Family Farms remain a strong business model

Despite the talk and headlines related to Australian farmland and foreign corporate ownership, the  family farm remains the dominant business structure in Australian agriculture. There is a good reason for that; families run their farm operation very different to a corporation.

One of the great advantages of a family business is its ability to come together, cut expenses and make hard decisions when times are tough. Add to this, a family can act more nimbly than a corporation that often relies on management decisions made by its executives who are away from the day-to-day operation and conditions. An executive also needs to balance capital expenditure across its entire business, causing bottlenecks for investment decisions. This is despite the deeper financial pockets a corporation can draw on when compared to a family operation.

Compared to a corporate farm, a family business has the quick footedness to innovate and implement the innovation into their operation. A corporation can be hamstrung by bureaucracy as decisions need to go through management before implementation, meaning an opportunity is lost.

While on investment decisions, a corporation is more likely to sell out over a family-run operation because they are looking at the return on their investment and shareholder pressures. In these scenarios, if a farm does not achieve a return at a certain level, they may instead sell and buy property elsewhere that will. A family farm is more likely to see out the peaks and troughs of agriculture because they have a personal connection with the farm.

This personal connection and “in it for the long haul” mentality means a family is more likely to stay on the farm than a corporation. A corporation will have a set way of doing things, which works when things are going well, but this may fall apart during lean times.

However, there are some things a family operation can learn from a corporation. Corporations are generally more disciplined, document plans, research investment opportunities, set up regular structured meetings. They also clearly define business plans, management structures, processes and have clear vision and mission statements that guide their business.

This is a general summary to give you information about the benefits of family farm ownership. We can sit down with you to better understand your farm business and offer advice to achieve your goals.  Get in touch with your local Sprout Agribusiness representative today to find out more.