The Rural Voice, 1982-04, Page 10Farm operation in trouble?
Could a professional consultant be of use to you?
by Bev Brown
Should a farmer who is in danger of
losing his farm spend a thousand dollars
or more to hire a professional farm
consultant? This is a question many beef,
hog and some dairy farmers are asking
themselves and in some cases their bank
managers are suggesting this could be a
good investment.
Just what can a professional consultant
do for a farm business? We asked Fred
Mooney, an agrologist with Broadwith
and Hughes in Guelph, to describe wh:
he does. "When I get a call from a farmer
who wants to hire me as a consultant, I go
out to the farm and look over the entire
operation -- the barns, machinery, and
livestock. Then I go over his financial set
up --records, cash flow. debt structure. 1
have to fins out what the farmer has to
work with, where he wants to go and how
he is planning to get there. It's my job to
help him get there. I take a look at the past
history of the farm operation, which tends
to be the best predictor of the future. Then
1 come back to the office and put together a
statement of affairs -- assets and
liabilities, strengths and weaknesses -- for
presentation to the farmer and his wife,
who is usually present at these
meetings." For this initial study and
recommendations Mooney usually
charges between one and two thousand
dollars. After that he is paid time and
expenses, including charges for con-
sulting with the farmer by telephone.
Mooney likes to set up a plan aimed at
getting the business in shape financially
so the farmer can take advantage of
opportunities when they come up or so he
can withstand the inevitable problems
that are going to arise. "In many cases
this requires some pretty tough decisions,
such as selling off some land or machinery
or cutting down the size of the herd," says
Mooney, who appreciates that it is not just
a business to the farmer.
Mooney says it is very difficult to show
in concrete terms what a consultant can do
for a farmer. "The biggest pay-off for my
time is simply talking with the farmer
about his total farm situation and looking
at alternatives which have worked in other
farm businesses," he explains. Most
PG. 8 THE RURAL VOICE/APRIL 1982
Rural Voice reporter Bev Brown, left asks Fred Mooney
consultant can do for a farmer.
consulting jobs start out as a one-shot
deal. Then as the farmer learns the value
of being able to duscuss ideas and plans
with someone beyond his farm gate, he
will call Mooney for advice. "I prefer to
continue working with the farmer to help
keep him on track, see how the results are
comparing with what we projected and
determining reasons why they are not. It's
important to explain why things are
different from what you project and
advising what adjustments can be made to
the original plan."
Mooney graduated from Queen's
University in economics and then took a
degree in Farm Management at Oregon
State. He worked for Canfarm when it first
started up and then spent three years as
an agrologist with the Bank of Montreal.
He joined Broadwith and Hugnes in 1980
to help develop the farm management side
of the business. Recently Broadwith and
Hughes merged with Deloitte, Haskins
and Sells, which is the third largest a
accounting firm in the world with offices in
67 countries.
just what a professional
"Generally, it's the younger farmer
who can see the benefit of using a
management consultant," Mooney says.
"This may be because they are often more
highly leveraged. Sometimes a young
farmer starting up will want some help to
put together a credit proposal to match the
plans he has drawn up."
Although he is working mainly with
fairly large farms, Mooney believes it
would benefit a small farmer to pay for the
service of a farm consultant. "Even if it
was just to take a basic look at the general
parameters of his business, show him how
to get his own figures together and discuss
his plans for the future."
According to Mooney, the biggest
emphasis has to be put on managing for
cash flow and profit. "It's not at all
unusual to have a million dollars tied up in
assets on a family farm," he explained.
"A 1 ner cent leakage on a million dollars
is $10,000. It takes very careful planning,
monitoring and adjusting. You cannot
afford to go by trial and error. It's so easy
to lose big bucks and the bigger the bucks