Better Business Management and Succession Planning in North Queensland Extensive Family Beef Businesses

At first glance the extensively operated North Queensland (NQ) beef industry appears a simple agricultural production system involving the grazing of adapted cattle on predominantly native pastures grown under reasonably reliable monsoonal conditions.  Production is carried out with scale, and on the surface looks to involve relatively few inputs, minimal management activities and low capital requirements, in essence, a low-cost system.  In reality, the NQ beef cattle production system is affected by a multitude of variables, each having a bearing on productivity, profitability and return on investment. Property values are influenced by producers’ land trading, seeking scale advantages, or pursuing ‘fair’ succession.  Additionally, superannuation funds and private investors with long investment horizons look to ‘park’ funds in the perceived stability of the northern beef industry.  The result is land prices well exceeding production values.

Under these conditions, hundreds of families run large operations in often isolated circumstances and unforgiving conditions.  They have built their businesses through hard work and calculated risk taking.  Predominantly husband and wife businesses, they run big herds across extensive rangelands, mostly with the assistance of their families and some contract labour.  They have generally undertaken some property development where viable to do so, mostly involving strategic fencing and stock watering systems, providing better herd management and utilisation of the native grass base, with some areas improved using introduced pasture species.    

As this group of industry pioneers enter the twilight of their careers, it is timely to seek out ways to address the challenges facing extensively operated NQ family beef businesses.  Better business management involves identifying the issues as they relate to each individual situation, developing remediation strategies and acting to tackle them.   A whole of business approach - simultaneously addressing land management, production, business, and family issues - can assist.  Succession folds into this process, bringing business renewal via the next generation’s enthusiasm and potential for updating technical capabilities. Encouragement to adopt an entrepreneurial mindset allows for new ideas to be examined and new business opportunities to be considered.

Motivated by family legacy, there is a culture of succession ‘at all costs’; a concerning approach encouraging the continuation of the family grazing tradition regardless of the dynamics of the situation.  Many families need to better assess the viability of their situations – both financially and personally – to reduce the risk of the realities of intergenerational transfer becoming overtaken by emotion and sentimentality.  Assessing financial viability involves analysing both the long-term profitability of the enterprise and the family’s wealth creation from capital gain. The capacity of family members to collaborate effectively to achieve this outcome helps identify the personal viability of the situation.

Although succession in the northern beef industry has traditionally been a long-term intergenerational partnering process, there are alternate succession models.  A separate enterprise within the existing farm business may provide family members some autonomy.  Pursuing a professional detour, running a non-farm business for the family, or taking employment elsewhere works for some.  Establishing a stand-alone, separate business by purchasing another holding is also an option, where parents act as guarantor to support the next generation into their own property to establish an independent business. These options are not new thinking but rather require more rigorous consideration sooner as part of a beef business’ pre-succession process.

For any of this to be achieved, independent guidance and support is generally a necessity.  Independent advice includes free services - the Rural Financial Counselling Service North Queensland (RFCSNQ), Department of Agriculture and Fisheries (DAF) beef extension officers and agricultural economists, and Legal Aid services. Paid options include accountants, financial planners, legal advisors, and agricultural consultants.  The guiding principle is that regardless of the services engaged, they do not offer advice outside their specific field of expertise.  Ideally, the process is pursued collaboratively, with the guiding principle that all parties ‘play the issues, not the people’ involved, keeping the process on track to reach an outcome that is palatable, if not liked by all.  These service providers need to be focussed on determining financial and personal viability before proceeding with the process.

Targeted discussion groups are a less obvious opportunity to foster better business management and succession outcomes for NQ extensive family beef businesses.  They may help to foster peer-to-peer learning and support, provide knowledge transfer, accelerate adoption of new technology, and develop networks and leadership opportunities. They are an opportunity to challenge cultural norms, overcome the tyranny of distance and remoteness, support intergenerational transition, and enhance capacity development for the inherently independent NQ beef producer.