Sensemaking and financial management in the decision-making process of farmers

Abstract

Purpose The purpose of this paper is to contribute to a better understanding of the financial decision-making process of farmers and to highlight the potential role that improved farm financial management (FFM) could play in developing sustainable farm enterprises. Design/methodology/approach This paper adopts a qualitative approach with 27 semi-structured interviews exploring farmers’ financial decision-making processes. Subsequently, the interview findings were presented to a focus group. Sensemaking theory is adopted as a theoretical lens to develop the empirical findings. Findings The evidence highlights that FFM has a dual role to play in farmer decision-making. Some FFM activities may act as a cue, which triggers a sensebreaking activity, causing the farmer to enter a process of sensemaking whilst some/other FFM activities are drawn upon to provide a sensegiving role in the sensemaking process. The role of FFM in farmer decision-making is strongly influenced by the decision type (strategic or operational) being undertaken and the farm type (dairy, tillage or beef) in operation. Originality/value The literature suggests that the majority of farmers spend little time on financial management. However, there are farmers who have quite a high level of engagement in FFM activities, when undertaking strategic farm expansion decisions. Those FFM activities help them to navigate through operational decision-making and to make sense of their strategic decision-making.

Influence of seasonal climatic water deficit and crop prices on rainfed crop grain harvest, repurposing, and abandonment in the western U.S.A.

“…Shown by the LOWESS curves (figures 2 and 3), western U.S.A. farmers have adapted to normal CWD conditions within their respective regions, planting acreages to maximize grain returns under their regional climate normals; therefore, allowing them to maximize revenue while minimizing risk. That being said, farmers consider many factors beyond CWD; including but not limited to, personal finances, traditional knowledge and instincts, recent weather and soil conditions, social and community influence, market conditions, and crop insurance participation [20,30,31].…”

Evaluation of financial literacy of rural households: a case study of tomato farmers in Ghana

“…Therefore, a better understanding of the complex financial environment in which they operate through improved financial literacy might contribute to a better understanding of the financial decision-making process of such farmers. This according to Hayden, et al, (2021) might contribute to potential improvement in farm financial management, vis-à-vis, sustainable farm enterprises. In order to achieve this objective, financial literacy of tomato farmers is explored to help financial intermediation practitioners design appropriate financial products to meet the special needs of these farmers.…”

Exploring state pension provision policy for the farming community

“…Linked to this issue of farmer identity, farmers tend to reinvest profits they earn back into the farm. Hayden (2017) explored the influencing factors on the financial decision-making process of farmers and highlights that farmers tend to 'stick to what they know' i.e. reinvest on farm as opposed to investing money off-farm.…”

“…Farmers accordingly may have neither the means nor the appetite for retirement because of income constraints. Furthermore, the income of farmers is volatile; some years they make good money, other years they do not, with many uncontrollable factors such as weather and market prices impacting profitability (Hayden, 2017).…”