Farmers’ Perception of Management Accounting

Abstract: The agriculture sector in Sweden is undergoing a fast reformation. Due to different policy changes, the competition from foreign agriculture has increased and the number of Swedish dairy farm businesses is steadily decreasing. Sweden has got good conditions for agriculture and the Swedish food production is an important sector of the Swedish economy that employs 240 000 people throughout the production chain. The increased competition has enlarged the focus on business management within farm businesses to secure a competitive agriculture in Sweden. In the farm management literature, the manager has previously been acknowledged as an important factor in determining farm performance based on the background that the economic performance differs among farms, even though they face similar conditions. In the business literature, management accounting is highlighted as a set of important practices for decision-making and control within the business. In the agricultural sector, the importance of management accounting has also been acknowledged, however, previous studies suggest that the usage of formal management accounting practices is low among farm managers. Instead, studies have shown that farmers tend to use their social network and experience to evaluate financial decisions. In contrary, previous studies have also shown that more successful farmers think in terms of business management. Therefore the aim of this study is to explore how Swedish dairy farm managers perceive management accounting and use it in order to manage their companies with respect to decision-making, and control. The results of this study is based on the analysis of nine interviews with farm managers on large Swedish dairy farms. During the interviews, the Zaltman metaphor elicitation technique was used to obtain knowledge and understanding of farmer’s perception regarding management accounting. The data was coded with the means-end chain theory and was displayed in a hierarchical value map, allowing for an analysis of the central attributes, consequences, goals and values of management accounting. The results indicate that management accounting is perceived as an integrated part of farm management practices. However, instead of using formal management accounting practices, farmers rely on informal and simplified management techniques for decision-making and control. The main contribution of this study is the novel use of the chosen method and an increased understanding of management accounting in farm management practices. This increased understanding can be used to develop the field of farm management further and to secure the long-term competitiveness of Swedish agriculture.