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How can we increase the adoption of business management practices on Canada’s farms?
While we realize most farmers didn’t get into farming to be business managers, we know farm business management matters.
A ground-breaking 2015 study titled Dollars and Sense revealed the success of any farm enterprise, regardless of size, production sector, or location is directly related to the business management practices of the farm manager. According to this research, top farm managers are dedicated to continual learning, carefully monitor and use their financial data and are 30 per cent more likely to consult business advisors. They are 50 per cent more likely to have and follow a formal business plan, monitor and use their costs of production, assess and manage their risks, and have a sound financial plan that includes budget goals. Farmers who adopt business management practices can improve their profitability by up to 525%.
Click here to access the 2015 study.
2020 Study Update
It has been 5 years since the first Dollars and Sense study. In 2020, we wanted to take a deeper dive into understanding the barriers and drivers of adopting farm business management practices on Canada’s farms, and how we can help.
The Dollars and Sense Study Update surveyed over 700 farmers from across Canada, farm types and farm size.
Findings reveal the rate of adoption for the vast majority of business management practices has dropped over the past 5 years, including those practices that were found to have the greatest impact on farm financial performance in 2015.
While the ability to read and use Financial Statements continues to have the highest rate of adoption at 63%, this has declined significantly since 2015 (73%), and having a formal plan for human resource management continues to have the lowest adoption, now at 12% (compared to 20% in 2015).
The following table demonstrates how the adoption of farm business management practices has changed over the past 5 years:
|Having a clear vision and goals for the farm*||43%||31%|
|Communicating plans and the direction of the farm with key stakeholders||39%||39%|
|Having a written business plan that is reviewed and updated at least once per year*||26%||22%|
|Having a budget and plan for each enterprise within the farm that is reviewed regularly*||73%||63%|
|Calculating, reviewing, monitoring cost of production for benchmarking and decision-making||33%||33%|
|Having an in-depth understanding of financial statements to monitor progress*||50%||48%|
|Having a structured approach to financial planning to ensure sufficient capital to withstand changes to the business environment||51%||43%|
|Following markets closely and having a marketing plan to track pricing goals and targets||36%||35%|
|Having a formal risk management plan and procedures in place to assess and manage risk*||51%||42%|
|Having a collaborative relationship with suppliers and customers||32%||29%|
|Having a well-developed human resource management plan outlining responsibilities and compensation that is reviewed regularly to meet changing business needs||20%||12%|
|Having a form farm transition or succession plan that has been communicated to those involved in the farm business and is reviewed regularly when major changes occur||27%||26%|
|Using farm business advisors to help meet business objectives*||32%||23%|
|Actively seeking learning and skills development opportunities to meet the changing needs of the business*||49%||41%|
*Indicates the 7 practices of Canada’s top performing farms in 2015.
Study findings reveal the greatest barriers to implementing farm business practices are:
- Farmers feel the farm is succeeding without them
- Aging/retiring farmers feel it’s too late to benefit
- Farmers don’t have the time
- Farmers don’t know where to start
- Getting others on board with adopting more formal business practices
Lack of communication skills is the greatest barrier to engaging others in farm business management activities.
The greatest motivators to implementing farm business practices are:
- To increase profitability
- To manage risk
- To prepare for farm transfer/retirement
- To reduce stress and anxiety and improve quality of like
- To improve our family/farm team harmony
Farmers who regularly work with farm advisors, young farmers, female farm operators, farmers in Quebec, horticultural operations and larger farms are more likely to implement farm business management practices. With the exception of larger farms, these farmers are also most likely to access support programs and services offered by the Ministries of Agriculture.
This research reinforces the need for Farm Management Canada to continue to champion a better understanding and use of business management practices on Canada’s farms.
Following are the recommendations derived from our findings:
- Redefine the value of farm business management by redefining what success looks like. Success can be both business-focused and/or personal
- Create messages targeted to different segments – by age, gender and farm type that would better resonate with a specific group regarding the value and importance of each business management practice
- Investigate reasons behind Quebec’s higher adoption rates of these business management practices and how these lessons can be disseminated across other provinces
- Increase accessibility and availability of risk management and scenario planning tools that can help farmers prepare for the uncertainty they will face in the future or to manage the long-term impact the pandemic could have on farms.
- Champion the use of Farm Business Advisors
- Develop communication guides for understanding what farm business advisors can offer farmers
- Develop new resources for farmers including communication guides for various business management topics that farmers could reference to improve confidence in communicating about business management practices with family, employees and farm business advisors.
These research findings are critical for informing government policy, resource allocation, and how we can continue to support and promote the benefits of farm business management while addressing the barriers to adoption and implementation.
Dollars and Sense Study Updates
Financial Support Partners:
Mental Health and Farm Business Management
Exploring the Connection Between Mental Health and Farm Business Management
The conversation around improving the mental health of all Canadians has been elevated in recent years. In recognition of the contribution of farmers to the Canadian economy, support for farm businesses continues to be delivered across the country through federal, provincial and territorial governments; not-for-profit organizations; and community groups.
The mental health of Canada’s farmers as it relates to farm business management is of critical economic, and public health importance. That is why Farm Management Canada, along with its partners, has been working to improve our understanding of the relationship between mental health and farm business management. More specifically, to highlight how mental health can be supported through farm business management, and how farm business management can contribute to positive mental health.
Mental Health in Agriculture Updates:
- Healthy Minds, Healthy Farms Media Kit
- New Research Available: Healthy Minds, Healthy Farms – Press Releases
- Healthy Minds, Healthy Farms; Exploring the Connection Between Mental Health and Farm Business Management – Full Report
- Healthy Minds, Healthy Farms; Exploring the Connection Between Mental Health and Farm Business Management – Executive Summary
- Environmental Scan reveals lack of research exploring mental health and farm management
- Peavey Industries LP/TSC Stores LTD. Community Agricultural Grant to Bring Mental Health Workshops for Farmers to Ontario
- Farm Management Canada Mental Health Study