Updated research from Farm Management Canada shows decreased adoption of many farm business management tools
By Jackie Clark
Staff Writer
Farms.com
New research from Farm Management Canada shows that adoption of most farm business management practices has decreased substantially since 2015.
The organization’s Dollars and Sense study from that year which revealed that adopting business management practices can increase farm profitability by 525 per cent.
Farm Management Canada followed up recently by surveying over 700 farmers across the country.
“While the ability to read and use financial statements continues to have the highest rate of adoption at 63 per cent, this has declined significantly since 2015 (73 per cent), and having a formal plan for human resource management continues to have the lowest adoption, now at 12 per cent (compared to 20 per cent in 2015),” said an April 26 statement from Farm Management Canada.
The organization found 22 per cent of respondents have a written business plan now, compared to 26 per cent in 2015, and just 23 per cent consult farm advisors to meet business objectives, compared to 32 per cent in the original survey.
“It has been our experience that most producers turn their attention to their farm business practices in times of crisis and opportunity, and in fact, more so the latter,” Heather Watson, executive director of Farm Management Canada, told Farms.com.
One “factor affecting the adopting of business practices is getting members of the farm team on side, this is especially true for young farmers and women on the farm who, through our research, demonstrate a greater propensity towards the adoption of business practices,” she explained. “We know farmers didn’t get into farming to be business managers, so for many farmers this is a new concept.”
The reason 41 per cent of producers give for not adopting business practices is the fact that they’ve been successful without them.
“But, what does success look like?” Watson asked.
“Adoption of business practices is driven by profitability, managing risk, reducing stress and anxiety, positioning the farm for transition and achieving family and farm team harmony,” she said. “Our research supports these outcomes for producers who regularly follow business practices. Not only can profitability improve by up to 525%, but so does confidence in decision-making, interpersonal relations, transition success and overall peace of mind.”
Farmers “are entrepreneurial at heart, independent and readily seek new opportunities,” she added. “Opportunity is exciting and often provides immediate gratification. However, farm business management is a long game, and the rewards come over time.”
This research indicates that less than 25 per cent of Canadian farms have a business plan.
“Somehow, we need to bridge the gap between immediate gratification and setting the farm up for long-term success,” Watson said. “One of the major obstacles is making farm business management a reality on the farm and showing how planning can be used to support everyday decision-making on the farm. This includes managing risk.”
Adoption of proven effective business management practices can help Canadian farmers adapt to new challenges.
“While automation and science are helping alleviate production pressures and realize new opportunities, the confidence that comes from applying proven business practices provides our best chance for managing risk and is the one thing that cannot be replaced by machines or technology,” Watson said.
“Looking at the contribution of agriculture to Canada’s economic, environmental and social development already, imagine what we could accomplish by realizing the benefits of the untapped potential from increasing the adoption of farm business management practices,” she added.
damircudic\E+ photo