Sometimes it might seem like a good idea to change your enterprise mix at the drop of a hat, particularly when seasonal conditions or commodity prices aren't favourable. Of course, in agriculture this is easier said than done.
It does take a lot of planning to change enterprises and normally takes a few years to fully implement any change. An example of this could be changing cropping rotations - there are considerations such as disease control and herbicide rotations, but it is usually pretty manageable.
Before any big switch in business direction is implemented, it does pay to think through the pros and cons and ramifications of such a change carefully. Sometimes regardless of how much planning is done, there will invariably be twists and turns along the way.
This is where external professional advice will prove to be very useful. Obtaining this advice will in all probability make the change more seamless.
There are many issues that need to be considered before a major change is made, and having someone with relevant experience will be of great value. Also, engaging a professional that doesn't have the emotional connection to the decision is a good idea.
Decisions that change the nature of the business in multiple ways need to be considered carefully and through a lens of what's best overall for the business. Sometimes it may be just the emotion driving the proposed change.
Gut feel is fine, but it's prudent to do a full analysis of the benefits.
Agriculture can be capital intensive, which can mean there are constraints to what can be done and what is fiscally responsible. An example is where a farming business has swung to solely being a cropping enterprise.
If you have spent big on machinery and pulled out all the fences, it's a mammoth task to go back to incorporating a livestock operation as well.
Some changes in enterprise mix may achieve full production relatively quickly, other changes won't be so fast. For instance, if you're in the horticultural sector, it may take a few years - or even longer - to get the new crop up to full production. This is where cash flow management is crucial.
Other examples are changes in genetics for livestock that may take a few years to permeate through the flock or herd - and the rewards may take a while to show up on the bottom line.
Of course, the numbers aren't the only consideration. Whatever enterprises you're undertaking within a farming business should be activities you enjoy.
I have seen a few times where farmers aren't doing what they really like, and this makes everything a real chore. A level of enthusiasm will always reap better results than doing something you find laborious.
Sometimes, after careful analysis and consideration, it's best to just go for it. Nothing happens without taking action.
Sign up for our newsletter to stay up to date.