Tracking trends in the use of advisory services

Some research conducted by the Australian Farm Institute in 2014 examining the role of advisory services in the Australian grains sector, and some more recent research conducted for the Council of Rural Research and Development Corporations has highlighted trends in the use of private advisory services by Australian farmers.

In some sectors such as grains and specialty crops like cotton and sugar, the transition from public-sector advisory services (typically provided by a state government Department of Agriculture) to private-sector advisory services is virtually universal, and farmers in these sectors almost completely rely on either fee-for-service advisors, or advisors employed by farm input suppliers.

In other sectors of Australian agriculture such as dairy, beef and sheep, the transition to private-sector advisory services is not thought to have occurred to the same degree, although robust statistics are a bit hard to come by.

The annual farm surveys conducted by ABARES provide some data that is useful in trying to identify trends in the use of private advisory services. Figure 1 shows average per farm expenditure on advisory and veterinary services since 1990 (in 2014 dollars), for the largest 20% of farms in each of the three main broadacre enterprises. It shows that real expenditure on advisory services has increased steadily, and that the average expenditure per crop farm is higher than is the case in the livestock industries.

Figure 1: Average per farm expenditure on advisory and veterinary services (for farms with more than $400K output).

Source:  ABARES Agsurf. 

This statistic can be a bit misleading, however, because the average size of crop farms has increased more rapidly than that of either beef or sheep farms over the period in question, and the total value of output of the crop farms included in the data are much higher than that of the beef or sheep farms. Additionally, those crop farmers accessing ‘free’ crop advisory services from their input suppliers would not record an expense against advisory services, meaning that the actual use of crop advisory services by crop farmers may be higher than the statistics indicate.

Comparing advisor costs per farm as a proportion of the total value of farm output for the largest-sized farm businesses presents a different picture, as is apparent in Figure 2. It shows that for all three enterprise types, average advisor costs have increased over the last 25 years from 0.2% of farm income to around 0.4%, but that surprisingly, these costs are roughly equivalent for the three different farm types. A possible explanation may be that there are scale efficiencies available when employing an agronomist, but not to the same degree for the services provided by a veterinarian.

Figure 2: Advisor costs per farm as a proportion of total farm output (for farms with more than $400K output).

Source:  ABARES Agsurf. 

It might be argued that a veterinarian is not strictly providing farm advisory services, and some of this cost might relate to services such as artificial insemination or pregnancy testing. This is probably true, but nonetheless does highlight that in the absence of public-sector extension services, livestock veterinarians may be an overlooked information and communication avenue to farmers that policy-makers, research and development corporations and agricultural researchers could utilise in the future.

Copies of the various research reports that have canvassed these issues are available from the Institute’s website.

Image:  Jamie McCaffrey