During May and June this year, I was fortunate to travel to the US and connect with the Pinion team there. My trip started at the Nashville office before travelling through Iowa, Nebraska, Colorado and Kansas. Much of the time was spent connecting with the team, along with farm tours and joining some consulting engagements. I was able to catch up with the farm business management, family business advisory, accounting, price risk management and wealth teams.
The aim of the farm tours was to better understand their farming systems and gain insight into the challenges and opportunities they face as a business. Interestingly, these were very similar to those many of our Australian clients would identify, including managing a team, machinery costs, family relationships and succession, expanding despite high land values, margin pressure and more.
The services helping address these challenges included detailed cash flow forecasting through an external CFO service, hedging futures markets, facilitating family discussions, implementing corporate governance principles, and combining these with a clear understanding of tax codes and legislation.
A significant focus of the trip was connecting with the farm business management team and assisting with the implementation of SnapShot™ benchmarking services. These insights are new and provide a fresh perspective on how their farms are performing. Interestingly, many of the metrics are not that different from Australia. They tend to have higher variable costs as a percentage of income than we do. Seed costs are a major contributor, given new seed is required each season.
Overhead costs such as machinery and labour are similar, with businesses operating at around a 1:1 machinery investment-to-income ratio and striving for $600,000 of income per full-time equivalent.
Data collection has started primarily in corn and soybean systems and will progress from there. As more data is collected over the coming years, we will be able to provide greater insight into business performance in both the US and Australia, along with identifying opportunities for improvement.
The trip was meaningful, creating opportunities to collaborate with the wider team, share different systems and processes, and gain firsthand experience of the challenges they are facing.
Royce Pitchford
Lead Consultant – Farm Business Services