Financial literacy should be part of the ‘licence’ to farm – Nuffield scholar

Terry Sim, September 21, 2018

Succession lawyer and farmer Claire Osborn Booth.

FINANCIAL literacy should be part of the essential criteria to becoming a farmer in Australia, Booth Agriculture co-owner Claire Osborn Booth told delegates at the Nuffield Australia national conference in Melbourne yesterday.

The 36-year-old farmer and succession lawyer highlighted the German young farmer system where trainees need financial literacy to gain a licence to farm.

Her Nuffield investigations into the transfer of farming businesses and their assets, and the role of financial literacy and debt in succession took her to New Zealand, the United States and Canada.

She and her husband Brendan own the mixed farming business Booth Agriculture, producing high quality agriculture, grains and seed crops. The operation also includes a separate enterprise to mitigate the risks associated with cropping, that breeds Angus cattle, and trades sheep and cattle depending on market conditions.

At the conference, the 2017 Nuffield scholar also gave some insights into how to be ready for bank meetings and the role of land leasing.

Young German farmers need financial literacy to get a licence

Claire told conference delegates aspiring young farmers in German, where farming is a licenced profession, had to study and gain experience before getting their licence and coming back to the family farm.

Young German farm apprentices have to gain a qualification in agriculture, spend 12 months with another farm business and that included time with the owner running through their management system and accounts.

“So when you returned home you not only had some accounting knowledge, but you had some management experience.

“So there are some great ways to improve in this area.”

Claire said New South Wales is a leader in the financial literacy field with the Rural Assistance Authority’s professional program providing $10,000 for farm businesses.

“So I believe if that people have the will and the desire there are definitely course out there that you can do.”

“I think it’s also a case of spending time with your accountant and saying ‘look you are one part of our business, but I would actually like to understand my numbers, I really need to stand alongside you, I don’t really just want to receive your information, is there something you can do ….”

Another good option is the Rabobank executive development program and its associated courses. She also regularly list courses on Booth Agriculture Facebook page.

“If you haven’t done one, I suggest you do, it is fully tax deductible.”

She said courses which were “life-changing” for the Booth Agriculture business were the RSC course ‘Grazing for Profit’, Richard Groom’s course ‘The Farm Business Audit Workshop’, Allan Parker’s Negotiation for Change and (Leadership) Partnership Program and the KLR Marketing course.

Spreadsheets, spreadsheets, spreadsheets

Claire said one of the top three things she focussed on for her “catch-up” meetings with her bank were: “spreadsheets, spreadsheets, spreadsheets.”

These should include spreadsheets for 12 months and five years, outlining cropping rotations or business plan scenarios covering below average turnover, “what we think might happen” and “what will happen if the moons align”. These should be provided a week before the meeting with the bank.

“So you are walking in and you are showing you have some awareness of what’s going on and the banker is saying ‘oh my God, I actually don’t have to do that, you’ve actually done that for me, tick’.

“Secondly it is having a vision, saying well, where are we going, what are we doing? And not just five years, I’m talking 10, 20, 30 years.”

She said she recently went into their bank requesting an interest rate for 15 years.

“We said if you reward me with really low banking margins I will reward you with loyalty.

“They made a phone call and this man came from nowhere and said ‘you talk like a corporate’,” she said.

“And I said well no I don’t, I’m a small family farmer, I just want to know where I am going, and that long-term planning, they said, was completely absent.”

She said the third thing is to show that the business is willing to sell assets “if it goes pear-shaped.”

“So having a 10-point plan – what am I going to sell? Where is it going to come from and how easily can I sell those assets? If the shit hits the fan, this is what I’m going to do,” Claire said.

“Those three documents provide complete and utter confidence to an equity, whoever that is, that you are going to be a wonderful person to do business with.”

On leasing to offset risk and generate income/profit

Claire said leasing is a defensive capital play and a way to “leapfrog” to increased turnover. As a duplication of the current operation, leasing is a way to dilute particular overheads, and increase turnover or the stock numbers for trading and generation of a land purchase deposit, she said.

“Without a doubt, leasing wherever it is, it doesn’t matter, will definitely be something that is an easy way to increase turnover.”


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  1. Peter Small, September 23, 2018

    A farmer needs a wide range of skills to be successful; not to forget motivation and luck. Perhaps the most important being their parents and where they farmed.

  2. Kieran Ransom, September 22, 2018

    Agree 100 percent. Overall farm financial analysis skills are almost completely absent on sheep farms; they should be the highest priority. In the sheep industry, there is too much emphasis on simple things like supplementary feeding and electronic identification – Band-aid fixes. The real need is financial analysis of how the farm plans measure up.

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