For Canadian agriculture, 2019 is all about managing change. Primary producers are embracing all the capabilities of technology to move towards efficiency. Like never before, they're capturing and using data to manage for higher production, more sustainability and developing financial and marketing strategies. More young entrepreneurs are coming back to farms, so planning for business transition has become vitally important. While all these internal shifts are happening, the marketplace is being tossed around with changing global weather, consumer demands and politically-loaded trade deals.
In our look at what themes will be prevalent in the agriculture industry this year, we want to highlight that embracing these advancements is critical to the success of current and future farming operations.
Rapidly changing technology
For the last decade, agriculture has been going through a technological metamorphosis that's impacting all parts of the industry. The advantages of technology in agriculture is giving producers more power than ever to be more efficient and successful. “Today Canadian farmers are using global information available at their fingertips, 24-7”, says Maggie Van Camp, National Agricultural Practice Development Leader. “They're adopting robotics, artificial intelligence, genomics and more. Soon this will be one of the first industries to apply autonomous, driverless equipment.”
Moreover, mobile apps are being used to track equipment status; drones are tracking where crops need to most effectively apply farm inputs; and auto steer tractors are easing the effort used by farmers and their teams.
Like never before, farmers are leveraging data for more environmental and financial sustainability. Food can now be traced from the farm to table. Strategically managing inputs and yields with historical production data balanced with financial information is a way to manage risk, control costs and maximize assets.
While the average age of farmers in Canada is 55 years old, we're seeing more young farmers than ever before. According to the 2016 Census of Agriculture, the number of farmers continued to shrink. However, the proportion of operators under 35 years of age increased for the first time since 1991. Yet only 1 in 12 operations reported having a formal succession plan laying out how the operation will be transferred to the next generation of farmers.
It has been estimated that $50 billion in assets is to be transferred to the next generation over the next 8 to 10 years; creating what some call a tsunami of change. “Planning for a smooth inter-generational transition is one of the key concerns of our farm clients, not just from a financial perspective, but from a family perspective”, notes Brent Van Parys, Partner in Business Transition Services.
We're also seeing a change in the agricultural workforce. More farmers are hiring non-family employees. Our government incentive and human resources advisory practices are seeing these trends in the help they're providing the agriculture sector. For instance, farmers are taking advantage of foreign worker programs to help grow their farms effectively.
When commodity prices are in flux and margins become tight, it becomes imperative for farmers to use reliable numbers to make marketing and other business decisions. It starts with knowing their own numbers and maximizing production, no matter the size of the operation. “I have seen successful farms of 1,000 acres, and unsuccessful farms of 10,000 acres”, says Mark Verwey, Partner and National Agriculture Leader. “The key difference isn't the land or the equipment or the weather, but the management.”
Better farm management equals a much greater ability to adapt to the changing and uncertain marketplace, whether those changes come from trade agreements, the weather, world production, tax changes or consumers' diets. “We see the effect of market change and uncertainty not only with our clients but in our BDO partnership group as many on our Ag-focused teams operate farms as well”, says Verwey.
Managing your financials during times of change is critical. When dealing with your farm's business activities, it's important to use data to establish sound tactics and know the numbers so they can be leveraged advantageously. Whether expanding to take advantage of new markets, or weathering a tough year, constantly monitoring your financial information—including benchmarking and trend analysis—ensures farmers can make informed decisions.