Alain Lavigne has belonged to a farm management group for 25 years and says he couldn’t imagine farming without it. “It puts the picture of the whole farm in front of you… it helps us evaluate our strengths and weaknesses,” says Lavigne, who farms with his family in Ontario, an hour east of Ottawa. “It takes some of the risk out of farming, so there is less stress.”
The goal of this farm management group is to help producers better understand their accounting reports and to make objective farm management decisions, says Luc Gagné, the group’s farm management consultant. “It takes the emotion out of it. When you know where you come from, it is easier to go forward with expansion that makes sense for your personal and farm objectives and goals.”
There are currently 60 members in this farm management group which goes by the name Groupement de gestion agricole de l’Ontario (which translates to “Ontario Farm Management Group”).
Farmers pay an annual membership fee of $1,650 that covers the salary of a farm business consultant and allows members to compare their farm’s financial and technical data against other farmers… on an anonymous basis.
The group got its start when the Ontario government reduced its extension services to farmers in the late 1980s, which is when producers decided to replace that service and try to go one better by hiring their own adviser. “We realized we were missing the agriculture specialist services, and at the same time, farming was becoming more complicated,” Lavigne explains.
Gagné, their adviser, says a broad range of farms are involved in the group. These include dairy farms with anywhere from 40 to 400 cows, along with turkey, chicken, egg, and cash crop operations.
The organization falls under the auspices of Les Groupes conseils agricoles du Québec (GCAQ), an umbrella group for farm management groups in Quebec, Ontario and Manitoba. This gives the group access to software for tracking farm finances and also gives the farm management consultant access to training and other resources.
The group uses Agritel software that tracks farm business financial performance, while Budgitel software is used for making future projections.
Farmers also have the opportunity to compare their financial performance indicators against other group members. All of the aggregated financial information is anonymous.
Detailed technical and economic information from the farm is collected, says Gagné. This could include inventories, number of hours worked, quantity of milk produced, age at first calving and calving interval. “Different ratios are calculated for the farm in general but also for the dairy and cash crop sides of the farm,” Gagné says. “For instance, cash flow, debt repayment, cost of production, and residual balance are calculated as well as profit per cow, cost of raising a heifer or the cost of production for milk on the dairy side.”
As part of their fee, members are also entitled to a set number of hours of service from the farm management consultant. If they need more time than that because they are working on a special project, they can hire the adviser on an hourly basis. (Note: Growing Forward funding may be available to offset the extra cost of consulting.)
The consultant can play a role in all aspects of decision-making from information gathering to choosing a solution, monitoring the results and making any adjustments needed. For instance, Lavigne says if his tractor broke down, Gagné would help him decide if he should repair the tractor or invest in a new one.
Lavigne, along with his family and employees, milks 120 cows three times per day. The family also farms 1,000 acres and has a maple syrup bush with 1,600 taps near Ste-Anne-de-Prescott.
When he first joined the group, Lavigne was farming with his father and brothers. The farm management group helped with the transition of ownership to include the next generation, his son, Jean-Pierre, and daughter-in-law, Shana.
Since 2009, group members with more than 100 kg of milk quota or 100 cows have also benefited from being able to compare their financial data with a larger pool of farmers in eastern Ontario and Quebec. The farms are divided into groups depending on whether they fall into the top, middle or bottom tier based on their financial and technical performance.
In addition to an annual meeting where the group analysis is presented, there have been summer picnics and bus trips to visit farms in other areas, allowing for an informal flow of information too.
“To exchange information with other farmers is an enriching experience,” says Lavigne. Gagné agrees. “As a consultant, I bring ideas and information but what farmers can get just talking together is much more important and constructive.”
Lavigne cautions that group members need to be progressive. “You have to be open minded and be ready to take the farm in new directions,” he says. “If you are spending too much raising your own calves, you have to be willing to think about buying replacement heifers instead.”
Fortunately, the younger generation seems to be increasingly comfortable with sharing information, notes Lavigne.
Stability is important for the non-profit group which is run by a volunteer board. Lavigne says it has helped that Gagné has been their adviser for 21 years and the group’s secretary, Johanne Lafrance, has held that position for the past 24 years.
For farmers thinking of starting their own group, Gagné cautions that it can take four or five years to realize the full potential when starting out. “During that time, support and funding are needed to make sure the group will stay alive.”
This article first appeared as “Join the club” in the January 2016 issue of Country Guide
Today’s problems are often complex and interconnected and the solutions are neither easy nor simple, which means business leaders need to put aside self-interest and work together to solve them.
It’s called collective impact, a teamwork approach that has a long history in the farming industry.
However, as the competition for land, employees and buyers heats up and farms become more intense and as our agricultural extension structure weakens, have our rural links become too fragmented for old-style information sharing?
Maybe the strategy of being bigger and better than our neighbours at any cost isn’t building the relationships and strategies for sustainable, long-term growth.
Instead we should take a page from our own history and current business strategist’s Lisa Renner’s new book: 1+1=3, The New Math of Business Strategy.
Renner has collaborated with competitors to build a family of six multi-owned companies by age 36. In her book, she tells how collaboration is helping businesses achieve the impossible or rather, what was impossible on their own.
It seems the idea of working together is spreading in the business world. When the recent IBM Global CEO Study asked 1,700 CEOs from 64 countries how their organizations need to change to be successful in the future, the most common response was partnering or collaborating with external organizations.
The Agricultural Management Institute is trying to resurrect collaboration. The Power of Groups: a farmer’s guide to working in small groups for better results can be downloaded for free from takeanewapproach.ca.
On the website you will also find a list of club advisers available to help any new or existing farm clubs across Ontario, and other provinces have similar services that can be found by searching their sites. In Ontario, these advisers will facilitate a whole year of meetings and complete a business plan on behalf of the farm business management club. The plan will state the purpose and goals, an action plan and specific parameters for the club’s long-term sustainability, but check details in your own province.