The key reasons 'why' you need to plan in agribusiness include:
To define your goals: Establishing a mission and vision will help you define the scope and scale of your agribusiness.
To set goals and set out how they will be achieved, by setting short, medium and long-term goals.
To help your investors, staff and customers identify with your vision, your purpose, your 'why'.
To define your value proposition or unique selling proposition.
To understand where you ‘fit’ – who are your competitors? Are there similar products/services in the market? What are the trends in your market?
To identify your customers and their needs, wants and expectations, to analyse the size of the market, and so on.
All of these things help you consider the opportunities, constraints, enablers and blockers to you achieving your business goals – your ‘why.’
Other reasons to plan
There are many other reasons why we need to plan and many of these will inform the overarching ‘Business Plan’.
For example, a primary producer will have to plan things like:
The physical layout of the farm, to ensure the most efficient production from the land and water resources available and to match land capability and productivity expectations. Without having a good understanding of the carrying capacity or productivity of the physical assets of the farm, developing production forecasts, to inform the assumptions within your business plan, cannot be completed without a level of confidence to support your business case.
Conformity with legislative requirements: work health and safety, food safety, etc. all have their own systems and record-keeping requirements which will require attention to how you plan and manage your business.
Quality management system: many primary producers are now required to implement some form of quality standard, whether part of a supply contract (e.g. with a supermarket) or an international standard (e.g. ISO)
Labour: planning for peaks and troughs in labour requirements, for example at sowing, harvesting, etc.
Production planning: timing of sowing, agronomic inputs, watering, harvesting. These would all need to be timed in accordance with seasonal requirements and possible variations, and may need to be refined based on the timing of the product hitting the market, for example to take advantage of higher seasonal prices.
Water use and water supply: particularly where irrigation is used.
Cashflow planning: funding of input costs, cashflow budgeting, production forecasting, estimated crop values, etc.
Financial planning: Funding capital works; calculating the best return on investment etc.
Livestock planning: breeding, animal health (vaccines, inoculations, drenching, etc.)
Plant and equipment: all need to be justified financially and their maintenance and replacement programmed.
Fixed infrastructure: buildings, fences, reticulated water supplies, etc. need to be planned and designed to meet their functional requirements; we also need to plan for their maintenance and their replacement, particularly for fixed assets that have shorter life-spans.
An agricultural contractor (or an agribusiness servicing primary producers), in addition to many of the above, would also have to think particularly about:
Workflow planning: balancing seasonal variations in labour and equipment demands.
Customer management: attracting, keeping and managing customers. You have to be able to service your customers’ needs, on time and on budget or you won’t have them for long, so planning workflows, plant and equipment requirements, communications etc. are keys to sustainability.
Business financials: time and expense tracking and invoicing, record keeping etc.
As well as the financial and business operational planning we talked about last week, the other key areas in which agribusiness managers need to focus their planning efforts is in the area of product integrity and quality. Product ‘integrity’ encompasses various considerations. These include, that the ‘product’ is: what we think it is ie. what is on the label is what is in the packet; meets minimum quality standards; looks, feels, performs as it is intended to do; is safe to eat; meets food safety regulations; is safe to use; meets health and safety, environmental and other statutory requirements.
We won't go into these issues in too much detail in this unit, but we do want to emphasise why it is important that product integrity is considered up and down the agribusiness value chain; that there are planning and monitoring systems available and we will introduce you to some of these; and that it is important to start to think about when and how you might need to apply these planning and monitoring systems in your agribusiness careers ahead. Bit, let's first take a closer look at planning for product quality.
Planning for product quality - an introduction to Total Quality Management (TQM)
‘Quality’ is a relative term and the key thing to remember is that it’s the customer who sets the expectations of quality, or defines what quality means to them. Quality can also be expressed in terms of the product’s reliability and longevity. These attributes are less subjective, because they can be measured in absolute terms (e.g. years in service; hours of service; number of repetitive cycles of performance etc.); but they are also relative measures. For example, what benchmark performance measure are you assessing quality against? Quality can also be thought of as the output of a process – a production and/or manufacturing process. Therefore, quality can be thought of as a way of working; a culture. It is in this context that the ‘total quality management’ approach to business management has emerged.
The National Livestock Identification System: - The National Livestock Identification System (NLIS), whilst not a QA system in itself, is a legislated system that is supported by and integrates with various quality management systems. Cattle, sheep and goats cannot be sold into the food supply chain without being tagged with a registered NLIS identifier, which is tracked back to the property upon which the animal was born. It is a critical tool that facilitates the traceability of livestock, enabling outbreaks of disease to be contained in a timely manner. The NLIS is one of the key tools that enables our livestock producers to have access to international markets, because it enables us to support our claims about the safety and quality of our products. If you want to do some more reading on the NLIS, click here.
The Food Standards Code: - In the diary industry and producers of ‘ready to eat’ food (like salad leaf vegetables etc) these agribusinesses must conform to the Food Standards Code. The code is administered by Local Government Authorities and industry bodies. Conformity with the Food Standards Code is a pre-requisite to sell food at various stages along the food chain. The Food Standards Code comprises four chapters, which encompass all facets of the food chain from primary production and processing through to packaging and labelling. One of the key components of the Food Standards Code is the Food Safety Standards, which establish systems of management and documentation of processes to enable recalls to be made should a problem be detected in a product. If you want to do some more reading on the Food Standards Code, click here. To learn more about traceability, click here.
Reflect in your Agribusiness Practice Journal why it is critical that Australian livestock be tagged with an NLIS identifier before it goes into the food chain? What are some of the ways the NLIS system protects farmers and consumers? Can you think of examples of meat products that have reached consumers (in supermarkets, in food vans, in restaurants) where food safety or legislated standards have been compromised? What were the consequences?
From the reading you have done about the Food Standards for Australian agribusinesses involved in the food chain, write down 3 examples of processes or practices an agribusiness might implement to ensure they comply with the Food Safety Standards.