Understanding the Drivers and Barriers to Adopting Farm Business Management Practices
New report reveals the rate of adoption for the vast majority of business management practices has dropped significantly over the past five years
OTTAWA, April 26, 2021 (GLOBE NEWSWIRE) -- An update to the ground-breaking 2015 study by Farm Management Canada reveals that the rate of adoption for the vast majority of business management practices has dropped significantly over the past five years, including those practices that were found to have the greatest impact on farm financial performance in 2015.
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 to make business decisions and are 30% more likely to consult with business advisors. They are 50% more likely to have and follow a formal business plan, monitor and use their costs of production to inform decisions, assess and manage their risks, and have a sound financial plan that includes budget goals. Farmers who adopt business management practices were found to increase their profitability by up to 525%.
It has been 5 years since the first Dollars and Sense report study. “The 2015 Dollars and Sense Study showed us that farmers who adopt business management practices could increase their profitability, however adoption levels were relatively low. In 2020, we wanted to see if adoption rates had increased, and take a closer look at understanding the challenges and drivers for using farm business management practices on Canadian farms and how Farm Management Canada can help,” says Heather Watson, Executive Director of Farm Management Canada.
The Dollars and Sense Study Update surveyed over 700 farmers from across Canada, farm types and farm size. 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). Having a written Business Plan has dropped from 26% to 22% adoption, while using farm advisors to help meet business objectives has dropped from 32% to 23%.
The key findings from the study show the greatest motivators for implementing farm business management practices reported by farmers using these practices are increased profitability, managing risk, preparing for retirement or transition, reducing stress and improving quality of life, and improving family and farm team harmony.
The research also shows that the greatest barriers to adoption are that farmers feel they are succeeding without them, while others feel they do not have the time and do not know where to start. Some farmers who are keen to adopt business practices are struggling to get others on board with adopting more formal practices. Lack of communication skills was cited as the greatest barrier to engaging others in farm business management activities.
Those farmers who are more likely to implement business management practices are farmers who regularly work with farm advisors, young farmers, female farm operators, farmers in Quebec, horticultural operations and larger farms. With the exception of larger farms, these farmers are also most likely to access support programs and services offered by their provincial Ministries of Agriculture.
This research reinforces the need for Farm Management Canada and others dedicated to supporting Canada’s farmers to continue to champion a better understanding and use of business management practices on Canada's farms while continuing to communicate the value of such practices. While realizing most farmers didn't get into farming to become business managers, the research proves that farm business management matters and helping farmers redefine success, while overcoming perceived barriers is key.
To read the Full Report, visit Farm Management Canada’s website at https://fmc-gac.com/programs-services/research-analysis/#DS.
Quote:
“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” - Heather Watson, Executive Director of Farm Management Canada
About Farm Management Canada
A national umbrella for Canadian farm business management activity, Farm Management Canada is the only organization devoted exclusively to the development and delivery of advanced business management information, tools and resources to position Canada's farmers for success. Our programs and activities are made possible through support from generous sponsors and supporters including the Government of Canada, provincial Ministries of Agriculture, private industry, and the non-profit sector.
For more information contact:
Heather Watson, Executive Director
Farm Management Canada
Heather.Waston@fmc-gac.com
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/c3f57ecb-4277-4071-b763-81d713ad2f7c