The following is an excerpt from Seeds of Success: Enhancing Canada’s Farming Enterprises, a new Conference Board of Canada report by Erin Butler and James Stuckey.
The report included a set of recommendations about how to improve farming business in Canada to achieve greater business success. The full report can be found at: http://www.conferenceboard.ca/e-library/abstract.aspx?did=5529
- Maximize assets and operations. Farmers should employ sound financial management to maximize the assets and operations of their businesses. Each must be managed and optimized as part of the business equation. This means understanding changing capital requirements (in the form of land and equipment and machinery), and creating the right mix to manage costs and optimize returns.
- Seek optimal farming scale — a movable target by region, type of operation, and business model — as a strategy for obtaining capital efficiencies. Most people think of scale in terms of sheer expansion of physical resources. Actually, there are different types of scale that involve very different costs and benefits..
- Increase product differentiation to take advantage of changing consumer demands for greater variety, and increasing demands for products with more specific and functional quality characteristics.
- Specialize farming management to improve business performance. They can specialize management by using more outside labour, and by fostering partnerships and other types of co-operation.
- Invest in product and process innovation to achieve business growth. Most farm businesses have a somewhat conservative attitude toward innovation, with most not seeking to be first adopters — but also not wanting to be last adopters. The CFIC’s Industry Survey results suggest that producers generally do not recognize the value that process innovation can play in achieving business objectives. Therefore, there is likely an opportunity for farm businesses to be more innovative in how they manage key business processes and activities.
- Utilize new leasing models. Farmers should utilize new leasing models in cases where the rising costs of farmland make it difficult to finance expansion, or where a farm’s operational continuity is at risk.
Farmland investment funds (companies that purchase land and rent it back to farm operators for a rental fee or under varying types of profit-sharing arrangements) have become more prevalent in the sector to provide liquidity and stability to farmers who have difficulty growing or maintaining their operations. Farming stakeholders should work to identify ways of maximizing the value of this development to improve of farming business.
- Improve human resources standards and practices. The farming industry must strive to make farming a more desirable occupation. The industry faces a significant labour market gap, and much of this is outside of its control to remedy.
However, there are steps that the industry can take to improve its human capital situation, including adopting human resources standards and practices that rival those of other industries.
- Begin farm planning with marketing. Farmers should begin farm planning with marketing—with a line of sight to the end buyer—rather than ending with it. That is, like other businesses, farming operations must identify opportunities in the market and tailor their business model and operations (what they produce and how) accordingly. Farmers have an opportunity to be “price-makers” and not just “price-takers.”