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Dealing with and adjusting to Change - March 2018

Recently in our office we have had a number of discussions with people involved within the agricultural sector, from farmers through to farm consultants, as well as other professionals such as solicitors, bankers and other chartered accountants. These discussions have revolved around the changes taking place that are affecting all aspects of society and the economy, but in particular the agricultural sector.

We have seen in the past ten or so years huge changes in climatic conditions, regulatory and environmental changes and challenges; changes in the economy, including within New Zealand and overseas; international pressures and influences; changes in labour supply and issues affecting that; health and safety; online information and social media; and in addition, personal circumstances have changed with people requiring more flexibility, time off and changes to their working hours.

What all this means for our farmers today is that they require additional flexibility within their farming systems, to adapt to and respond to these changes.

One such discussion I had regarded a dairy farmer in the Waikato who was considering installing an in-shed feeding system. The farmer had been putting off this for over ten years, worried about the cost (which was totally understandable). When the farm had originally been purchased, a decision was made not to install in-shed feeding systems as the farmers type and style of farming did not warrant this. Ten years later the farmer has now made the decision to adjust his farming system due to changes in the availability of labour, the changing climate, health and safety issues and labour costs regarding the use of feed pads etc, and the additional flexibility that it will provide for his farming system.

What this means is the farmer did not necessarily make the wrong decision ten years ago, however circumstances do change and what was right ten years ago is not necessarily right today.

As accountants we see businesses from all areas of the spectrum, needing to develop to move forward in todays world. Business owners today require more visibility of their numbers than they ever did before. Online programs like Xero, Cash Manager, MYOB, just to name a few, are now the way forward for many people, giving them instant access to monitor their results and compare these to the budgets that have been set at the start of the year. The role of the accountant has been changing for a long time from that of a book keeper, to a business advisor. Not only are accounting systems changing, but people are looking at their business structure and utilising more flexible structures such as Trusts, Companies and Limited Partnerships. There are several advantages that these structures give over the traditional farming partnership.

It is normal human nature to resist or be wary of change. Modern business and farm owners should consider that change is not necessarily a bad thing, and that all stake holders in a business need to be carefully considered and their views respected when making decisions going forward. Good advice and assistance from professionals like chartered accountants can certainly help in the decision making process.

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