FARM BUSINESS PLANNING

Farm business planning is the assembly of information, knowledge and managerial skills into a path for the future of your farm business. It provides objectives, measurements (key performance indicators) and time lines that allow you to “tick off” progress. Objectives need to include long term personal and family objectives.

Business planning need not be complicated nor should it be. Processes and targets should be uncomplicated and must be seen to be achievable. Complex and wide ranging business plans have a habit of being very difficult to manage. Having too many short term objectives usually means that it is very difficult to complete any of them.

Generally, before formal planning can start there will be a number of immediate issues that have been of concern. These should always be dealt with first. Formal business planning will not progress if they are not. The urgent issues will keep rising to the surface until they are resolved.

One of the key features of farm business planning is to match the development of the business with the environment. Is the concept of increasing output and incomes compatible with the environment and is it sustainable? What needs to be done to improve those relationships?

Another feature is to be taking account of other physical and financial consequences of changed processes. For example, if a land development is undertaken, its direct cost/ benefit effects are fairly easily calculated. However, there are likely to be second layer repercussions that also need to be taken into account. Perhaps more labour will be needed. Given that the result will be greater or better production are other resources adequate? Are there sufficient resources to carry out development? What about cash flow effects? How long will it take to convert development into an income stream? Will there need to be additional borrowing?

Bob Brown with 2 of his prized Merino sheep

GETTING BETTER RESULTS ON THE FARM

Greg Gower slogged his guts out for more than 10 years on his sheep farm in Fern Flats, Manuwatu, barely making enough to survive.

"I was Mr Do-it-all," he says.  "I built the fences, sprayed the gorse by backpack, planted and pruned the pines and drafted, drenched and sheared the sheep - by doing it all myself I thought I was saving a dollar to make a dollar."

When that didn't work, he and his wife Jane called in consultants.  "But the money they said we had to spend to put things right just scared the heck out of me."

Then his veterinarian introduced  him to the Sheep for Profit scheme.  The scheme's managers had a more subtle approach.  They asked the Gowers to monitor their flock's performance for a year, and then helped them analyse the results.

"After that we knew what the faults were, and what must be done about them," Mr Gowers says.  "Most important of all, we had the confidence to do it."

With that new-found confidence they prepared a farm plan and took it to the bank.

"Not only were they prepared to back our sheep plan but also wanted us to extend it to our beef."

The Gowers sought a loan for improvements, mainly for fencing, the water system and fertiliser, saying they would recoup the money within 5 years from increased sheep and cattle production.

Mr Gower's role on the farm is changing.  From being the sole worker, he is now more management-focused, employing specialists to do the structural work.

"I've discovered farming is a business you work on, not in," he says.  "My focus is on generating production.  Costs are no longer an obsession; I now realise your have to spend money to make money."

Jane Gower says the Sheep for Profit scheme has given her confidence in the future.  "It shows you that you should be running your farm in a business-like manner.  And it has reawakened us to the best thing about farming - living and working in a beautiful setting, far from the noise and pollution of the city."

SHEEP FOR PROFIT

Sheep for Profit's aim is to add $12 to the value of every ewe on a sheep farm after three years.

Two years into its initial programme, records of 33 farms show the liveweight of lambs produced by each ewe to have increased an average of 3.4 kg, adding $6.80 to each sheep's value.

Some farms have already reached the $12 mark, but others have been knocked back by the drought, farming consultant Chris Mulvaney says.

Crucial to making the plan work is finding out how stock is being fed.

"That's the guts of it.  Take a disciplined approach to recording your animal production and what you find will help you decide what needs changing."

The Te Awamutu veterinarian runs the scheme through AgriNetworks, which he half-owns with Veterinary Enterprises.

He and fellow vet Don MacColl have recruited 80 farmers and are looking for more.