- Farm profit variability in NZ is significant.
- The Red Meat Profit Partnership (RMPP) is a collaboration aimed at increasing on-farm profitability.
- Farmers learn best from other farmers.
Sheep and beef farming is tough. With so many factors beyond farmers’ control— from the unpredictable weather to market volatility, farm profit variability is significant.
Yet there are some consistently high-performing farmers who are generating good profits, producing more through the efficient control of a wide range of management variables. Indeed, the sector in general has made good gains in productivity over the past 30 years.
The Red Meat Profit Partnership (RMPP) is a collaboration between the red meat sector and the New Zealand government through the Primary Growth Partnership programme. It brings together nine industry partners investing alongside the Ministry for Primary Industries in driving sustainable productivity improvements in the sheep and beef sector to deliver higher on-farm profitability.
The RMPP is focused on helping a lot more farmers achieve higher profitability through adopting the best practices of the high performers through a range of programmes.
Based on research and a pilot project involving 75 farm businesses, the RMPP is now rolling out the RMPP Action Network, an innovative new farmer-led Farm Extension programme designed to boost farmer’s business skills and create the desire to implement profitable best practice. The RMPP Action Network will bring small groups of seven to nine farming businesses together every six to eight weeks, with a wraparound of information, adoption support and a facilitator.
Related: 2018 National Primary Sector Conference
Hear insights from the RMPP Action Network on how you can help your clients drive growth, productivity and profitability at National Primary Sector Conference in May.
Chartered accountants have an important role to play in facilitating change.
“A profitable and vibrant red meat sector is essential for attracting our best young people into the rural professional sector and then retaining them,” says Crowe Horwath Agribusiness specialist Sean Bennett CA.
“RMPP’s mandate is to improve productivity and profitability, and for us to be profitable long term, our clients need to be profitable.
“RMPP is bringing together partners that compete commercially into a collaborative partnership for the good of the sector. That shows recognition that we need to take ownership and drive the changes needed together.
“For rural professionals, that means identifying and filling knowledge gaps within the red meat sector and working alongside RMPP to facilitate practice change.”
Melonie Sheppard, RMPP Project Manager, says the RMPP Action Network addresses the low uptake of best practice by many farmers.
“Our 2014 research with 1,000 farmers showed where the sector was going wrong, effectively a tell-mode approach without access to relevant information and the right support in applying it.”
Evaluations of the 75 farm businesses involved in the pilot project, testing new ideas for information sharing and adoption support, shows that those achieving the best outcomes are:
- connecting with other farmers and trusted advisers to put their ideas into action
- getting independent experts on-farm to advise on specific challenges and how to deal with them
- doing more measuring and monitoring that helps in decision making
“That’s what leads to farmers making change,” says Sheppard.
“We’ve had 82% of farmers in the pilot fast-tracking or adopting entirely new practices. Usually between 10% and 15% is considered a good outcome in the red meat sector.”
Part of the reason uptake is so high is because the model harnesses the power of peer learning – farmers learn best from other farmers.
“As rural professionals, we need to be proactive and not the ambulance at the bottom of the cliff.”
“When you get a group of farmers together, the learning dynamics are very powerful. If they can see another farmer has tried something new and it works, they will give it a go. But that adoption support is a critical part of the mix. Farmers value being able to draw on expert advice in giving them confidence to act.”
As the RMPP Action Network starts to roll out, chartered accountants could start thinking about how they can add even more value to their clients. One challenge for the sector is the low financial literacy found within many farming businesses. RMPP courses like Understanding Your Farming Business is helping to address this with modules in business planning, measuring farm performance and finding and assessing financial information.
Another focus is encouraging farmers to use key performance indicators and benchmarking to encourage better decision making. Beyond introductory benchmarks there is a need to standardise a broader set of KPIs across the sector, to provide meaningful and comparable business performance analysis. Nine KPIs have been decided upon by industry as being the most important ones that farmers should be able to understand and interpret. Information on the nine KPIs and how they should be calculated will be available as the RMPP Action Network rolls out in quarter three of 2017.
It’s not just about being subject matter experts, but connectors and facilitators as well, says Bennett.
“Crowe Horwath is in the position where we have the required skillset to facilitate groups for the RMPP Action Network. Our role is to also filter the noise and identify the value adding components alongside farm businesses then work with them to incorporate those practices into their management structure.”
Ongoing commitment and adoption support will also be crucial in ensuring farmers can achieve the goal of greater productivity and on-farm profit.
“As rural professionals, we need to be proactive and not the ambulance at the bottom of the cliff. It’s a key ingredient currently missing. To get farmers to undertake practice change, they need to be confident to do so and turn behaviour changes into habits. This will require commitment from the farmer and a good support network around them.”
This may require a shift in rural professional thinking too, says Bennett.
“For too long, farm businesses have been allowed to farm their equity. As an industry, it’s time to start asking the hard questions rather than continue the soft conversations that happen around farm performance at present. Accountability needs to be embedded into the red meat sector.”
Related: Accounting and the agricultural sector
Charmaine O’Shea’s farming and accounting knowledge is contributing to a more profitable and sustainable agricultural sector