Treat the farm as a business

Terry Pyle

If you were to poll farmers, orchardists, dairymen and ranchers across the country asking why they chose agriculture as a profession, few, if any, would say “I am in it for the money.” The reason people live and work in the agricultural industry is because they love what they do.

The long hours of hard and the inherent risks are just too much for most people, but farmers love the challenge. Lou Holtz once said, “Winners embrace hard work. They love the discipline of it, the trade-off they’re making to win. Losers, on the other hand, see it as punishment. And that is the difference.” This is how ag people see themselves, tough and disciplined.

On top of the physical demands there are the challenges of being good stewards of the land. We strive to produce at the highest levels possible while at the same time being the greatest conservationists in the world. Keeping abreast of all the new technology and research, and how to incorporate them into our own operations is time- and thought-consuming. Every single day of the production season there are hundreds of vitally important decisions that have to be made. The focus necessarily has to be to produce the most we can from every acre.

The down-side to all these demands on a farmer’s time is they force his focus onto his work and away from the running of his business. It is human nature to gravitate toward what we enjoy, so any time he faces competing emergencies in the office and in the field, he will always go to the field. I wish I had a dime for every time a farmer told me, “If I don’t produce a crop, I don’t survive.” This is an absolute truism, but the same is also true of marketing, if you don’t market your crop well, you won’t survive. In order for an agricultural business to succeed in today’s economy, there has to be active purposeful management of cost containment, risk mitigation, finances, continuous improvement, and on and on. How is all of that possible?

There are various technology tools that can support our decision-making and management. Specialists are available to us who are experts in everything from accounting to soil sciences, yet even with all this help, the management of an ag business can be overwhelming.

The business of agriculture has many elements, and each requires active management. When we focus all our effort and attention on production we limit time devoted to the other areas vital to our long-term success. When we see working on those other things as punishment, we won’t give them the attention needed to properly manage those elements of the business, and it will eventually cost us.

We may embrace hard work but as my dad used to say, “Sometimes the answer isn’t working harder, it is working smarter.” With so much going on all the time and having to find solutions to urgent issues on a daily basis, finding time and motivation to manage the business side of things can be difficult, but it can be done. Creating order out of chaos is almost impossible but creating order before the chaos starts is doable.

There is an order to management that when followed provides the structure for a manager to successfully run his business. Organization and disciple are both essential elements but the order in which we establish them is critical. An organized plan of operation must come first. When done correctly it will provide the framework by which all management decisions will be made, which will also provide the manager with the tools to help him be disciplined in handling the daily unexpected demands on his time and attention.

Set up a plan and stick to the plan. That sounds pretty simple, but any plan will only work if the manager is disciplined enough to stay the course when the fires start to burn.

Tiger Woods talks about how his father taught him to golf from green to tee. He started with the end goal, putting the ball in the hole. Planning should always start with the goal. Steven Covey taught “begin with the end in mind” in his landmark book “7 Habits of Highly Effective People.” We have to know what we want to accomplish before we can develop an effective plan to get there.

Taking a critical look at how we are currently doing in terms of productivity, efficiency and financially are all important elements of creating an achievable plan, but that is a topic for another discussion.

Terry Pyle has worked with farms and agri-businesses in the Columbia Basin for the past 30 years. Coming from a financial background and having experienced the economic cycles of agriculture, he delivers real-world experience to the application of financial and economic principles. He can be reached at tpyle@qosi.net or 509-760-0015.

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