5 challenges advisors to agribusiness clients will face in 2019
Increasing levels of competition and rising complexity in their clients’ businesses are the general trends that agribusiness advisors will need to overcome in the year ahead.
This year will see most agribusiness clients with their head down, carrying on with life and business as they have always done.
But the changing nature of their businesses, the markets for their products and the regulatory environment will mean they will need to continue to evolve how they do things to stay competitive.
The same is true of advisors, as this changing business landscape means their clients will need more from them, and competition to deliver these additional services will be fierce.
Five core hurdles that agribusiness advisors will need to face with their clients in 2019.
1. Increased regulatory complexity
The change of government in 2017 accelerated regulatory changes and increased uncertainty in agribusiness.
Not surprisingly, business confidence especially in the rural sector took a dive. But the thing about governments is you can’t simply ignore them (as much as many businesses would like to).
Changes and additional complexity in health and safety, employment law and payroll mean advisors need to be engaging clients to provide advice as well as support around implementing products and systems they may not have traditionally needed.
Environmental regulations continue to come into force, which means more support and advice will be required around land use changes for farmers looking at converting or intensifying, stocking rates, wintering, fertiliser practices and so on.
The on-farm side of the business and how it interacts with both environmental and financial management tools is going to require collaboration across various professional services – even within small businesses – to a level rarely seen today.
There is also the opportunity for advisors to look at broadening their service offering off the back of these pressures and support clients in a wider range of areas.
2. Continually increasing technological complexity
As challenges grow in business, those smart cookies in the tech sector continue their relentless battle to solve them using ever more cunning and ingenious methods.
The plethora of new systems and technology deployed in agribusiness is almost overwhelming at times. Many systems are designed not just to solve occasional problems that arise, but to become an ongoing requirement for business, from payroll to environmental compliance and everything in-between.
Farmers aren’t always natural IT experts and it can be tough trying to keep up, especially where system integrations can be costly if preferred software providers are found to be incompatible.
Advisors should be up to speed and have a plan to support clients in making certain the business systems matrix (or tech ‘stack’) they are using is right for them while also communicating seamlessly with the farm’s financial reporting workflow.
There’s no point having a heap of siloed data and incompatible, complex systems all creating technological friction within the business.
3. Increased business complexity and risk
The tried and true, year-in-year-out role for both the agribusiness client and their advisor is changing rapidly and becoming more complex.
To be good, you need to know more, do more and act in a timelier manner. This creates a series of challenges and there needs to be a plan to make it all work.
Risks are now far greater, with new challenges emerging and things are moving so much faster than they once did. Biosecurity, cyber fraud, IT issues, environmental challenges, regulatory compliance, consumer sentiment sitting on a knife edge, animal rights awareness and more are creating sleepless nights for many.
Because of this, there’s no room for a ‘she’ll be right’ attitude.
Managing and, for that matter, advising an agribusiness has become far more challenging and complex. It means robust governance structures, diligent planning, well-crafted risk management and mitigation tools and strategies are now a must.
Advisors should be working with their clients to set these discussions up now.
4. Increased competition for NZ’s core food exports
The range of products available in market are constantly and quickly changing, thereby challenging the status quo.
Lab grown meat, fake meat, meat-free diets, and new uses for traditional farm exports means the opportunities, but also the risks, are endless. With this, there is a lot of scope to revaluate with clients what they are doing and see if there are opportunities for new practices, products and approaches, diversification of land use and the business etc.
Now is the time to have those forward-looking conversations and challenge what the business is doing to make sure it’s fit for the future.
5. Increased competition for attention
As agribusiness advisors, this is perhaps the most fundamental point to be made.
With the trends outlined above, you will most likely face a mix of responses from your clients: fear, ignorance, denial, confusion, excitement, optimism and more.
You will also face competition from professionals who are embracing a more proactive approach to advice, using the latest in software and AI tools such as MYOB Advisor and so expand their service offering. Your clients are also being bombarded with information from multiple sources and are quite likely overwhelmed by it all.
So how do you stay front of mind as a key lynchpin in the farmers’ communication/business network when there is a lot of noise and many products and services, or other professionals that can do some of what you do?
- Having an understanding of all of the above challenges and a plan for your practice to meet and deliver on them will be the first step. Will or won’t you offer more services, or will you partner with someone else to ensure a seamless delivery to the client?
- Making sure you have the right people with the skills to engage with the client on a broader number of issues in a more advice-based future. Do you need to hire some new talent?
- You need to have a structure to deliver the services clients are going to need into the future. Is your old model going to work in the new world or does it need refreshing to ensure the client still receives the benefit of that trusted key advisor, but access to the right specialists around that to deliver what they need in a modern agribusiness?
- Have a clear client communication and servicing plan. With the pace of change, once a year contact isn’t enough. How are you going to ensure a higher number of contact points cost effectively?