Snapshot

Owners: Peter, Jane, Doug and Fran Aikman
Location: Annuello, north-western Victoria
Farm size: 3000 hectares
Average annual rainfall: long-term 300 millimetres; growing season 180mm
Soil types: deep sands on dunes, sandy loam mid slopes, sandy clay loam flats
Cropping program: one-third wheat, one-third barley, one-third legumes (combination of lupins and vetch for hay and brown manure).

A couple of times every year, a group of like-minded growers from northern Victoria get together to discuss financial management. The five-person peer learning group was the brainchild of Peter Aikman, who was working to improve his financial literacy and keen to see how a group approach might improve his process.

Peter contacted five growers he had previously worked with when he was a consulting agronomist. They agreed to collaborate and have since been workshopping their business approach for four years.

The group use business management software called P2PAgri, which automates budgeting processes. The software was developed by consultant Mike Krause, who had previously written a GRDC-invested publication called Farming the Business, released in 2015.

Victorian grower Peter Aikman, who returned to farming in 2014 after a 10-year stint as an agronomist in the northern Victorian Mallee.

Peter, who had returned to farming in 2014 after a 10-year stint as an agronomist in the northern Victorian Mallee, believed he was handling the agronomy on his farm well, but realised he was deficient in business management and financial literacy.

“I completed the Rabobank executive development program, where I completed a strategic plan as part of the course. In that strategic plan, it hit home that I had a lot to learn about financial literacy,” he says.

“After that, I went about calculating my own financial metrics, such as return on assets, return on equity, net profit ratios and so on. I realised, ‘I’ve got all my own data in a series of spreadsheets – what do I do with it now?’

“There’s so much data in the world, but in a lot of cases it is underutilised until you’ve got the right information about that data. Once you’ve got that information, you can draw some knowledge and learn from the data, and then you can start making some decisions.”

As he sought ways to interpret his data, he encountered Plan to Profit Agri and decided to complete the P2P adviser accreditation.

The discussion group that he later established “collates, calculates and compares the key financial metrics of the businesses involved. However, it has also grown into an environment where we can discuss things that are happening in our business and things we’re looking at potentially doing. It’s about learnings, networking and transferring knowledge.

“We try to focus on the financial aspects of the business. The bigger-picture stuff: what our return on assets and return on equity are; what our net profit ratios are; what our investment in machinery is.

“As you get into it, you realise it’s not a competition within the group – it’s competing against yourself year-on-year with your numbers. And looking at other people’s numbers – not to think you’re better or worse, but for inspiration and looking for opportunities to improve their business, as well as yours.”

Rewards for effort

The group’s members range in age from early 40s to late 50s, with varying levels of experience in financial management. “I think the most experienced person is still getting enjoyment out of it and learning,” Peter says. “And the people at the bottom are learning so much.

“We’ve got three years of complete data now and after this harvest we will have four. The first year was all about collecting the data. We then realised that we needed to learn more about each other’s businesses so that the discussion could flow.

“This year – nearly four years into the process – we are starting to make decisions based on the P2P learning. We’ve got the data and the information; we are gaining knowledge and now we can make decisions. It’s taken three or four years to get to a point where, say, a property becomes available and you can put the data into Plan to Profit and make some decisions around it.

“It’s not going to tell you whether to buy the property or not, but at least you have good data to be able to make better decisions. You won’t know whether it’s the right decision until you get to hindsight, but if you’re armed with more information and knowledge, I think you’re going to improve your chances of making better decisions.”

Peter says a group approach would not suit all growers, as many do not have the capacity to collate appropriate data. “I had the numbers because I had done the Rabobank course. But it can take a couple of months to collate all of the data: machinery values, liability and interest rates, land values and so on. Farmers are always busy and hours in the office are generally not prioritised.

“There is a commitment to keep good data, to allow enough time to make sure the data is up to spec for it to be relevant in our group. One grower has dropped out, mainly because he had two young children and was concerned he wasn’t dedicating enough time to it.”

Tracking the season

Peter says he uses the software to track the current season, as well as plan the following year’s rotations. “You can easily compare the profitability of different crop type percentages. For example, you can compare the profitability of growing a percentage of high-protein grain legumes – lentils and chickpeas versus the profitability of brown-manuring a percentage of lupins and vetch.

“Scenario analysis is definitely one of P2PAgri’s strengths – it’s never going to tell you what to do; however, it is giving me more accurate data to help make more-informed decisions.”

P2P software

He says the P2P software is user-friendly; “however, it is important to dedicate enough time and keep accurate data”.

“I guess we’ve all got software like that. Some people use Agworld to its fullest and do very well with it. Other people purely use it because that’s what their consultant might be using, so they have to use it.

“P2P probably falls into that exact bracket. If you’re not disciplined and you don’t dedicate the time to it, I could see some people getting very little value out of it, whereas for someone like myself, who identified the importance of improving my financial literacy, I could see them extracting great value from it.”

Peter manages the P2PAgri accounts of the group’s members, and is in touch with founder Mike Krause.

“If there’s a problem, or if I need any clarification, I contact Mike. I feel like I get the biggest value out of it because I’m entering most of the data. You generally learn more when you’re actually doing it yourself.”

Farming the Business

GRDC supported the development of the farm business management publication called Farming the Business. The book was released as:

• an easy-to-read physical book;
• a unique ebook in the Australian iTunes story, which has more than 70 high-quality embedded instructional short videos; and
• a series of PDF chapters easily downloaded from the GRDC website.

Farming the Business has been so popular it has gone to its fifth printing in seven years and is used as a key farm business management text in Australian universities and TAFE institutions. It has also been advertised and available at most GRDC Farm Business Updates since 2015.

GRDC’s initial investment in developing Farming the Business has had significant outcomes that have enabled the training of growers in farm business management.

It enabled Tocal Agricultural College (near Maitland in New South Wales) and P2PAgri to partner and provide a short course called ‘Plan to Profit’. It is planned to put 120 NSW grain growers through this course in 2022 and another 120 growers in 2023. A number of these growers could be eligible to obtain free training through the federal drought funding initiative through AgSkills.

Three items have stood out to make this short course training unique in Australia:

• The book – Farming the Business is the major text that provides rich learning for this short course. A copy is provided to each student.

• Using live video communication – Due to the influence of COVID-19, the course is provided only online through Zoom. With the combination of group training and one-on-one Zoom sessions, students receive personal training in farm business management without leaving their home office. Early feedback from students shows the training in Zoom easily matches ‘face to face’ training.

• The software – The use of the P2PAgri software platform means that growers use their own farm business data to improve both their learning of farm business management and the financial capability of their farm business.

Feedback has been very positive about the trainers’ practical knowledge of farm business management, the ease of use of the P2PAgri cloud-based software and the effective use of Zoom.

This is a great example of how GRDC investment has been used to seed further investment for training of farm business management to growers.

Tocal Agricultural College course

Tocal accessed funding from the Federal Government’s drought initiative resulting in participants’ fees for the online course for growers being covered. The online course runs for 10 weeks, initially involving a maximum of 10 growers and then online face-to-face with individual growers in which they can ‘plug’ in their own figures with Mike Krause providing feedback/tuition.

“Each student has a copy of Farming the Business as the major text and they are encouraged to read sections of the book. The case study videos associated with the text are available to all students. A selected number of short training videos in the eBook version of Farming the Business are also available to these students,” Mr Krause says.

More information: Mike Krause, 0408 967 122, mike@P2PAgri.com.au; Noeleen Clarke, Tocal Tafe College, 0400 913 984, noeleen.clarke@dpi.nsw.gov.au; Farming the Business manual