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When the going gets tough – the tough get going

This is what seems to happen when farmers come under financial and farm pressure. With the rapid fall in the payout, massively increased on-farm costs and high debt, this has been a recipe for some very stressful and difficult times for farmers. I thought I would traverse some of the misconceptions and pressurised decisions that seem to be made. Recently a farmer had been refused an increase in overdraft to run his business, in fact the Bank told him to put the farm on the market and th...

Are we There yet?

Whilst travelling to the Sunshine Coast for a well-earned break, I saw these above four words in the 'In Flight' magazine. It prompted me to explore, in agriculture, and particularly the Waikato – Are We There Yet? I was also fortunate to be asked to be on the discussion panel at the recent Waikato Bay of Plenty Institute of Chartered Accountants Economic Summit. What came from that meeting made me realise that living in the Waikato, is a privilege. There are many initiatives that make the...

The only thing to fear is fear itself

I recently attended the ASB Agribusiness conference in Blenheim and the issue of fear kept coming up. Dennis Avery, Director and Senior Fellow of the Centre for Global Food Issues spoke at length on the global warming trap. The media and the Green Movement are using fear to get our noses in the trap. They are telling us the world is heating up, the seas are going to cover the low lying land, and that the planet we live on is over populated, and so on. There is evidence, which is quite compel...

The Future - Prepare, Don’t Predict

When I was doing the Agribusiness Icehouse programme we were fortunate to have a Bill Malcolm, Economist from the Department of Agriculture and Food Systems of the University of Melbourne, present to us. He has recently delivered some very interesting thoughts on the future. There are still a few things about the future for certain: The future will arrive The future will be a different world; they will do things differently there Much about the present will be present in the future ...

Working together as Farmers

As the economic fortunes of agriculture change and the grim reality of very tough times ahead becomes evident, maybe, just maybe, it is time to work together. I mean, we all used to. Our parents used to form up groups of farmers to go and dock lambs, shear sheep, and put hay in the shed, all helping each other with no cost to anybody, say for good food out on the job and a pint bottle of beer at the end of the day. The labour was free and the times were good. The district had close bonds and e...

Farming Philosophy - Staying Positive in a Negative Environment

Following the recent rebalancing of the economy, the change in the dairy pay-out and the change in the fortunes of farmers, it is important for farmers to ensure that they maintain a mental toughness. It is important to try and get a realistic view of what is actually happening. When things go wrong or we perceive that things are bad, it is how we handle the processes and information that we are feeding ourselves that makes the difference. Did you know we have approximately 60,000 thoughts e...

A Co-operative - by the Suppliers for the Suppliers.

At the 5th Annual Lexis Nexis 2008 Rural Professional conference in Christchurch, Henry van der Heyden, Chairman, Fonterra spoke on "Fonterra – where is the cooperative heading". Blue Read, Chairman, Fonterra Shareholders Council then spoke on "Keeping the co-operative relevant during times of change". Both these presentations were a graphic reminder of why you should supply a co-operative. Why? A co-operative is based on voluntary membership owned largely by you the suppliers, for your ...

Become an Active Listener

Why would a farm financier and consultant want to write about listening? In my work in the rural sector, I often find people experiencing financial and emotional difficulties do not fully listen to the advice given by their professionals; in fact many do not listen at all. I also find that rural professionals, sales people and so on do not actually listen, properly to the farmer. If you are not listening attentively how can you help them solve their problems? I was recently involve...

Honesty, the first step to change

Malcolm Mountford wrote an excellent article in the "Dairy Exporter" in July 2001. In that article his main thrust was the unwillingness of farmers to change what they did on the farm to make it go better. Only one brave soul stood up at a conference and said it was him who didn't want to change so they kept doing the same thing and kept getting the same result. Sound familiar? I have just written a philosophy on looking back at ourselves as a third person, or the "helicopter view". What do ...

Looking at life from the Third Person

Recently, whilst travelling between clients, I heard on National Radio about a study carried out in the States. Some psychologists had looked at a large cross section of the community and got them to consider life from the third person. What that means is to try and stand outside and look into your business and into your life and see how it looks. You are actually the person looking into your own life. Someone else described it as a 'helicopter view'. Getting out of yourself, getting up in the...

So why would you take to your avocado trees with a tree saw?

After reading a lot of detail on a web site based in the USA called "Avocado Source" I got thinking about avocado trees and why they weren't producing and what we could do to make them work better. It is clear that the evidence overseas is that as avocado orchards get overgrown, but particularly as the trees get bigger, the canopy to root ratio gets out of balance. That is to say that the canopy gets bigger than the root system can manage. Consequently the tree starts producing smaller fruit and...

Farming and Fraud

As the economy tightens people will come under more pressure and then they start doing strange things. My experience has been that the more stress people are under the more likely they are to commit fraud and dishonesty. The same applies to dealing with known dishonest people. If the going gets tough and things fly to bits they will walk leaving you with the mess. This particularly applies to partnerships and companies, once you are in, you're 'caught'. Will your partner stand by you if the goin...

Running your business in credit could be better for your health and your bank balance

A client of mine who had spent years juggling farm debt and big overdrafts, contacted me for advice. I assisted and encouraged him to alter the way he ran his financial affairs. After making these changes, the difference I saw in my client inspired me to look at the issues and write this article. There are basically two models to run your business finances on; let's take a look at them: Overdraft You have your term debt, say $2,000,000 plus overdra...

How to seriously cut back on farm expenditure

Firstly get out your Balance Sheet and have a serious look at it. Get your accountant or consultant to help here. How does your expenditure compare with industry levels? What are your true cash supplies? After drawings and tax is there anything left, of are you going backwards? Do you have to go to the bank every year to borrow more money? Complete an assets and liabilities like the following: Assets Farm say 100,000 kg/ms production @ $45 $4,500,000 ...

Procrastination = Complication

Apparently procrastination in society is getting worse. A Canadian industrial psychologist completed a 10 year research project and found that procrastination is definitely on the rise. His 30 page report appeared in the Psychological Bulletin over there and highlighted a number of issues. In 1978 only 5% of Americans were chronic procrastinators and now it is up to 26%. Procrastinators tend to be less healthy, less wealthy and certainly less happy. The procrastinator delays filing tax returns...

Too much clutter on the farm?

Is there too much clutter in your finances, farm and personal life? I was with some clients recently completing some strategic planning and big picture thinking. These clients were very busy, nearly anxious and running at the end of their tether with very little stopping distance. My discussions with these clients revealed that they had a lot of clutter in their lives, which need to be sorted out. Here are some of the issues we face every day: Financial Do you have multiple loans, all of di...

When you lose, don’t miss the lesson

This is a saying from the Dalai Lama and it is so true. Expanding this saying out, what it also means is that if you also lose, you need to think about what the lesson was and learn it. You need to be careful not to make the same decision process again, or the same mistake again. I often think life is like a train going up a hillside. As the train moves up the hill, there are little steel "back stops", which drop down onto the track to prevent the train taking a backward slide should anythin...

Have we forgotten the lessons of the 1987 crash?

While I'm no pessimist, in fact I'm known to be an eternal optimist, some of the memories and lessons from the 1987 crash linger on, not only for me but for many others as well. Those who were severely affected have never forgotten. It is timely to recount some of the effects from the crash, compare what is similar now and consider what do we need to do for the future? The circumstances surrounding the 1987 crash were: rising prices across all sectors, an overheated share market, previously ...

Kiss principle still applies to agriculture

Keep It Simple Stupid. Edward De Bono has written numerous books and his book "Simplicity" gives a very clear rendition of simplicity. It is interesting to note that he only uses one word as the book title as well. Life is ever changing and complex. In our farming businesses, there are a myriad of decision to be made, let alone all the complexities of compliance, GST and so on. Being able to simplify issues, rationalise them and make logical decisions is important to enable us to do things in ...

Making better decisions

The ability to make logical and correct decisions at least 50% of the time is an important part of any agricultural business. People who are able to make logical and sound decisions, in an instant, find that everything flows in a forward direction. At the other end of the scale are those people who cannot make a decision, procrastinate, get it wrong and it all ends up going backwards. For those in the middle, it is about getting decisions made eventually and hopefully moving forward at a stead...

Put some fat into the system

"Cash is King" "Save some for a rainy day" "Stored feed is like money in the Bank" All these statements ring true and in this world of "Instant Gratification". I believe we have moved away from the mind-set of caution, storing and saving etc. In farming, some sort of buffer is essential. Let's explore some of the issues and downside risks that occur. Money If you have spent up to your limit and have no buffer, when things go wrong and there is a shock or an emergency in your life, you have n...

The dairy shed - get it ready right now

How many times do we wish we had attended to those small jobs that cause us a lot of trouble later? The cowshed is really the pivot of the dairy farming business and must be treated accordingly. It requires time, energy and effort to get it right. As one farmer in the South Island said "once you turn on the shed, it is like a juggernaut and needs to be treated as such". This farmer had a really big business, with numerous staff and two herds, but the same things apply regardless of size or scale...

Thinking about thinking

How many times did your parents tell you to Think about what you are doing? Give this or that some more thought? Consider your options? … and so on. When I went to University it was the same, they taught us to think about what we were doing, consider what the issues were, and how to think through a problem. It is the same in the farming Industry. I sometimes think (there I go again) that there is more opportunity for thinking in farming than any other business. There are so many decisio...

Do you want to do 140 milkings less per year?

Sick of milking twice a day? The cows are sick of it. Autumn and winter are coming up fast. Why not reduce the number of milkings over the latter part of the season? By milking three times in two days; i.e. twice on one day and once the following day, you are saving about four milkings per week. It is important to realise that you need to take a relatively relaxed approach to this. Some farmers have attempted to milk at exactly 18 hour intervals resulting in milking in the middle of the ni...

Prevention is better than cure

How many times do we have a piece of gear on the farm wrecked or broken, because we failed to maintain that item sufficiently well? If you think of the old steam engines in the early days, there was one man walking around with an oil can, keeping everything oiled. This kept the metal apart, so that it didn't contact, bind and destroy the engine in the train. It is the same on the farm. Do you do month by month maintenance? Or do you just wait until something breaks down, grumble about the poor...