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Understanding Farm Advisory Boards

 farm board

by Danielle England, AgInnovate, and Jeanette Long, Ag Consulting Co

What are Farm Advisory Boards?

A farm advisory board is a group of six to eight people who get together regularly to help manage a farm business. It is generally made-up of members of the family plus one or two of their key, trusted advisors.

Farm Advisory Boards provide a structured process for farm families to discuss key business management decisions such as finance, land purchase or leasing opportunities and machinery replacement, just to name a few.

Advisory Boards are different to Boards of Management (required for company structures). In an Advisory Board, members are there to provide ‘advice’ only, and it is up to the business partners/legal owners to make the final decision. This provides some level of comfort for farm family members, as all the final decisions still remain the responsibility of the farm business owners.

How often do they meet?

Farm Advisory Boards will meet three to four times throughout the year to discuss the strategic management of a business. The timings of these meetings will depend upon the availability of board members and farm operations. (For example you don’t want to schedule them right in the middle of seeding!)

What might a Farm Advisory Board discuss?

Agendas for farm advisory board meetings are set by the chair in cooperation with the farming family, and should be circulated to all advisory board members at least one week prior to a meeting.

Key reports should also be circulated to farm advisory board members at this time. Each farming business will be different, but the reports may include:

  • Minutes/notes from the last meeting
  • Operational reports (cropping and livestock)
  • Financial reports (benchmarking, actual to budget reports)
  • Special reports on strategic opportunities or threats to the business

How do I know if I need a farm advisory board?

Farm Advisory Board meetings provide the business with a dedicated forum where time is spent discussing the business in a structured way.

If you find that you

  • do not have any spare time because you are too busy doing operational ‘stuff’,
  • have the next generation entering the business,
  • are not spending the time to consider the future direction of your business and family, or
  • if you are not adequately meeting the legal responsibilities of the business, then a farm advisory board may be the answer.

What are the advantages to establishing a farm advisory board?

Farm Advisory Board meetings provide farm business partners with the rigor and time to strategically review the direction of their business, and time to prioritise the key tasks for the business, outside operational deadlines.

They provide an opportunity for all members of the farm business to have a say in a formal environment, on key strategic decisions for the business. They also provide a place for the next generation to learn the ‘business side’ of the farm, with the full support of the older generation and their trusted advisors.

Boards of management are key risk management tools for many businesses outside of agriculture. Boards, advisory or management, mean that more than one person knows the direction and operation of the business, and there are processes and plans in place to ensure business continuance should something happen to key family members.

What are the disadvantages to establishing a farm advisory board?

Often as sole operators, the thought of sharing the decision making in a family farming business is uncomfortable. This is perceived to be one of the biggest disadvantages in a family business, but once in operation, most farm families with boards, believe this is one of its greatest advantages.

It is often the time pressures on collecting the relevant information and hosting a board meeting that is the hardest issue for businesses with farm advisory boards. If you are committed to the process, then the benefits of creating these reports, and spending the time, far outweigh the hassles.

Do I need to pay the independent advisory board member?

Yes. Most professionals will charge their normal daily rate for preparation and meeting time. Meeting expenses, such as board room hire, independent board member travel, morning and afternoon tea costs, should be met by the farm business.

For more information contact:

Danielle England               Narrogin WA       0429 676077     danielle@aginnovate.com.au
Jeanette Long                   Ardrossan SA      0438 373993     jeanette@agconsulting.com.au

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Extension and Adoption, Facilitating farm family meetings

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Job descriptions – important for farms?

2013-07-06 16.41.28Yes!  Job descriptions are important on farms – as they are in any business.

In agriculture we often see businesses operating with limited structures around people management. This is not only for employees but also for sons or daughters working in the business.

I’m a great believer in having simple and formal processes in place to ensure everyone is clear on their roles and responsibilities. It helps with accountability, manages expectations and reduces those assumptions which often end in tears or resignations.

Having job descriptions and performance reviews in place for sons and daughters in the business enables open discussion and provides an avenue for gradual transfer of decision making as skills and confidence grow.

Even if there are only two of you in the business clarity around roles and expectations assist with the separation between work and family life.

A couple of websites with great resources to help make it easier include

  1. The people in Dairy website http://www.thepeopleindairy.org.au/live-library.htm This website is a result of Dairy Australia recognising the importance of people to the industry. It includes masses of downloadable templates which can easily be adapted for any agricultural industry.
  2. For an overseas perspective – Labour Management in Agriculture comes from the University of California, Prof Gregorio Billilkopf. This site also has free downloadable books on labour management and conflict resolution. http://www.cnr.berkeley.edu/ucce50/ag-labor/7labor/001.htm

Partners in Grain (www.partnersingrain.org.au) has been funded by GRDC to develop a workshop on managing farm staff. Contact your state coordinator to find out more information.

It would be great to hear of other useful resources any readers may have found! I look forward to some comments.

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Facilitating farm family meetings

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A career in agriculture?

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Young people choosing agriculture as a career is a continuing problem. At many of the sessions I facilitate in rural Australia it’s a burning topic – participants focus heavily on the students…

“How can we encourage high school students to consider ag?”

I have been giving the topic a lot of thought as my own children enter the university age – with two parents in the industry both are pursuing different career paths. During our sons primary school years we were in drought and by the age of 15 he said “who would want to be a farmer  – look how stressed you two are.”

Hmmmm…. what is the impact of environment and are we targeted the wrong timing? Let’s take a bigger view of the issue. Who and what are the key influencers of children’s choice of career? A couple of ideas are front of mind for me.

1.Age – targeting high school students is too late. Values and beliefs are laid down by the time they are in high school, I believe the key time to influence thinking is earlier than this…. Start the process in primary school during formative years.

2. Teachers have a large impact on our children’s thinking – many teachers do not have an interest in, or understand agriculture. A friend recently told me about his daughter who had decided to study ag and how she was actively discouraged by not only the teachers but also the career councillor.

3. Parents… I am going to focus here on mothers (my mother had a big influence on my choices). I have worked with 100’s of women on farms over my career and sadly many of them are not very happy. They fall in love with a man, marry him, the farm, the family and the business. Some families embrace the daughter in law, however many do not. Many women live in someone else’s home which they can’t make their own, live on a shoe string budget and work very hard. Poor succession planning often alienates them further. These young mothers are a key influencer of their children during their formative years – what are the subconscious messages that are being passed on?

At a workshop recently one of the women told me she was not encouraging her children to farm.

Yes agriculture is not limited to farming – there are thousands of careers in the industry – is this message really getting out there and to the key influencers?

Lots of issues here … what we need is a new perspective –  look at the impact of key influencers, timing, subconscious messages and some of the social fabric of how the industry operates.

What are your thoughts?

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Facilitating farm family meetings

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Farm succession – getting started

When to start the succession planning process?

I believe right now is a good time! If we think about it as part of the business strategic planning process and integrate it into our thinking it’s becomes an important part of ensuring business continuity.

Most members of family farms have the common goal that the farm should stay in the family. This is a great way to get the discussion started; there are plenty of examples of farms that have not remained in the family because the discussion never happened.

Certainly when someone is entering or exiting the business is an essential time to meet and discuss the effect of any changes.

Too often the discussion only starts when there is a family crisis, someone is unhappy, leaving the business or causing waves. Sometimes this is too late. However, as sensible as the process might seem, sitting around the table to discuss Wills, land transfers, retirements and pay outs understandably causes fear and emotion.

Getting everyone to the table at the same time can be difficult. Starting the process can be challenging and different generations will be ready at different times. For the older generation it wasn’t common practice for them when they entered farming. Assumptions made and many of them had to wait for the previous generation to exit,or even die, to take over the farming business. They often didn’t know what was in the Will until it was read.

This generation had to trust their parents to look after them and may expect the younger generation to do the same.

In contrast the younger generation are looking at farming differently – they have been encouraged to see it as a business which like any other small business should have a plan. They are looking for security for their future, to know what will happen and when.

Expectations are different and the generations need to be considerate of each others needs. Stephen Covey’s “Seek first to understand and then to be understood” is important for succession planning. Ask questions and really listen to the answers, ask more questions. Do your best to encourage open and honest communication.

Unfortunately there is not one forumla, every family is different with different personalities and needs.

A few tips for getting people to the table

  • demystify the process as much as possible, explain carefully what’s involved and what would be expected of people.
  • remind family members of the big picture goal and the need to ensure everyone is looked after while maintaining the business (if that’s the goal)
  • recognise the fear and emotion attached to succession planning and deal with this as it arises. Acknowledge the emotions and address them, don’t sweep them under the carpet or respond inappropriately.
  • hold the meeting away from the family home. Treating it like a business meeting in a neutral environment often improves behaviour and ensures the meeting is taken seriously. It can also stop us from retreating to childhood behaviours and habits.

And  always remember; we all do the best we can with the resources we have available to us!

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Facilitating farm family meetings

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Farm succession facilitation for business continuity

Facilitation of farm succession is something I am very passionate about. Done well it keeps families together and farms in business, done badly, or not at  all, family support systems can be destoyed and so can businesses. My passion is driven from my own personal experience growing up on a family farm and marrying into a family farm, one family handled succession well and the other very badly.

These personal experience led me to completing Farm Family facilitation training with Lyn Sykes from Dubbo, ToP Facilitation training, Coaching training and an MBA so I could assist farming families with succession planning in a constructive way.

Accountants, lawyers and financial planners all play important roles in the succession process and often the most overlooked role is that of the facilitator. The facilitator will ensure the tough questions and the emotions are dealt with – they aim to assist the family achieve outcomes with shared understanding and common agreement.

Getting the whole family together is key to the shared understanding ….and I mean the “whole” family. The most successful meetings we have facilitated have included everyone involved in the farming business, this includes the siblings and their partners. The meeting provides an opportunity for everyone to put forward their views and perceived role in the future of the farm as well as their personal goals.

The other big misconception is that succession planning is about Will’s… this is only one part of the discussion. Succession planning is more accurately described as strategic planning or planning for business continuity. It includes discussions about business mentoring, business transition, roles and responsibilities, expectations and goals, retirement plans, plans for business growth, housing and more.

I’m not saying it is an easy process. Many families have never sat around the table and shared their hopes, goals and dreams for the future and at first it can be uncomfortable. After five years of working with families in South Australia I am still passionate about doing whatever can be done to keep families and farm together.

I would love to hear your comments…

What is your most pressing question about succession planning on farms?

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