opinion and they really value the opportunity to hear the goals and aspirations of other family members.

“When we talk at length about some of those goals, aspirations, wants and needs, and get everyone to share them with the rest of the family and business partners, it means that everyone is operating together towards achieving business and personal goals.” 

More information:

Bill and Jeannette Long, Ag Consulting Co,
acc@agconsulting.com.au,
0438 373 993;

Tanya Robinson,
tanya.robinson@grdc.com.au 

Next:

Sheep profits lifted with benchmarking groups

Previous:

Risk analysis reveals decision impacts

GRDC Project Code AEA00004

Region National