One of the biggest risks facing dairy farmers in the current downturn is cutting costs on the wrong things - like abandoning management training to save money - when now more than ever farmers need to take the long view.
To assist dairy farmers during these challenging times, Primary ITO is offering a new range of products and services designed to deliver quick wins. These include free workshops, discounts and study grants to support trainees in financial hardship. The study grant programme is a joint initiative between Primary ITO and DairyNZ.
DairyNZ Strategy and Investment Leader (People in Business) Mark Paine urged farmers not to give up on upskilling because the best way to survive, and flourish, through a downturn is to be pro-active rather than reactive.
"Farm and business management skills in particular are a farmer's greatest assets during times of financial hardship because good skills enable more informed strategic and tactical decisions - particularly when training is linked with the goals of the business."
Dr Paine said that those likely to be most affected are young emerging managers who are reasonably highly geared because they're moving into farm ownership as fast as they can to progress their careers.
"In a prolonged downturn such as we're experiencing now, the temptation might be to abandon what some might see as non-essential costs, like training. But to do that would not only lose you the investment that you've put in, but also the full benefits of the training, which will only become apparent when the training is completed."
Studies done in both New Zealand and Australia show that skills make a significant difference to the bottom line. A Study in Tasmania found skill levels explained the difference between the top 10 per cent of dairy farmers (making over 10 per cent return on capital) relative to the average farmer (making a little over 2 per cent return on capital).
In the current circumstances it is important to explore what the potential consequences are for the business and to put in place a good recovery plan for getting the business back on track in terms of career aspirations and progressions.
"My advice is that whatever training is in process, see it through. Don't discontinue your training, but instead have early conversations with business partners and your employer about the coming season, and make sure your training adviser is part of the conversation. Search for flexible options that will work for the business and the staff.
"Costs are one thing but we have to take a long term view. Often the people most motivated, committed and highly talented are the ones that are most exposed in terms of severe, long term downturns which is what this one is proving to be," he said.
For more information about Primary ITO's free and discounted offerings, visit www.dairytogether.co.nz.