Collaborate to survive and thrive

John Gladigau, 2006 Nuffield Scholar


Background
John Gladigau and his wife Bronwyn own a 2000-hectare property at Alawoona in the Northern Mallee region of South Australia. They annually crop 2000 hectares to wheat, barley, triticale and rye on their own property and in a share farming arrangement with a neighbour, and run a 500 head self replacing merino flock.

The move towards collaborative ventures has always been a natural progression for John, with his involvement in a cooperative farmer buying group, a farm management discussion group “Breakthrough”, and their share farming operations. In a unique arrangement, their business also shares an employee with another like minded farming operation fifty kilometres away, creating one full time position between the two properties.

In 2006 John was awarded a Nuffield Scholarship, sponsored by ABB Ltd, to study collaborative ventures around the world. During 2007 he travelled to the USA, Canada, NZ, Mexico, Brazil, UK and Europe gaining a global perspective on the future of agriculture and visiting many businesses involved in collaborative arrangements which were creating long term benefits for all involved.

Executive Summary

There is no doubt that collaboration in any form of business makes a great deal of sense, and especially in agriculture. At a time when our terms of trade are diminishing it is widely documented that farmers globally are overcapitalised beyond what a successful business can reasonably sustain into the future. They are also being stretched in their business and agronomic expertise, and are developing businesses which are being funded by capital growth due to high land prices, rather than return on investment.
The fact that so little collaboration occurs between grass roots farmers, especially in Australia, has more to do with our fierce independence, some lack of understanding of business fundamentals, scepticism of being “ripped off”, and the emotion attached with long term family farm ownership. Though collaborative ventures can be fraught with danger, mainly due to the emotions and personalities of the individuals involved, much of these can be mitigated by having a comprehensive business plan with well documented entry and exit clauses for all concerned.
Though there are not the government or industry incentives for collaborative ventures in Australia as there are in countries like the UK, I believe there are advantages available to farmers through the full utilisation of capital and resources, marketing and value adding opportunities, purchasing of inputs, sharing of labour resources and expertise, and the full business and financial accountability such a venture brings.
A study of collaborative models from around the world has led me to conclude the following:
• There is an enormous amount of investment money currently looking for a home in agricultural ventures, especially in Australia. Such ventures need to be structured in such a way that they can be scrutinised alongside other industry and investment sectors.
• Businesses need to be able to differentiate between real estate and agribusiness, and if necessary separate the two to maximise performance.
• There are no set rules on how a business model can be set up, outside of the laws and regulation by which you are governed. There are many entrepreneurial structures that can be designed to share risk and reward between parties for the benefit of all, including flexi–leases and share farming options.
• All collaborative ventures need to be set up with the notion of win–win in mind.
• Successful, large-scale businesses create cells of optimum efficiency and profitability, and replicate them.
• The two greatest threats to the success of any collaborative venture are emotions and personalities of the parties involved.

I believe Corporate Family Farms, or the notion of running several family farms under a single business structure, has a huge amount of potential in Australia. We are not restricted by agricultural policies which create disincentive for cooperation and are in a time in history where, with the bio fuels revolution, and a volatile local grains industry, we are in a position to make a significant contribution to the agricultural development of our nation. We can do this through the creation of business models which not only make our properties more profitable and sustainable, but also preserve their integrity and heritage for generations to come. In this way, not only will it allow a lot of currently unviable businesses to survive, but with the opportunities available, the potential to thrive.


Contact John Gladigau, 2006 Nuffield Scholar
Ph: 08 85874315
Email: bunyarra@riverland.net.au