Governance is getting up in the helicopter and looking towards the far horizon. Joanna Grigg reports.

Barry Brook, a specialist in farm governance, outlined his views on good farm business governance at the recent Westpac Bayleys Marlborough Sheep & Beef Farmer of the Year field day. He used his experience with the Avery family at Bonavaree Farm as an example.

Brook started his involvement with the Avery family after meeting Doug at the judging of the South Island Farmer of the Year in 2010. Doug was impressed and asked him to become a mentor, then the sole independent director and chairman on the newly created Bonavaree board of four family members.

The board meets five times a year and a set person (Wendy Avery) is appointed to take and circulate minutes in a timely fashion. Brook said as chairman he is the referee and guiding hand.

“Governance, when done well, brings a disciplined approach to the business and it should result in much better success.

“The board needs the ability to make the big decisions and has the accountability; the buck stops there.”

The four key tasks of any board, as outlined in The Four Pillars of Governance Best Practice, by the Institute of Directors, said Brooks, is to establish the purpose, set values and culture, hold management to account, and set the tone around risk and compliance.

“The board needs the ability to make the big decisions and has the accountability; the buck stops there.”

The purpose developed by the Bonavaree board is ‘to lead by developing the farm of the future’.

“I can’t emphasise how important it is to get to grips with your purpose.”

Brook said this can take several discussion sessions.

“This is where you discuss why you are in business, if the location, size and type is right, and set the compass.”

The second role is setting the values and culture for operating both the board and the business. It might be encouraging people to share the speaking time, welcoming outside views, and how to deal with tough issues. For staff within the Avery business, Brook said they are expected to perform well, be paid well, and be given an environment that encourages learning.

Brook noted that a special feature of the Avery business is welcoming outside visitors, even though it takes time and opens up the business to criticism.

“This approach takes guts but it often leads to new partnerships.”

The third role, assessing performance, is quite separate from doing the daily farm management. The board assesses the quality of the operator (often known as the CEO) in different ways, such as animal performance, animal welfare, time spent by staff, and meeting financial and feed budgets.
Business targets are set, for example 41kg lambs from ewe weaning weight and 175kg of meat and fibre per hectare.

“What gets measured gets managed.”

Bonavaree uses the Farm Insite Dashboard to report across several areas in one visual sheet. The one-page graphic includes budget variations, meat and fibre figures sold, net and gross profit trends, feed covers and growth, sheep performance, and year-to-date comparisons for stock on hand.

The fourth role is to set the tone for risk and compliance. Brook said this includes managing solvency and debt, water and environmental issues, and health and safety. Some of the risks identified that require planning are investing all knowledge in one person (i.e. Fraser), earthquakes, climate pressure, and changes in consumer trends.

Feedback from the competition judge on the governance within the Bonavaree business was “it is as good as I have ever seen”. 

Four key tasks of any board:

  • Establish the purpose
  • Set values and culture
  • Hold management to account
  • Set the tone around risk and compliance