Elders’ launch of a new fee for service consultancy division looks likely to be the prelude to a lot more user-pays advisory services in the farm sector.
The agribusiness network has just begun unveiling its Thomas Elder Consulting service, expecting to have its first “private” agronomy advisers appointed by the new financial year.
Although employed by TEC, consultants will effectively take a profit share from returns generated by their advisory skills, with their fees reflecting the level of expertise and workload involved.
While private farm consultants have been increasingly part of agriculture for three decades or more, many enterprise areas and regions have been less likely to be rely on specialist advisers, particularly in the livestock sector.
Expect more paid help
However, 36 per cent of farmers recently surveyed nationally by the University of Melbourne expected to use “more, or a lot more” paid advice in the next five years, while 53pc would use about the same.
Up to 63pc of farmers said they have paid for independent information and support, although only 32pc hire consultants as their main source of advice.
Only 20pc rely on farm input suppliers as a primary source of free advice.
As more production efficiencies are required at the farm level, farmers need access to more specialist technical guidance
Elders’ technical services head, Graham Page, is sure the big range of free agronomy, marketing and livestock production advice provided by corporate agribusinesses, or local merchandisers and industry groups, will remain an important feature of the industry.
However, the growing complexity of farm management and supply chain expectations required more dedicated expertise tailored to specific farming business needs.
A team of up to 20 TEC’s specialists will also work with producers on whole-farm planning strategies, using emerging research, data-driven initiatives and precision agriculture technology.
“I think something like the TEC model we’re rolling out will become fairly typical in the future,” he said.
User-pays offerings already existed in different forms among various farm services players, or had been seriously considered.
The cotton industry and areas of the horticulture sector were now largely dependent on specialist advice, available only as a user-pays offering.
The B&W experience
In fact, the TEC model is partly based on user-pays services adopted by Elders’ North West NSW joint venture, B&W Rural, which works extensively with cotton croppers.
“As more production efficiencies are required at the farm level, farmers need access to more specialist technical guidance,” Mr Page said.
“Apart from modern agriculture’s rapidly changing demands and the new technology available, one key driver of change has been the decline in government extension services.
“This has put a big requirement on agribusiness to step up and fill the void.”
However, there was only so much time or technical expertise a branch-based agronomist could dedicate (free of charge) to individual clients’ crop management.
“Our existing advisory network is effectively already at capacity,” Mr Page said.
“These guys are generally not in a position to dedicate more and more time as farmers scale up.
“TEC will give people the chance to tailor their needs to different levels of service.”
TEC consultants would have considerable flexibility in the relationships they built with customers and would not be tied to rigid pay scales which often applied with private advice providers.
“Customers are all different and they’re looking for flexibility, so fee options will vary quite a lot,” he said.
“Some just want one-off advice, or alternatively an annual rate may apply for longer-term arrangements.”
Cropping sector consultancy fees based on area can range from $1.20 a hectare for dryland cereals to $60/ha for irrigated crops, while hourly rates currently charged by private agronomists typically average between $150 an hour and $200/hour.
Most customers recognise the need to pay for good advice when it’s needed
NSW-based Delta Agribusiness managing director, Gerard Hines, said while fee for service consulting was nothing new, it was not yet universally accepted across the varied Australian farm sector.
“Many areas have a heavy concentration of private advisers, and the fee for service trend is generally spreading,” he said.
“But there are still plenty farmers who largely rely on advice from product resellers.”
Delta, which employs 43 farm consultants and agronomists aligned to its 28 branches, has about a third of its specialists working on a “reduced fee for service basis” with specific customers.
“Most customers recognise the need to pay for good advice when it’s needed, but our consultants only work with farmers who buy inputs from us.”
Delta, which also conducts its own agronomic research trials, had sales approaching $190m last financial year.
Those who are paying still look around for other sources of information – in fact, farmers are savvy about using a range of advice options
“I have no doubt our model is still relevant, although it may evolve as technology and industry’s needs change,” Mr Hines said.
“It will be interesting to see what Elders does, and who they recruit.”
University of Melbourne’s Associate Professor, Ruth Nettle, said her Rural Innovation Research Group’s study found about 40pc of farmers unsure if they would get value for money, or other benefits, if they started buying outside expertise, yet those already paying said they did benefit from the service.
“However, those who are paying still look around for other sources of information – in fact, farmers are savvy about using a range of advice options,” she said.
The combined government and industry funded findings, to be released later this month, also found farmers wanted all service providers to be more aware of wider implications to the “whole farm system” when making recommendations.
“Farmers aren’t just concerned about what a fertiliser or chemical application might do to a crop, they need advisers to say what it will mean in context of an overall economic cost-benefit, or any flow on impacts.”
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