FARM CHANGE THROUGH BENCHMARKING

Chris. Lewis1, K Verhoek1, I Williams2

1BakerAg

2Pioneer Brand Products

Corresponding Author: Chris Lewis. chrisl@bakerag.co.nz.

 

ABSTRACT

Benchmarking is the practice of establishing the relative performance of a business against an appropriate standard, which can be self-set targets or peer performance. It identifies the excessive costs and inefficiencies of a business, increasing its competitiveness and ability to outperform others. Dairy System Monitoring (DSM) has been operating for twenty years as a consultancy service that benchmarks over 150 New Zealand and Tasmanian dairy farmers. Its aim is to work alongside farmers, collecting and sharing interpretation of their farm data in a manner that motivates and more actively engages them with their business. DSM participants perform ahead of the New Zealand national average for operating profit as the DSM service enables individuals to verify current performance and make good decisions. also a useful analysis tool for consultants. It is used to develop guidelines for managing home-grown forage; continuously update and respond to farm performance information; and critically examine expenditure in-line with physical performance. In conclusion, the DSM service can confirm mainstream science, but it also progresses to the next stage with analysis on profit drivers that create clarity around the strengths and weaknesses of individual businesses, directing performance beyond industry averages.


BIOGRAPHY

Chris Lewis is a Registered Farm Management Consultant and Director of BakerAg. Based out of Masterton, Chris consultants to large scale dairy business through the lower North and South Islands. He is skilled in farm systems modelling and facilitation and extension. 2014 Dairy Consultant of the Year recipient and awarded NZIPIM Fellowship in 2018.Ian Williams is a forage and farm systems specialist for Pioneer, based out of Hamilton but working throughout New Zealand. Ian is recognised nationally as a skilled facilitator with a strong science background. Ian was seconded into a group responsible for the development of templates for farm environment plans, for Waikato based arable farmers through Environment Waikato In their overlapping backgrounds and common origin as MAF consultants their passion is to build on collective experience and research with their farming clients in the search for sustainable, profitable farm systems.

ECONOMIC OUTLOOK FOR FARM SURVIVAL IN THE CURRENT FARM ECONOMY DOWNTURN

James W. Richardson2, Joe L. Outlaw1

1Regents Fellow and Co-Director of Agricultural and Food Policy Center, Texas A&M University

2Senior Regents Professor and Co-Director of Agricultural and Food Policy Center, Texas A&M University

 

ABSTRACT

Agricultural producers in the U.S. are currently struggling financially.  Farms and ranches are losing money and some are going out of business. The farm economy downturn is not confined to the United States, based on the recent decreases in farmland values around the World. Many farmers and politicians are asking if the current downturn is going to be like the farm crisis of the 1980s. This paper reviews why the current conditions are not the same as the 1980s and projects the likely economic situation for representative commercial farms in the United States given sustained low prices.

Underlying economic conditions in the general economy do not suggest that a repeat of the Farm Crisis of the 1980s.  However, just because economic conditions are not as bad as the 1980s does not mean things are not bad.  Results from simulating 63 U.S. representative crop farms indicates that 30 will face high probabilities of liquidity and equity issues through 2025, to the extent that their overall ranking for economic viability will decrease one or two levels.  Thirty-three of the 63 crop farms will be able to weather the crisis.


BIOGRAPHY

Formerly Co-Director of the Agricultural and Food Policy Center, Texas A&M AgriLife Senior Faculty Fellow, and Senior Regents Professor in the Department of Agricultural Economics at Texas A&M University.

James received his Ph.D. in agricultural economics at Oklahoma State University in 1978 and joined the Texas A&M Department of Agricultural Economics in 1978 where he taught risk analysis and conducted research on farm policy, risk analysis, and the economic feasibility of alternative feedstocks for renewable fuels.  He is best known for his farm level policy analysis research and simulation models. Using his models, the Agricultural and Food Policy Center prepares an annual report for Congress projecting the economic viability of 95+ representative crop, cattle and dairy farms in principal production regions of the United States.  Using the representative farms, the Center has assisted Congress by analyzing the probable economic consequences of alternative farm bill proposals for every farm bill since 1985.

Recent publications by the Center are available at: https://www.afpc.tamu.edu

INNOVATION IN EAGLE: FARM BUSINESS MANAGEMENT SOFTWARE

Terry Betker, P.Ag., CAC, CMC

Backswath Management Inc.

terry.betker@backswath.com

 

ABSTRACT

 Successful farm operators know the importance of continuously evaluating their business performance. But to truly complete a thorough examination of an operation’s effectiveness, farm owners and managers need to look at more than just numbers like sales, profits, and total assets. Leading farm managers must be able to read between the lines of financial statements and make the necessary correlations that shed light on seemingly inconsequential numbers and render them more accessible, comprehensible and ultimately more usable. This may seem to be an overwhelming task, but fortunately there are well-tested ratios that make the task less daunting. While ratios are very useful tools to analyze business performance, they do not make decisions. They simply create context for the decision-making process.

Farms today are increasingly complex. Capital investment requirements are large and often accompanied by debt. Associated risk increases. Key to profitability and longer-term sustainability is the adoption of best management practices. The application of best management practices is enabled through innovation in the industry in tools, techniques and resources, including software programs that analyze farm management performance, both financial and management.


BIOGRAPHY

Terry is President and CEO of Backswath Management Inc., originating in 1992 and a company that provides business management expertise and resources to farmers and farm families on strategic business planning, transition planning, financial analysis, benchmarking and human resource management. Terry was actively involved in a family grain farm for nearly 20 years. The farm is now entering its third generation. Terry has delivered presentations on farm business management to agriculture organizations throughout Canada, the U.S., Mexico, Chile, New Zealand, Poland and the Netherlands. He teaches at the University of Manitoba and serves on national and provincial committees. Terry is a professional agrologist, a certified agricultural consultant and a certified management consultant. He has completed the executive program for agricultural producers at Texas A&M University. He is the 2015 recipient of Farm Management Canada’s Wilson Loree award, recognizing his contribution to developing and promoting new and positive change in agricultural business management practices and expertise in Canada. His credentials include certification in mediation theory and strategic planning, and a science degree in agriculture from the University of Manitoba.

EDF SNAPSHOT 2018: ANIMAL WELFARE IN EUROPEAN DAIRY FARMS – FIRST INSIGHTS

Tomke Lindena1, Dr. Birthe Lassen1

1Thünen Institute of Farms Economics

Tomke.Lindena@thuenen.de

 

ABSTRACT

The European Dairy Farmers (EDF) Snapshot 2018 focused on “Animal Welfare” as animal welfare is a daily concern of dairy farmers and is increasingly important to those outside farming. 201 farmers from 16 countries participated in the survey. First descriptive results are presented in this paper. Even though the results are not representative, they offer interesting insights into the farmers’ perception of animal welfare: According to the participating EDF farmers, animal welfare is of high importance throughout the supply chain, but they also see different priorities for animal welfare aspects. Where EDF farmers consider animal health as the most important aspect, society seems to attach great importance to grazing. In addition to legal and dairy processors’ requirements concerning all farmers in the respective countries, half of the EDF farmers join voluntarily at least one additional programme concerning animal welfare. EDF farmers are mainly motivated to implement animal welfare criteria to improve the cows’ welfare and to increase profitability. The EDF Snapshot data provides interesting insights into the status quo of animal welfare in European dairy farms and forms the basis for further research. EDF members use the results to discuss the current situation and to optimise their own farm strategies.


BIOGRAPHY

Tomke Lindena has been working at the Thuenen Institute of Farm Economics in the field “international competitiveness of dairy production” since 2015. Besides her work in the project “Dairy Sustainability Tool” she works on policy advices for the German Ministry of Agriculture. She is also responsible for the German group in the European Dairy Farmers (EDF) network. Tomke comes from a dairy farm in northern Germany, which her brothers have now taken over from their parents. She is currently doing her PHD in the field of “economic analyses of sustainable dairy production” in cooperation with the University of Kiel. “. She is supervised by Prof Dr Sebastian Hess (University of Kiel) and Prof Dr Hiltrud Nieberg (Thuenen Institute).

CUSTOMER ENGAGEMENT OF SOUTH AFRICAN FARMERS TOWARDS THEIR FERTILIZER SUPPLIER

Prof Christo Bisschoff1, Mr J Craven1

1NWU Business School, North-West University, Potchefstroom, South Africa

Christo.bisschoff@nwu.ac.za

 

ABSTRACT

The postmodern ultra-competitive global marketplace makes it difficult for companies to hold on to customers.  This is especially true for industries that are driven by commodity products, and the South African fertilizer industry is not excluded from this statement.  It is therefore important that companies not only operate to create loyal customers, but also increase and maintain a high level of engagement with their customers. This study measures customer engagement for a South African fertilizer company.  In doing so, the study makes use, firstly, of a proposed customer engagement model, secondly, a customer engagement questionnaire to measure engagement, and thirdly, measuring the reliability of the data. The results show that all the antecedents were regarded as important by the respondents, and all but one exceed the required 75% level of excellence. The data were tested for reliability and showed excellent reliability in excess of 0.90, as measured by Cronbach alpha. This model can be used by manager, future researchers in the fertilizer industry, as well as other agriculture related industries.


BIOGRAPHY

Christo Bisschof grew up on a sheep station and later started his employ on this family farm heading the irrigation division. After five years he then joined the North-West Cooperative as an agricultural economist and completed his master’s degree (1990) and his doctoral studies (1992) in Marketing and Agricultural Business Management. He started his academic career at the University of Pretoria as a lecturer in Business management. Christo focusses his research on brand loyalty, business ethics and also focusses on comparative research. He has published an array of accredited articles, has addressed audiences international conferences, has acted as reviewer of a number of accredited journals and has served on the panel of the Marketing Association of South Africa. He was the Chairman of the International Business Conference and published the proceedings as the editor. He still serves on the academic committee. Christo lectures marketing at the North-West University Business School in Potchefstroom. Christo is married to Antoinette and they have two sons; Christo (Jr.) (29) holds a PhD in Sport and Exercise Sciences and is a lecturer at the North-West University while Wilhelm (27) is an electrical engineer in Christchurch, New Zealand. Christo is a keen, but rather high-handicapped, golfer who has not yet succeeded top beat his sons in a round of golf.

THE ECONOMIC FEED CONSUMPTION OF DIFFERENT CATTLE BREEDS IN A COW-CALF PRODUCTION SYSTEM

Frikkie Maré1 and Henry Jordaan1

1Department of Agricultural Economics, University of the Free State, Bloemfontein, South Africa

MareFA@ufs.ac.za

 

ABSTRACT

In order to ensure the future existence of an industry or business, it should be sustainable in terms of environmental stewardship (planet) and economic prosperity (profit).  The problem with improving more than one sustainability indicator is that these indicators are often negatively correlated. In order to increase economic prosperity in a cow-calf operation, one should thus aim to increase the output produced by using less natural resources per unit of output while taking society at large into account. The purpose of this study is to evaluate the differences in value addition and feed requirements of seven different beef breeds on the same extensive farming conditions for a cow-calf enterprise by calculating the economic feed consumption. The results show that there are prominent differences between the seven breeds in terms of their respective feed requirements, value addition and economic feed consumption. The Bonsmara was the best breed in terms of economic feed consumption and the Simmentaler the worst. However, when one considers the results in conjunction with the data that were used to perform the analyses, it can be seen that there was a high negative correlation between the economic feed consumption and the weaning percentage of the various breeds. In order to improve the economic feed consumption of beef production, it is recommended that primary cow-calf producers evaluate the reproduction performance of the breed that they are farming with.


BIOGRAPHY

Dr Frikkie Maré is the Academic Department Head of the Department of Agricultural Economics at the University of the Free State. His research is mainly focused on the economics of red meat production throughout the value chain.

FARMER MANAGERIAL SOVEREIGNTY: AN INTERNATIONAL ISSUE GLIMPSED IN KENYA & THE UK

Professor E. John Wibberley, PhD, FRAgS,

University of Reading & Royal Agricultural University, Cirencester, UK, ejwibberley@btinternet.com

 

ABSTRACT

Decision-making is a crucial component of farm management. Farmers may choose to cede decision-making to others inside or outside their businesses (as specialists, contractors or consultants). However, their decision-making may be [or may feel] usurped against their will. This Paper explores Farmer Managerial Sovereignty (FMS). FMS is about the extent to which decision-making is freely and flexibly in the hands of practical farmers and farm managers at farm level rather than with bureaucrats, policymakers, the suppliers of their inputs and/or the buyers of their outputs. This paper explores whether or not FMS has changed over the past two decades, and if so, how? Do farmers/farm managers in Kenya feel more or less change in FMS over these past two decades than those in the UK or vice versa? Two somewhat eclectic samples of 24 contrasting farmers/farm managers from Kenya and 24 from the UK were asked to provide indicative responses: Kenyan farmers felt FMS only lessening somewhat, notably due to increased government bureaucracy and public scrutiny. The UK sample aggregate FMS score indicated a much lessened to lessened overall FMS during the past two decades, especially due to increasing environmental rules, pesticide limitations, increased government bureaucracy and public scrutiny.

ENTERPRISE RISK ANALYSIS

John P. Hewlett1Jay Parsons1

1University of Wyoming, Department of Agricultural and Applied Economics, Laramie, Wyoming U.S.A.

hewlett@uwyo.edu

 

ABSTRACT

United States farm policy enacted since 1996 has created a need for agricultural producers to better understand and manage risk. However, risk is a difficult concept to address because the ideas are challenging and the breadth of solutions is wide. Even where the concept is well understood, few have mastery of the tools and skills needed to properly evaluate alternatives.

RightRisk has been involved in developing teaching simulations, online courses, and risk decision tools since 2001. The team’s Enterprise Risk Analyzer (ERA) tool provides farm and ranch managers much-needed assistance in evaluating risk management alternatives. The ERA tool utilizes an Internal Revenue Service (IRS) Schedule F and a series of other schedules as the basis for evaluating enterprise risk, including enterprise net income and break-even analysis. From these, the manager is in good position to evaluate each enterprise on its own merit, compare it to other enterprises, and to do so with a better understanding of the uncertainty involved with the outcomes.

The Enterprise Risk Analyzer tool enhances the manager’s understanding of how breakeven prices and yields are likely to vary over time. Using the risk-estimates provided by the user as most likely, minimum, and maximum estimated yields and prices for each enterprise, the tool provides tabular and graphical information for the probability of breaking even over a range of values. The ERA tool describes possible outcomes using a cumulative distribution graph that indicates the probability of earning a net return at or below a given value.


BIOGRAPHY

John Hewlett is a Ranch/Farm Management Specialist at the University of Wyoming and member of the regional RightRisk and Risk Navigator teams. He also coordinated past efforts of the regional WIRE program. He grew up in Washington State, where he worked eight years (four as foreman) on a large stocker-cattle/crop operation. John holds a BS degree in Agricultural Business from Montana State University and a M.S. degree in Agricultural Economics from Oregon State University. He came to the University of Wyoming, Department of Agricultural and Applied Economics in 1987. Since then he has been involved in a number of state and regional extension programs, receiving two Agricultural & Applied Economics Association awards for professional excellence, five Western Agricultural Economics Association awards for outstanding extension programs, three Western Extension Directors awards of excellence, two UW Cooperative Extension awards for creative excellence, the Jim DeBree Excellence in Cooperative Extension award, a National Association of County Agricultural Agents Distinguished Service award, the Wyoming Association of County Agricultural Agents Outstanding Agricultural Extension Educator award, and nine other regional or national awards.

USING THE FINANCIAL RATIOS ROA AND ROE TO PREDICT FARM LOAN DEFICIENCY RATES

Gregory Ibendahl

Kansas State University, Wamego, Kansas, United States

 

ABSTRACT

Agricultural loan delinquency rates cannot be fully explained just from an examination of farm profitability. During a period from 2009 through 2010 the agricultural loan delinquency rate nearly doubled in the United States, while at the same time farmer profitability was also increasing. Part of this increase can be explained by examining the relationship between the financial ratios ROA and ROE. Whenever, ROA is greater than ROE, farmers are earning a rate of return on all their assets that is lower than their cost of borrowing. We find that the percentage of farms with this adverse relationship of ROA greater than ROE increased prior to the delinquency rate increasing and thus could explain why delinquency rates increased from 2009 through 2010. Because the increase in the percentage of farms with ROA greater than ROE happened several years before it was reflected in the agricultural loan deficiency rate, banks could use this relationship between ROA and ROE as a predictor of when a farm might have a delinquent agricultural loan.


BIOGRAPHY

Dr Ibendahl is an Associate Professor in Agricultural Economics at Kansas State University. Dr. Ibendahl grew up on a grain and beef farm in Illinois and worked for a major agricultural seed company before returning to school to earn his PhD. Dr. Ibendahl holds an Extension position at K-State and works in the areas of farm management and agricultural finance

CHECK YOUR BLIND SPOTS: 360° OF FARM RISK MANAGEMENT

Lipari, M., Watson, H.

Farm Management Canada (FMC)

mathieu@fmc-gac.com

 

ABSTRACT

Agriculture is an industry riddled with risk and uncertainty. In fact, agriculture rates amongst the highest risk industries in the world. Climate change, pests and disease, demand for growth, global markets and trade, regulations and consumer preferences are all contributing to the increasing level of risk faced by farmers. And yet, agriculture is the least prepared industry for managing risk.

For farm managers, risk and uncertainty can lead to poor decision-making, to the detriment of the farm and agricultural sector. Risk management involves applying a process by which farmers are equipped to reduce uncertainty and take calculated risks that support effective decision-making.

The Organisation for Economic Co-operation and Development published two studies recommending a holistic approach to risk management. This type of approach has not been applied in Canada.

This paper explores the development of AgriShield®, an online risk management platform that gives farmers a 360° view of the risks they face to improve the adoption of a comprehensive approach to managing risk by Canada’s farmers.


BIOGRAPHY

Mathieu Lipari joined the Farm Management Canada team in 2010 as a Project Manager and brought with him an excellent grasp of the challenges of agriculture in Canada and overseas. He manages a variety of successful projects at Farm Management Canada that provide farmers with business management tools and resources. Prior to joining the team, Mathieu worked in similar roles for the International Development Research Centre and for Guelph University and has managed agriculture projects in North and Central America, Europe and Africa.Mathieu holds a Bachelor of Business Administration from the University of Québec in Montreal, Québec and a Technical Degree in Agriculture and International Development from the University of Guelph.

IFMA

The objective of the International Farm Management Association is to further the knowledge and understanding of farm business management and to exchange ideas and information about farm management theory and practice throughout the world. The IFMA is a non profit-making organisation and currently the Association has members in over 50 countries.

Congress Managers

Please contact the team at Conference Design with any questions regarding the Congress.

Photography Credits

Tourism Tasmania, Barnbougle Dunes, Ray Joyce, Health Holden, Graham Freeman, Joe Shemesh, Glenn Gibson, Hobart City Council, Nick Osborne, National Trust Tasmania, Dale Baldwin, Brian Dullaghan, Rob Burnett, Alistair Bett, Alice Bennett, Wai Nang Poon, Chris Crerar, Kathy Leahy, Flow Mountain Bike, Tasmanian Parks & Wildlife Service, James Bowden, Masaaki Aihara, Sean Feennessy, Bruce Irwin, Liz Knox