Spencer Hilton has seen the business of farming change drastically during the decades he’s spent on his fifth-generation grain operation.
“In the day and age that we’re farming in right now, we’re dealing with the ‘Walmart effect,’” said the Strathmore-area farmer.
“There’s a real advantage to economies of scale and size. It’s not for everybody, but if you can manage growth and size, there are some real advantages to being a bigger entity.”
That’s true in almost any business — but in farming, that growth can come with a different set of headaches.
“When it’s a family dynamic, it’s a little different,” said Hilton, who has been through two generational transitions on his 12,000-acre operation so far. “There’s history and emotions and seniority and generational differences that can enter into the discussion and skew the agreements.
“That’s where we’ve really gained some tremendous value from our farm management consultants.”
Management consulting is something of a new concept for producers — one that has grown in popularity as farming has become more complex.
“With the scale and scope of farming, we’re now having to look at a very tough area to put your mind around, which is management consulting,” said farm management consultant Merle Good
“The average farmer in Alberta might have grossed $150,000 20 years ago. But the average farmer who I work with is now grossing $800,000 to $1 million. Once you get to those levels, there’s lots of moving parts.
“When your business outgrows your ability to keep all your moving parts together, you need to look at some kind of management consultant in that role.”
‘A hard sell’
Management consulting is a broad term that can encompass any number of farm business experts — lawyers, accountants, strategic planners, succession planners, the list goes on.
“Consultants have different roles and effectiveness based on what you’re actually hiring them for,” said Good. “One of the hard parts of management consulting is deciding whether you’re getting this person to give you advice or to help with implementation.
“If you’re looking for someone to give you advice on where you should be going with your farm, that person may not be the one who’s effective at implementing what you want to do.”
In hiring a management consultant, farmers don’t always know what they want the final outcome to be, so it’s tricky to find the right person for the job. The adviser’s role then becomes helping their farmer client “figure out where they want to go,” rather than simply providing a solution to their problem.
“People say, ‘We don’t know what we want, we don’t know where we want to go, but we want you to help us get there,’” said Good.
“When you’re looking for a management consultant, you have to go through a bit of a process to get to the product. That’s sometimes frustrating for clients.”
Farmers are no strangers to hiring consultants, but they sometimes view business consultants in a different light, Good added.
“Farmers over the years have moved toward agronomic consultants and marketing consultants. They’ve done that because there’s certain things in agronomics or marketing they don’t understand and need specific help in. Management consulting is a harder sell.”
Hilton, who started farming in 1978, agrees.
“There is a prevailing sentiment out there that we can solve our own problems. In agriculture, we often do that,” he said.
“We actually went down that track for a while before we realized we just didn’t have the depth of knowledge or resources or, frankly, the unbiasedness to pull it off ourselves.”
‘It’s not magic’
Farmers are also used to paying for physical products — equipment, inputs, land — but with management consulting, the product is oftentimes the process. But a good adviser will provide both a process (such as estate planning) and a product (such as a will or succession plan).
“The reason people don’t like having somebody come in and spend hours on personal goal setting and risk analysis is it’s all process and there’s not a definitive, defined outcome,” said Good.
“If I spent three meetings at three hours a meeting talking about your goals and objectives in life, and I charged you $5,000, you’re going to be unhappy if nothing has changed two years down the road.
“As a 74-year-old farmer would tell you, it’s all this ‘namby-pamby bullshit.’ At the end, you still need a product.”
And that product will look very different from farm to farm.
“They’re good at what they do, but these people aren’t magicians,” said Hilton. “It’s not magic. You can’t pull it out of a hat. There are no pat solutions for any particular farm or farming structure. It’s pretty individualized.”
Instead, what farm management consultants offer is a “road map” to formalize discussions that have (hopefully) already been taking place on the farm, by “taking input from people and putting it into a structure that will be durable and reasonable and fair,” he said.
“Once you understand what’s important and you’ve communicated it properly, the next most important thing is putting together the structure and the agreements so that you can formalize those communications and feelings.”
But that takes time, added Hilton, who hired Good as an adviser.
“You have to really be committed, and you have to prioritize it,” he said. “You have to be willing to put the time in. If you can’t do that, it’s pretty hard for somebody like Merle to come in and start to create the processes and the structures and the agreements that will formalize what you want to do.
“What you put in is what you get out.”
For Hilton — a busy farmer in his own right — that time investment has proven to be worth it.
“Engaging a farm business management consultant was probably the highest return on investment that we’ve ever seen on our farm by far,” he said.
“It outstrips everything else because it really is the future success of our business.”