With an aging workforce in agriculture, equity partnerships could be the answer to dealing with retirement.
A group of industry experts at the Clermont Beef Expo forum last Wednesday gave practical advice to a 200-strong crowd of local graziers.
“We have an aging workforce, so equity partnerships could enable them to retire without selling the asset,” said Charters Towers beef producer Emma Robinson.“People spend so much putting those pieces together only see it sold off.”
The issue came into play when farms reached a certain point, she added.
“How do family farms work together and have some kind of viability without either selling or getting bigger?”
The panel pointed out that despite the perception equity partnerships were only from “the big end of town”, there were just as many opportunities closer to home.
“Equity could be a sibling who owns part of the land but doesn’t want to be part of the business,” Ms Robinson said.
It could also be investing in the supply chain and using cooperatives.
Ms Robinson recently completed a study tour researching beef cooperatives and producer driven supply chain innovation in the UK, USA and Canada made possible through the Winston Churchill Trust.
Most farmers in the US belonged to at least two or three cooperatives, whether it be to source their farm inputs or market their products, and the cooperative model had long been used as a strategy to deliver greater farm-gate returns, she said.
Ms Robinson said while most of the co-operatives were initiated because of producer dissatisfaction with prices, they endured because of the shared value they created across the supply chain.
“This value is achieved through greater efficiencies from the standardisation of production practices, cost savings through bulk purchasing power, data sharing that drives a more consistent, quality product and the capacity to more quickly meet changing consumer demands.”
Producer cooperatives were best placed to respond to the increasing consumer demand for certified and verified products and products with unique providence or attributes, she added.
“Others in the supply chain are leveraging this opportunity, but producers own this story and need to create greater value from it, a producer cooperative can help achieve this,” Ms Robinson said.
The difference between Australia and the UK and US was the latter two had a strong level of practical support for producer cooperatives through government policy, funding and expertise, she added.
The talk of cooperatives pricked many an imagination at the forum and local grazier Gordy Rickertts said this was where the industry need to move.
“I think it’s an issue we have battled with. I think we have that thinking that if we commit to it will we get the best result?”
Managing director of Cue Agribusiness Mark Cook pointed out that the business needed to be in order and at a stage where it could be taken to the equity stage.
This included have a plan to present to prospective partners on how the business would move forward, he said.
“It is also about finding out who is the best equity partner for you. They come in all different shapes and sizes,” Mr Cook said.
“They might have a long-term view of 25 years, or you might have a private equity partner who has a tight view and targets of when they will enter and exit.
“What are their drivers - financial or strategic?”
The general consensus was get legal advice - and go in with open eyes. How much control do you lose or gain?
Chief executive of IT firm Practical Systems Mark Morton said equity partnerships were not to be feared but were an opportunity.
“In most cases, equity partnerships are looking to invest in farm managers as they are pretty good.”
Partner at Hanrick Curran John Kotzur, who works in succession planning, said it was tricky finding the right partner, but it was important it was the right fit.
“I think as red meat becomes hot, will be more old families looking to invest.”
General manager for livestock at Kilcoy Pastoral Company Craig Price outlined how operations did not change when it was taken over by a Chinese company.
The same people still run the operation, and the only difference is that when it comes to capital expenditure, it goes to the board level.
For graziers, investment could be from within the supply chain.
“Because of the business we are in - a 100-day feedlot - it is important to have a secure cattle supply,” Mr Price said.
Kilcoy has formed partnerships with some graziers and “we have seen some clients improve their herd and as a result supply more cattle”.
The panelists were John Kotzur, partner at Hanrick Curran; Craig Price, general manager of livestock at Kilcoy Pastoral; Mark Cook, managing director of Cue Agribusiness; Emma Robinson; and Mark Morton, chief executive of Practical Systems Ltd.
