Grit, know-how and a job well done: What powers rural contractors

Contractors are an essential part of the rural economy, offering farmers greater efficiencies through their specialist skills. Yet despite their importance, there’s been little formal research into this sector. Te Whare Wānaka o Aoraki Lincoln University researchers shine a spotlight on rural contractors, exploring the characteristics that drive their success.

In the journal, Research on World Agricultural Economy, Lincoln University authors Dan Smith, Professor Alan Renwick and Dr Victoria Westbrooke share their findings in Small rural farm-support agribusiness: Strategies to survive and thrive.Case studies from New Zealand.

“Having grown up in a small rural New Zealand town, my family were rural contractors. Everyone is either a farmer or a rural contractor. I’ve always felt that these businesses were important to the economy, yet not well understood. Contractors are more efficient than farmers at completing many tasks on-farm, and by fulfilling these roles, it allows farmers to concentrate on what they do best. Ultimately, this drives greater efficiencies across the agricultural sector,” says Senior Lecturer Dan Smith.

While someone might think external factors are the main drivers affecting a rural contractor's business, this is not the case, according to rural contractors themselves. Instead, operational excellence – their commitment and knowledge to do a job well - is what they believe drives success most.

“Rural contractors consider the aspects of their business within their control to be the most important for success. Instead of worrying about whether there is enough work or the cost of inputs, rural contractors see effective and efficient management and delivery of services to farmers as most critical. External factors such as competition and regulatory requirements are not considered hugely influential,” says Dan.

Twelve Canterbury rural contractors specialising in hay baling, fertiliser application, fencing, spraying and cultivation were interviewed as part of Dan’s research. Canterbury was chosen as it contains most land uses present in New Zealand, including dairy farming, sheep and beef farming, arable and forestry, spread over differing soil types and geography.

“The challenges I identified through this research included input costs, seasonality and the time pressures associated with an owner-manager having to be across all aspects of the business. Plus, rural contractors often need to operate expensive, specialised assets and machinery, which accrue both debt and the need for constant maintenance.”

To help counter these challenges, Dan says rural contractors look to mitigate risks through specialisation, which can help manage the seasonality of many on-farm tasks. The number of specialisations shapes the main priorities for a rural contractor.

“If a contractor has one specialisation, they are most focused on forming positive relationships with farmers, their staff and extending into the community. Those with more than one specialisation care most about operational excellence – being as effective and efficient as possible. The largest businesses, with five or more staff, placed the greatest focus on the care and maintenance of their assets. So, the size of the business, and if they specialised in one or more activities, dictates their greatest priorities,” says Dan.

The good news is that the majority of those interviewed by Dan reported low stress levels and were satisfied with their business's performance.

Additional characteristics of rural contractors identified by Dan enabled them to get established and succeed in their businesses: those who had previous experience and knowledge of the industry, and an entrepreneurial spirit.

As rural contracting continues to grow in importance within the agricultural sector, Dan points out the qualities and skills most needed by those looking to enter the industry.

“This research shows that in the eyes of rural contractors, focusing on internal aspects of a business is the key driver of success. So that’s nurturing productive relationships, careful planning and time management and the determination and commitment to being the best at what you do.”

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