The low payout forecast is changing people’s strategies and farm owners have to make the right decisions for them in the short, medium and long term, No8HR principal consultant Lee Astridge says.
“Everybody is doing their best to get themselves in as good position as they can to survive. The reality is it’s going to be a slower climb out than people thought.
“It’s hard. We’re almost back to that $3.85/kg milksolids, it’s a big signal to what’s happening and what is likely to happen next season as well.”
Astridge had been working with farm owners to look at the structure of their business, originally working on a plan to get through two low-payout seasons, but now farmers needed to take a longer view of how to get through the next three or four years.
Some farm owners were scaling back staff and going back to an onfarm role themselves. Astridge was also seeing a trend towards contract milking as a more viable option so farm owners could fix costs and remove some volatility which was attractive right now, she said.
Some farm owners were exiting sharemilking and contract milking partnerships altogether and employing a farm manager instead.
Most farm businesses were financially going backwards and it was important for owners to find a balance between cutting costs and maintaining their own wellbeing. For farm owners moving on a more hands-on role onfarm, there would be a big psychological impact, she said.
Those who thought they were to the pathway to being less-involved in their business were suddenly back in it, and in a lot of cases, for an unknown amount of time.
“The timeframe is shifting and farmers moving back into their business have to look at how long they will be back for. They have to ask themselves the question of what’s realistic for them.”
There was also a psychological blow to sharemilkers, contract milkers and staff with fewer opportunities to move forward and more risk associated with financially investing in the industry.
Some people would be rethinking whether sharemilking or farm ownership was something they wanted or could afford, she said.
For farm managers and other onfarm staff their ability to climb the ladder had been slowed because there was a lot less recruitment activity and some staff could feel in limbo.
Looking optimistically, for those staff it was an opportunity to consolidate their careers and nail the skills that were needed before they overextended themselves at the next level, Astridge said.
On the positive side, it was a good time to find good quality people in the market, she said.
“If we are looking for a silver lining, it’s really positive to have employers and employees being really discerning around the opportunities they’re looking at.”
Farm owners were trying hard to keep good people employed, whether employees, contract milkers or sharemilkers, but there would be some hard conversations in some businesses.
Employers having to make decisions to restructure needed to have an open conversation early so people weren’t surprised.
The most important thing was to be open and honest with staff, Astridge said.
“Farm owners are finding it tough, and so are staff. What we are seeing in good situations is lots of really open communication, a lot of honesty around where people are at respectively and a lot of honesty around how much you can weather together and how much you can’t weather together.”
When it was an industry-wide issue it was sometimes easier to talk about than when there was an individual business driver only.
“The conversation is that the industry is in a world of hurt and I’m under real pressure. It’s often easier to be transparent in situations like this.
“It’s just tough and everybody has to be a bit kind to each other and everybody has to start by being kind to themselves.”
What tended to happen in times of pressure was people would close down communication, but it was even more imperative when the going was tough, she said.
Talk to the staff and include their partners so you were not relying on a piece of information being passed on second-hand.
People wanted to feel valued and that they were positively contributing to the business so it was a good idea to get staff involved. Focus weekly meetings on efficiency – ask them questions about problem solving and how you can all be more productive onfarm.
Involving staff would have a productivity, communication and a team benefit and it would set up good practices for the future.
“At a time like this people will pull together with a farm owner if they feel like there is a sense of equity and a sense that everybody is sacrificing.
“Be really inclusive in your conversations and focus on what you can do. We know people engagement is really related to how they feel about their boss or manager – it’s much less impacted by how much I can pay you or what job you do. The relationship you have with your people is principally impacted by the relationship you have – so work really, really hard on relationships which are founded on good communication, shared commitments to high productivity and everybody pulling together.”
