Date posted: 27/03/2023 10 min read

Agritech takes flight

Farmers need every agritech tool on offer to maximise land use, stay on top of inventory and livestock, and ensure workers get fair pay.

In Brief

  • Farmers are big adopters of both specialist agritech tools and generic tech, such as Starlink.
  • A challenge for accountants is the time frames in farming: 10-year budget projections and 18-month sales plans that straddle calendar and financial years.
  • Forecasting and budgeting tech, industry-specific tools and payroll applications are especially important for the sector.

Jo Gilbert remembers life as a little girl on her family’s farm in Katanning, WA, when the accountant came to visit. Her father would sit all day with the accountant from RSM’s office, adding up the numbers in a thick cashbook with a calculator. “Mum would make lunch, everyone sat around the table – all work stopped because the accountant was coming,” says Gilbert.

An RSM accountant still does her father’s accounts – Gilbert herself, now an RSM partner and director of the Albany RSM office, where it’s not unusual to have 70-year relationships with a farming family. But there are no more calculators these days. The accountants wield far more powerful tools for helping farmers prosper.

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Embracing technology

For an industry that operates far away from data centres and office whiteboards, the agricultural world is dripping with technology. Sensors, probes, drones, robotics – companies are coming up with a host of innovations to improve yield and reduce cost. Farmers are also avid adopters of generic technologies too; Elon Musk’s Starlink service is popular in the paddocks for high-speed satellite internet access.

Farming businesses are inventory businesses with a broad range of factors that can affect revenue. Weather patterns – particularly how much rain and when – are obviously critical. Climate change is affecting the rhythm of the seasons and changing areas from temperate to tropical.

The COVID-19 pandemic had a huge impact on farming, reducing the availability of cargo ships and therefore access to markets, pushing up the cost of inputs. For example – due to the pandemic and Russia’s invasion of Ukraine, the prices of fertiliser skyrocketed – farmers are paying significantly more for fertiliser.

And livestock farms need to factor births and deaths into their inventory management, as well as the usual quantity, sale and purchase price.

Forecasting and budgeting

With so many parameters to consider, many beyond their control, farmers are heavy users of forecasting and budgeting reports. New Zealand-created Figured is one of the best-known farm reporting applications.

Accountants help farmers set a forecast and budget in Figured and review the forecast each month. It takes live data from the accounting software (Xero or MYOB) and updates the actuals in its forecasts.

If the good rains fail to arrive in March and April, producers can miss the optimum growing period for cereal grains. The farmer then needs to wipe off a line of revenue from the projection and update the end result.

Cropping software needs to track the type of crop, the expected yield and expected price per tonne. Some farmers will take 18 months to sell every last bit of grain from their silos. This adds more complexity to the accounting process.

“That will span two financial years, two calendar years, and will have a massive impact on their cash flow if they’re not monitoring and managing that,” Gilbert says.

Aglytica CashPeek is a budgeting and cash flow forecasting tool that integrates with Xero. Designed for farm owners (non-accountants), it can manage and track multiple bank and supplier accounts, profit and loss (P&L) and non-P&L items.

Farmers can use CashPeek to forecast bank balances and identify when they will need to take on the most debt. The software can create a budget based on actuals from the previous year, and then update the budget based on actual data from Xero.

CashPeek connects Aglytica’s benchmarking platform, Profit Series, to compare financial results with other farms.

P2PAgri is another application that analyses business trends and compares a farm’s performance to a benchmark calculated on other P2PAgri users. The software tracks the efficiency of the farm’s business performance, reports on how well costs have been managed, and creates reports to help a farm renegotiate a better deal with its bank.

Profit analysis includes determining the best mix of crops and calculating the yields required to meet targets. It will also show whether the business has enough cash over the season to cover its bills.

The forecasting module creates five-year scenarios so farms can understand whether they can afford new machinery or to buy more land for farming or leasing.

Specialist agritech

Sub-industries have their own online applications. Vintrace covers all aspects of running a vineyard for the winemaker, the viticulturist, financial controller and stock controller. The winery software tracks the harvest and crush, barrels and vessels, bottling and packaging, grower contracts and inventory for retail.

Vintrace manages client billing through integrations with Xero and Intuit Quickbooks. The Melbourne-based business sells to wineries in the US, New Zealand, Italy and France.

There are many other applications for the agricultural industry which accountants need to know about. Agworld is used by agronomists to advise farmers on the type of crop they need to plant in each paddock and the amount of fertiliser required. AgriWebb is a popular tool for livestock management. “That’s not particularly relevant to what the accountant does. But it’s important in the overall picture for us to know if someone’s looking for that, that they can use those tools,” Gilbert says.

Off to the races

Accounting software for livestock is also specialised, even more so for a niche like horse racing. A single racehorse can have multiple shareholders. The trainer needs to invoice all the shareholders on a regular basis to cover the cost of upkeep and maintenance. Software such as Ardex and Prism make it easy for a trainer to type in all expense transactions relating to a horse, and the software divides the expenses based on the percentage ownership and sends the appropriate invoice to each shareholder.

Prism captured a large market share by integrating payroll and expanding into marketing and communications activities, says director at Racing Management Services, Ben Pollock. RMS provides bookkeeping and accounting services, as well as organising travel for horses, riders and staff.

The Prism platform includes modules for managing horse ownership, horse racing performance, stable rosters and appointments with specialists, and a mobile-friendly interface for trainers and other users. Prism’s integration with Xero makes it much easier to reconcile bank transactions, bills and invoices, Pollock says. It includes a broader chart of accounts that assigns income accounts dedicated to on-billed suppliers.

Prism can assign one income account to a farrier, vet or chiropractor. This shows how much income has been put aside for expenses from each supplier.

“The problem was at the end of the quarter the trainer thought he had A$1.2 million. But then you’d have to go through and say, this is training income. The rest is just money in, money out,” Pollock says.

“Now you can see very clearly, when you take a report to the client, that this is your training income and this is your farrier income, which is offset by your farrier expense.”

On top of tax changes

One of the looming issues for many Australian companies in agriculture is the end of the instant asset write-off in June. “There’s a lot of volatility in income and the instant asset write-off has been a really big windfall for a lot of people. You can go and buy a harvester for a million dollars and there’s a tax deduction straight up,” Gilbert says.

“People who have not been paying tax up to date are going back into tax payable from the first of July. So, we’re now doing a lot more tax planning than we’ve ever done before, because we need to look further than 30 June this year.”

“There’s a lot of volatility in income and the instant asset write-off has been a really big windfall for a lot of people. You can go and buy a harvester for a million dollars and there’s a tax deduction straight up.”
Jo Gilbert, RMS

Farmers can need projections up to 10 years ahead if they need to extend their overdraft and afford to pay for fertiliser or buy the farm next door.

Farmers “need a lot more science behind the numbers”, Gilbert says. “There’s an opportunity to get people really managing their businesses on a day-to-day basis.”

Pastoral care – farms sign up field workers to payroll

Field workers

Right now, farmers need bread-and-butter compliance. Australia’s Fair Work Ombudsman has cracked down on “dozens” of agricultural companies that underpay employees or fail to keep proper records. The blitz followed a 2021 decision that workers picking fruit on a piece rate must be guaranteed a minimum wage under the Horticulture Award.

The ombudsman inspected almost 200 farms and orchards in Coffs Harbour and Grafton in NSW, the Riverland region in SA, Wide Bay and Moreton Bay in Queensland, and Victoria.

The inspectors aren’t just handing out warnings. In January, the Murray Pioneer newspaper reported farms in the Riverland district had been hit with almost A$23,000 worth of fines for breaching pay slip and record-keeping laws in the past 12 months. In August 2021, a dairy farmer in Queensland was fined A$17,500 by the ombudsman for failing to back pay an employee A$6698.65 in wages and superannuation.

Many farmers are realising they need to have mobile timesheets and proper payroll records to account for every worker in their fields. This is generating interest in payroll software such as KeyPay, NZ-based PaySauce and others.

The agricultural sector has a history of underpayment, says co-founder of KeyPay, Phil Bernie. “In these industries you often have low-skilled or vulnerable workers. They’re not always aware of what their rights are and the obligations of employers. Often English is a second language, they’re often coming in on 457 visas and have been paid with piece rates,” he says.

Even farmers who want to do the right thing have their work cut out for them. Farm workers are covered by the Pastoral Award, which includes broadacre farming, livestock, pig breeding and raising, poultry farming and shearing operations.

“As someone who’s just trying to run a small agricultural business, it becomes really difficult to make sure you’re paying your employees correctly,” Bernie says.