Farm Planning & Wellbeing

In the “Understanding the Resilience of NSW Farmers” study conducted by Canberra University (2015), Jacki Schirmer and Ivan Hanigan state that:

“While the questions asked about ‘farm business planning’ and did not include specific evaluation of planning for the other aspects of the farm such as specific land management, they give some idea to the extent to which farmers are engaging in the type of forward planning likely to support both successful business outcomes and to support self-efficacy.

29% of NSW Farmers reported having written a farm plan that included business planning, while 54% had a farm business plan that was not written down as a formal document. While just under two-thirds had discussed their pan with others and included strategies for coping with drought in their planning, only just over half actively monitored whether they were achieving farm business objectives or assessed and planned for likely risks that could affect the farm other than drought. Only 41% reviewed or updated their farm business plan frequently.

To explore the question of what type of farm business planning should be promoted as part of supporting farmer resilience, responses to the questions about farm planning were analysed to identify which type of farm planning actions were most strongly associated with better resilience outcomes.

Simply having a plan – whether written down or not was strongly associated with either better wellbeing or better farm financial performance.

However, farm business planning was associated with significantly better farm financial outcomes and farmer wellbeing if:

(i)        it included strategies for coping with drought, assessment of likely risks on the farm and how to respond to them, and succession planning;

(ii)       the plan was used to help make decisions and outcomes of the plan monitored; and

(iii)      was discussed with others.

I have read many studies over the years, which I have been unable to locate and reference.  In that reading, I learned simply that businesses that have written business plans make more money; and firms that adopt certain HR processes for engagement and management of their team, also make more money.  It has always confounded me that we as humans do not take on board the outcomes and strategies identified as a result endless hours of data collection, research and analysis.   How wonderful that others have done the hard work for us!

Although, I did not need to read the excellent work of Schirmer and Hanigan, as prior to its writing I have had the pleasure and privilege of working with Richard Groom from PF Agribusiness.  Richard works with clients in the manner described above, developing plans that address the issues above,  meeting on a regular basis to review progress and keeping families accountable to those plans.  In respect of our mutual clients, my analysis indicates that they achieve superior financial performance, and sitting across the table from those families over the difficult past 5 years, I view (subjectively) considerable resilience and adaptability.

PrincipleFocus recommends that farmers invest 2 – 3 hours per month, with others, developing and discussing their plans, including a review of budgets and forecasts, to identify opportunities and possibilities for farm business improvement.  Improved wellbeing and financial outcomes are surely worthwhile rewards for this effort.

Peter Debus is a director of PrincipleFocus, a Chartered Accountant and Chartered Tax Adviser.