Harjit K. Takhar, Partner, Manning Elliott LLP.
Strategic financial forecasting proves essential
Business owners need to be mindful of market pricing, taxation, staffing and labour, and even weather when dealing with the farming industry.
“These are just some of the issues facing the industry—there are many more,” Takhar says.
However, consumer influence is becoming a more prominent factor in business decisions as changing preferences and the needs of those to purchase products is driving demand.
“Consumer awareness is much stronger than 10 to 20 years ago when we wanted fast, quick and cheap food products,” says Takhar. “Today, we are trending to a much healthier lifestyle—gluten-free and vegan diets are on the rise. We are moving away from processed food and back to naturally and locally sourced food.”
The agri-food industry comprises a broad sector—everyone from the farmers to the businesses that deal with every aspect of the food production, including those involved in the sale and delivery systems—such as suppliers, producers, transporters and retailers, and the automated system manufacturers.
The industry arcs beyond simple supply and demand as a solid business plan and ongoing forecasting are vital for the success of both farming and agronomy organizations.
“Business owners need to be proactive in seeking professional assistance for accounting, tax and business advisory services so that they can focus on what they do best,” says Takhar. If business owners have good control and understanding of what is expected, what can be managed, and what can be improved upon, they stand a better chance of success.
But economic and geographic challenges are further changing the landscape for operators.
“There have always been barriers to entry in agri-food and services,” explains Takhar. “Farmers or processing plant owners need to purchase or lease land. It’s becoming more and more difficult to afford agricultural land to purchase, while rent can be prohibitive in a lease agreement.”
For those reasons, many business owners have moved to the Fraser Valley and further east to lower their operating costs.
As well, farmers and growers are looking at a declining labour pool. While technology has helped diminish some labour demand, Takhar says there are still those jobs—such as fruit pickers—that cannot be replaced with technology.
“Today, many seasonal workers, such as students and immigrants, don’t want to pick fruit because it’s so labour intensive,” she says. “Growers must look outside Canada, and that means extra costs such as flights, room and board and medical insurance, all of which eat away at the bottom line.”
Aside from this are the costs of new automation, breakdowns of equipment, improvements, and fluctuating exchange rates, which can erode profits further.
Takhar says financial preparation, risk management and understanding the changing trends can assist agri-food operators on their road to success.
Harjit K.Takhar specializes in providing accounting, assurance, and taxation services to small- and medium-sized private companies in a wide range of industries including agriculture, manufacturing, retail, and professional services.
Manning Elliott LLP is one of the province’s largest independent regional accounting and business advisory firms with offices in downtown Vancouver (604-714-3600) and in Abbotsford (1-604-557-5750). The firm has been around for more than 60 years and employs over 150 professionals and staff.