Farmers coy on consultants

Last updated 05:00 16/08/2014

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Most farmers do not employ a farm consultant even though a study shows they can make a $4 return for every dollar spent on their services.

Of 2000 farmers surveyed about their use of professional help to manage their farms, more than half use consultants for less than 10 hours a year.

The result surprised Lincoln University farm management research senior lecturer Dr Kevin Old and research fellow Dr Peter Nuthall who carried out the research.

"The key message is 75 per cent of both strategic decisions and perhaps less tactical decisions are being made by farmers solely or perhaps with farm colleagues," said Old. " It did surprise me a little [as] there appears to be a handsome return using farm consultants."

He said farm decisions made a "massive" impact on the rural and national economy and many people would benefit from improved decision-making.

The researchers plan to release results about farm ownership, succession and governance later.

Farmers with a net farm investment of less than $5 million were found to pay $1330 a year on average for consultants. In contrast, farmers with a net investment of more than $25 million averaged $17,700 a year.

Spending the most on consultants were crop farmers at $5800 a year and dairy farmers $4240.

A lack of trust appeared to be an issue, with farmers rating consultants an average of 2.42 on a 5-point scale, with one being good and five being poor.

Old said more research was needed on the trust issue. The survey found farmers benefited by zero to $40 for every dollar spent from consultant advice, averaging $4. "I am a great believer that farmers make rational decisions for their own needs and they aren't seeing value . . . obviously farmers are making choices not to use independent consultants."

The study found about 29 per cent of farmers were sole traders making decisions themselves. Nearly 2 per cent were paid managers, 6 per cent were paid and had some investment interest in a farm, 1.7 per cent were sharemilkers and the rest were usually in a business partnership and took responsibility for most business decisions.

Only 4 per cent reported having a "farm specific" board of directors or a formal advisory committee (5.3 per cent) and larger farms tended to be more highly represented.

The average use of farm consultants was 21 hours a year with more than half of farmers surveyed using them less than 10 hours a year. Just 4 per cent of farmers employed consultants more than 70 hours a year.

Farmers under 35 used consultants an average of 42 hours a year compared with older farmers' 21 hours and many not employing consultants at all.

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Some farmers using company representatives to help them with their decision- making averaged 14 hours a year.

Trusted persons were most commonly used at 51 hours a year and ranged from a respected colleague to a family member. Most farmers did not employ a consultant and relied on their own experience and observations, often after talking with family and "trusted persons". Yet 52 per cent admitted they needed help in controlling risk.

- Stuff

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