Consolidation is the name of the game in Canadian business, and especially in Canadian agriculture. The pressure is on everywhere to grow bigger. If you’re a farmer, that means buying your neighbour’s land to grow your economy of scale, and it’s the same if you’re a processor, an input dealer, a chain of accountants or practically anyone else.
But there’s a quandary. Is there nothing a mid-sized farm can do to stay viable in today’s world?
Are our mid-sized farms doomed to die because they won’t be able to keep up the pace?
Such questions have long been on Mark Brock’s mind. He farms with his wife Sandi at Hensall, Ont., where they operate a 1,600-acre grain and oilseed farm and also produce meat sheep.
Theirs is a mid-sized farm, or, as Brock describes it, one of those “awkward” farm sizes, almost large enough to make significant capital investments but too small to generate enough return on investment.
That was evident recently as he looked into purchasing a new combine. The numbers just didn’t work. He and Sandi couldn’t justify the purchase when custom combining rates worked out to about $1 more per acre than servicing a loan.
Brock began looking at other options. Could sharing this purchase with another farmer be an alternative? Was some sort of collaboration or sharing agreement possible?
That’s when he began to grapple with a larger set of questions that would ultimately take him to New Zealand and Australia in order to learn how other farmers have formed partnerships and joint ventures to serve their common needs.
Brock has just released Farmer to Farmer Collaborations, a 32-page report he wrote as a scholar with Nuffield Canada. He was accepted into the program in 2019 and chose to look at business structures formed in New Zealand and Australia where farmers have pooled resources and bundled their collective economies of scale for a greater return on investment.
The report he produced documents these collaborations, and details key human elements that were essential to making them succeed, such as trust, openness, accountability and leadership.
But Brock went a step further too. His study topic began to diverge as he tried to discuss the idea with others here at home and ran into real resistance to the whole idea of collaboration.
Brock summarized his ideas, and in return he kept getting the same broken-record response: “That will never work.”
It made him wonder: Why would so many farmers be resistant to even thinking about collaborating? Especially if there could be value and a return to their bottom lines in doing so?
He began expand his Nuffield topic to look at behavioural economics, too, including delving into something called prospect theory, an idea developed by psychologists who have studied various anomalies and contradictions in human behaviour, and the biases in how people choose between different options.
It “steps outside the bounds of ‘rational choice’ economic theory and considers that people don’t behave rationally,” Brock writes in his report.
Of course, farmers prefer to think they make rational decisions. They can, for instance, point to the spreadsheets they use for determining a crop’s cost of production or a livestock barn’s performance, and how they use this information to make logical business decisions.
But Brock is a farmer too, with experience in the real world. “As many of us know, not all decisions are made logically or rationally,” he writes in his report. “There are times when the data indicates a farmer should do one thing, yet they do the complete opposite.”
In an interview with Country Guide, he explained further. “My thought as I started this project was that farmers would always do a collaboration if it made economic sense. But as I got a lot of resistance to that, I had to step back from just looking at pure business structures to looking at why farmers can resist the idea of collaborations, too.”
One part of his deeper look into this is whether we’re aware of our biases, and how they can lead to making quick, emotional decisions.
Instead of actually thinking it through, ideas can get dismissed simply on the basis of “gut instinct,” notes Brock.
A “status quo” bias, for example, means it’s easier to do nothing than make a change. It’s also why many farmers will nod in recognition at the realization that they can feel worse about a bad outcome from a new action than a poor outcome from inaction.
Another is the “overconfidence bias,” or tendency to put too much faith in one’s own abilities or knowledge.
“Farmers all have overconfidence biases, whether it is projected timelines or production targets, and we need to be aware of the consequences of overestimating our abilities,” Brock writes.
A “social proof bias” can be a factor too, making us feel the need to do what others are doing.
Brock began exploring how understanding our own biases then allows us more insight into how we make decisions — including how we assess the potential of a collaboration with other farmers.
His report from his travels to New Zealand and Australia also details five case studies where collaborations did indeed work, after the farmers involved decided forming them as formal business structures to meet a common service need was in their best interests.
One collaboration he examined was formed around the shared need to access more irrigated water. Another was between farmers who agreed to a joint venture to spread their combined capital costs across a much larger number of acres, modernize equipment, and boost purchasing power. In New Zealand he met dairy farmers and representatives of their supporting organizations who collaborated to be able to retain employees by providing opportunities for farm employees to start their own farm operations. Other collaborations shared a need for more localized research and extension that reflected their area’s higher rainfall and geography.
Each collaboration was different, and each met a distinct need, says Brock. But in each case participants had asked lots of questions, both of themselves, and about why they should collaborate.
“All of the collaborations, fundamentally, were about achieving the betterment of the participants by the collaboration,” he says.
“They had a common reason to be together. They had a common purpose and a common ‘why’ … that’s the linchpin to all of this. If the collaboration doesn’t have a clearly defined ‘why’ they won’t succeed.”
There are more farmer-to-farmer collaborations happening in Canada, Brock notes, and he expects we’ll see more in future, too.
Yet, having spent time away, he says he has concluded that Canadian farmers do remain inclined to be quite individualistic.
“I believe this individualism plays a role in why I got the “that will never work” response to my question about collaborations,” he writes in his report.
The tendency to view one another as competitors isn’t quite as pronounced in Australia and New Zealand, he believes.
Canada’s farm business environment is quite different than that of Australia and New Zealand and there is a different outlook in the southern hemisphere about who one’s competitor is, too.
“I heard it said more than once that farmers in Australia don’t view each other as competition. They view the world as competition. And New Zealand is very much the same way.”
“There are similarities in geography, products produced, and the need to export,” he wrote in his report. “However, I would generalize Canadian agriculture as more individualistic, especially at the producer level.”
“During my involvement in farm organizations and industry groups. I’ve witnessed all too often one group throwing another one under the bus in an attempt to get ahead. There are farmer-to-farmer collaborations happening in Canada, but more often than not, Canadian farmers prefer the individual approach. I would describe agriculture in the U.S. similarly and note that Canada’s close relationship with the U.S. has a significant influence on Canadian agriculture,” he also says in his report.
Farmer to Farmer Collaborations also examines some of the tools and supports Brock believes Canadian farmers need to begin thinking differently about collaborating. In it, he also questions whether this country’s business risk management programs actually offset the need for farmers to collaborate. Our current suite of risk management programs are very individually focused on cost and outcomes.
“I ask the question: ‘Does this lower exposure to risk offset the need for Canadian farmers to collaborate, therefore re-enforcing individualism?’”
“Furthermore, I wonder if Australian and New Zealand farmers collaborate more to manage risk because they do not have access to similar programs. It is not my intent to criticize our Canadian support programs but merely highlight the potential unintended consequence they may have on farmer collaborations,” he also says.
Brock sees a need for more opportunities than currently available for Canadian farmers to develop their business skills. He observes farm groups spending a lot of time on production-related information, and not putting enough focus on business or business management.
He also asks, if there was a greater emphasis on the business side of farming, how reliant would we be on additional government support programs?
Encouraging farmers to improve their business skills “may create a spark that leads to collaboration,” he says. And providing access to more services in financial and production benchmarking may help drive innovation too.
It was evident to him while in New Zealand and Australia that farmers there have greater access to these resources. BDO Canada is doing work benchmarking farm financial data and working with Agrifood Management Excellence (AME) to produce standardized farm financial statements, he notes. More of this kind of data in farmers’ hands could help them assess how their businesses are doing financially, and enable them to measure improvements.
“As Canadian farmers, if we had this information and understand its relevance, would it create the curiosity for change?” he asks in his report.
“Curiosity is the backbone of why people would even consider a change or feel the need for one. All collaborations begin with a common curiosity.”
It was farm consolidation and his ongoing concern about mid-sized farm viability that led him to do this research. Many farmers are equally challenged to access capital and make significant investments in their operations due to the sizes of their farms.
Brock said he hopes farmers who read his report will find some tools and ideas and new ways of thinking about whether a collaboration is right for them. He hopes to be speaking to farm groups over the next few months about it.
“My hope with my report is that if a farmer reads it, it might make them a little bit more aware of their subconscious reaction to a collaboration,” he says. “And my intent near the end of it is to provide some bones that you can put some structure around. Basically, here’s a starting point, if you’re interested in pursuing one.”
A farmer he met in western Australia summed it up best, he adds. “He said, ‘If you get the people part right, the economics will look after themselves.’”
Q&A: Could you do a Nuffield research project? Why would you want to? We asked Mark Brock
Country Guide: We often wonder how anyone can accommodate the additional workload of a Nuffield scholarship into their busy schedules. How much of a time commitment was your project, and how were you and Sandi were able to commit to that?
Mark Brock: It’s a huge commitment, especially when you have a family. It’s a family decision. You can manage the time fairly well until you get to the travel component of it. I made sure I was gone during the winter when there wasn’t so much going on. You really just have to make sure that you’ve done some very good planning to be able to be gone eight weeks and know that you have systems in place to deal with that. We had a list of good friends and family who we could call if we needed anything. I was also just a phone call away. Once you do it, you feel quite comfortable that you can do it and you’d want to do it again. It’s probably been one of the most rewarding things to see that you can actually leave your business for eight weeks.
CG: Talk to us about the planning you did in advance of your studies. How did you connect to whom you wanted to talk to?
Brock: The Nuffield network is phenomenal. We started March 2019 with the Contemporary Scholarship Conference. There you meet other scholars from around the world, so you make some pretty good connections with these scholars, and when you start wanting to build your travel plan around your topic, it’s a matter of reaching out to them to help line up people. The scholars I visited and stayed with (in New Zealand and Australia) were fantastic in helping line up people for me that were related to my topic. That’s the best part of the Nuffield network. You get that one touchpoint that becomes this tremendous resource of people.
CG: How would you say taking part in Nuffield Canada’s scholarship program has changed and benefited you personally?
Brock: I don’t think I could ever put a dollar value on the benefit. It’s the ability to talk to people from around the world and get a sense of their challenges and what they deal with, and then to reflect on what does that mean to me. It’s the ability to step outside your bubble. I’ve been very fortunate to be involved in Canadian grain organizations, so I was able to step out of Ontario and get a sense of Canada. What Nuffield has done is give me a sense of the world. You can’t put any value on that. I encourage people who have the tenacity to want to do a Nuffield scholarship to do it, but even if you can’t make that kind of commitment, I would encourage you to travel and experience agriculture in other parts of the world. It gives you a sense of appreciation for what we have here.
CG: How has being a Nuffield Scholar enhanced your own critical thinking, people, business skills, etc.? Can you offer us some examples of how you may think differently, or do differently, because you had the Nuffield opportunity?
Brock: I think my report was almost an internal analysis of myself as a farmer. I think that report speaks a lot to my own experiences and my own thought processes. For me that kind of self-awareness through the report has been a really excellent way for me to open my mind a bit, and maybe take pause before I have a knee-jerk reaction. Through this process of writing the report I think I’m more open-minded to new ideas and doing things differently, and probably more open to making sure I understand other people’s points of views and that people value things differently. Ultimately, it’s led to me actually looking at different collaborations for our farm. We have a strategic plan for our own farm, and since my own report has been completed, I think collaborations are now part of our strategic plan. One is that we’re looking at purchasing a piece of equipment 50/50 with a neighbour. I’ve been using my report for a baseline for how we would structure that equipment purchase.
CG: What would you say will be the most lasting personal and professional benefit you’ve gained taking part in Nuffield?
Brock: It’s made me understand myself more as a person and I would like to think it’s made me conduct myself more professionally on the farm in terms of trying to be more open-minded and open to ideas.”
Mark Brock’s Nuffield Scholarship was sponsored by Grain Farmers of Ontario. His Nuffield report Farmer to Farmer Collaborations will be released in March 2021 on Nuffield Canada’s website at nuffield.ca/scholars-reports.
The Canadian Nuffield Agricultural Scholarship Association (Nuffield Canada) is part of Nuffield International, a non-profit global organization that inspires individuals around the world to travel, study and shape the future of agriculture and their local and global communities. Scholars devote months of their time digging into a topic of interest to them, developing expertise in their area of study that then makes them an invaluable resource to others.