Kondinin Group members were asked to nominate any knowledge gaps in their farming business enterprise. Of the 200 respondents, just over half said they wanted to know more about off-farm investment and 46 per cent needed to understand more about marketing their produce. An understanding of legal liabilities concerned more than two in five farmers surveyed while a third struggled with a sound understanding of business structures and how to best make them work in their farming operation. See figure 1.
For most farming families, assets are usually tied up in the family farm, particularly on farms where expansion of the operation is a primary objective.
But for well-established enterprises, particularly those with operators viewing retirement, off-farm investment can be an opportunity to reduce the exposure to weather and price variations.
In a 2011 report to industry, the NAB suggested always seeking advice and ensuring personal goals are kept in mind as well as business goals including succession planning. Consideration of future financial requirements for equipment or asset purchases should also be part of a sound strategy.
Over the coming 12-months, Farming Ahead will identify a number of opportunities around off farm investment and explore how they may fit into your farming business.
Production is usually something most farmers have their head around, but marketing that produce requires another skill set and can take time to understand.
Whether it is understanding forward contracts, hedging or simply exploring new market opportunities, a series of articles will revisit all aspects of marketing grain and livestock over the coming year.
Grain marketing in particular can influence profitability and should be well understood to maximise rates of return. As an example, one member said their son broke a leg playing sport and was unable to assist in the paddock with harvest three years ago.
Instead, the son utilised his time in actively marketing grain over harvest. The family estimate the additional return was in excess of $100,000.
Often the unknown legal standing can influence the way we farm. Hiring staff in particular was raised by members as an issue they need to know more about.
Legal obligations for sales and purchases, consumer law, mining and exploration, debt recovery and property transactions are all areas farmers are likely to encounter in a farming business.
Kondinin Group will consult with legal experts to provide a basic framework of knowledge for members on these legal issues.