Tuesday, 12 August 2014 10:35

Consultants worth it - study

Written by 

AN ANALYSIS of profit data shows farmers receive $4 return for every dollar spent on professional farm consultants.

 

Yet most farmers don't use them. This is just one conclusion from the first instalment of a series of results stemming from research conducted by Lincoln University's Senior Lecturer in Farm Management Research, Dr Kevin Old, and Research Fellow, Dr Peter Nuthall.

Last year more than 2000 farmers were mailed a questionnaire on farm succession and governance. A response rate of 36% was achieved. The researchers noted, with this response rate being greater than the norm, it was clear farmers were interested in the topics covered.

Results showed that while all farms have a manager, some 29% were sole traders responsible for making the decisions themselves. Nearly 2% were paid managers and a further 6%, while also paid, had some investment interest in the farm. Similarly, 1.7% were sharemilkers. For the remaining balance the 'farmer' was usually a business partnership which took responsibility for the majority of the business decisions.

Only a small proportion of farms reported having a 'farm specific' board of directors (4%) or a formal advisory committee (5.3%). While these are overall figures, it was found that larger farms tended to be more highly represented in this regard.

Most farmers have the potential to access farm consultants, but the results found only a small number used such services on a regular basis. The average use across all farmers was 21 hours per annum; however, over half the farmers surveyed use less than 10 hours per annum, which indicates infrequent or irregular use.

At the upper end of farm consultant use, just 4% used more than 70 hours per annum; equating to nearly six hours per month, which probably represents one appointment per month.

Young farmers (those under 35 years) tend to use consultants more (an average of 42 hours per annum) compared to relatively older farmers. For instance, for those over 55 years of age, the figure is 21 hours per annum. However, these are averages, and many farmers will not employ consultants at all.

The researchers also found some farmers use 'company representatives' to help with decision making, with the average being 14 hours per annum. The category with the highest average for usage, however, was 'trusted persons' at 51 hours per annum. These people could be anyone from a respected colleague to a family member.

A pertinent measure of whether farmers feel the need to hire a professional consultant is in how much they are willing to pay for these services.

It was found that farmers with a net farm investment of less than $5 million paid $1,330 per annum on average. In contrast, farmers with a net investment of more than $25 million spent $17,700 per annum on average.

When all farm sizes were averaged out, it was found that dairy and crop farmers spent the most on consultants: $4,240 and $5,800 per annum respectively. This is perhaps unsurprising as crop farms have important decisions to make each year regarding selecting crop mix.

A total of 56% of the farmers rated their trust in consultants at 1 or 2 on a 5 point scale (with 1 being good and 5 poor). The remaining 44% were ambivalent or worse when it came to trust in consultants. In fact, the average score overall was 2.42, which strongly suggests an overall ambivalence, Lincoln says.

More like this

MOU a significant milestone

The signing of a Memorandum of Understanding (MOU) between Lincoln University and Ballance Agri-Nutrients is being hailed as a significant milestone.

Rural resilience programme expands

Mental health and resilience programme WellMates is available at Massey University for a second year after research found that it has significantly benefitted participants.

Study puts value on food safety research centre

A new study from Lincoln University’s Agribusiness and Economics Research Unit (AERU) has put a valuation on the NZ Food Safety Science & Research Centre in terms of its value to New Zealand.

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Knowing bugs means fewer drugs

A mastitis management company claims to deliver the fastest and most accurate mastitis testing available at scale for New Zealand…

Machinery & Products

AGTEK and ARGO part ways

After 12 years of representing the Landini and McCormick brands in New Zealand, Bay of Plenty-based AGTEK and the brands’…

100 years of Farmall Tractors

Returning after an enforced break, the Wheat and Wheels Rally will take place on the Lauriston -Barhill Road, North-East of…

JD unveils its latest beast

John Deere has unveiled its most powerful tractor ever, with the launch of the all new 9RX Series Tractor line-up…

Biggest Quadtrac coming to NZ!

In the biggest announcement that Case IH Australia/New Zealand has made around its tractor range, its biggest tractor is about…

» Latest Print Issues Online

The Hound

Why?

OPINION: A mate of yours truly wants to know why the beef schedule differential is now more than 45-50 cents…

Fat to cut

OPINION: Your canine crusader understands that MPI were recently in front of the Parliamentary Primary Sector Select Committee for an…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter