Results from ANZ’s ‘Privately-Owned Business Barometer’ report finds that there is improved optimism about the sheep and beef sector. Optimism is great news, but can farmers also better manage their farms to improve results?
The ANZ report is based on survey results looking at the attitudes and actions of NZ business owners and this most recent release focuses on farmers, specifically the red meat sector, in this instance. Read the report ‘Red Meat Sector Key Insights 2014′.
Surprisingly, the empirical research finds that there is “…a quiet confidence and willingness to invest on-farm, in order to benefit from what can be highly satisfactory returns…” and I say surprisingly because the national flock continues to dwindle and there is a perception that dairying is the darling of the agri sector based on the returns to the farmer. Indeed for further proof one only has to look at the lead story in this week’s NZ Farmers Weekly (28/7) ‘Resurgence of the sheep farmer‘ as a reflection of this sentiment.
The ANZ research points to “…changing technologies, attitudes and management practices that will, if supported,…” provide the catalyst for a stronger and more robust sector. And results indicate a big uplift in expectations of growth in the red meat sector and especially for farmers own operations.
Analysis by Beef+Lamb NZ points to a large variation in profit achieved per hectare in sheep and beef operations, with the top 20 per cent of farmers achieving returns of around four times more than the average, irrespective of land class and location…”.
Irrespective of what business sector an entity operates in success is driven by increasing productivity, whilst at the same time lowering the variable costs per unit of production and controlling overheads. And farming is no different. Beef+Lamb NZ found that management is the critical difference between the top 20 per cent who are making economic returns and those that are not.
The key message is, therefore, obvious! To emulate the more profitable operations, a more structured approach to management is necessary. And the term ‘management’ is used here in the broadest sense and is intended to encompass financial- budgeting, forecasting, cashflow analysis, feed budgeting, nutrient budgets etc. The sector is awash with data, albeit not necessarily as straight forward as the dairy sector which sees each individual animals every day and can base much of the above on information more readily converted into performance targets. Currently, most data appears in ‘silos’, for example a farmer might be running Cash Manager for financial transactions, Farmax to look after the ‘pasture’ piece of the business and perhaps ‘Overseer’ to manage nutrient budgeting. This reflects the lack of integrated packages that consolidate farm performance data.
Research and investment into new pastures and genetic improvements to livestock have resulted in marked productivity gains, which have in some way managed to offset for the shrinking flock size. The investment and development in the technology area is gaining momentum and increasingly is a major focus for sector providers, as evidenced by the publicity and growth of the FarmIQ system. And this area will continue to be able to deliver productivity gains, both via automation of processes and in the provision of ‘meaningful’ data for farmers to make informed decisions around.
In conclusion, a more structured approach to management is required by sheep and beef operations. One based on empirical information not intuition utilising the data sets available and utilising the data- financial, nutrient et al to define clear business targets and make informed decisions that are acted on and can be measured against those business targets. Thus closing the feedback loop.
Kim Nankivell is a business consultant focused on helping customers to succeed through the use of technology. Kim specialises in the area of farm productivity. You can follow him on Twitter, connect with him on LinkedIn or contact him at firstname.lastname@example.org.