SALEM — Farmers frequently needed help catching up on basic computer literacy during Phil LaVine’s early days as an agribusiness management instructor.
More than two decades later, he’s encountering a different challenge with the next crop of growers.
While they don’t need assistance setting up printers or overcoming other technical hiccups, young farmers often aren’t familiar with compiling and analyzing financial records.
“When I first got here, mom and dad didn’t know how to turn on a computer,” joked LaVine, an instructor at Chemeketa Community College in Salem, Ore. “The new generation knows how to run a computer but they don’t like to work in the office at all. Nobody got into farming to keep records.”
Laboring over expenses in an Excel spreadsheet isn’t the most enjoyable aspect of farming, but it’s just as necessary as scouting for pests or tilling the soil.
“People who aren’t paying attention to their records are setting themselves up for failure,” LaVine said. “Treat it like it’s a business. It’s easy to get sucked up in the lifestyle of it, but it’s tough to maintain the lifestyle if you don’t maintain the business.”
Chemeketa’s agribusiness management program was started in 1970 to provide farmers with bookkeeping skills, rounding out the agronomic knowledge they gained from Oregon State University’s Extension Service, he said.
Proficiency with financial records is crucial when farmers must deal with the bank or the accountant, but it’s also key to operating their business more efficiently, he said.
LaVine teaches farmers from the perspective of the “lean” business theory, which focuses on continuously improving productivity while conserving resources.
“You try to eliminate waste and get the biggest bang for your buck,” he said. “That new combine has to pay for itself. That extra ground has to got to pay for itself.”
Growers who enroll in the program learn basic financial practices, such as reconciling their bank statements with their records of expenses and revenues.
With that understanding, they can then understand the strengths and weaknesses of their farm operations — and how to adjust spending and investments accordingly.
“You want to be able to manage the farm based on its successes and failures,” he said.
More profit, less work
LaVine gives the example of a farmer who was able to double his profit while reducing his workload.
The problem was simple: An unproductive tract of leased land was costing more to cultivate than it was generating in revenue.
Until the farmer analyzed his records, though, he didn’t realize it made sense to stop farming the parcel.
“He was losing money on the lease,” LaVine said. “He was taking good money and throwing it after bad.”
There’s more to wise financial decision-making than just crunching numbers.
Growers enrolled in the program are taught to set longer-term goals — envisioning where their farms should be in five or 10 years — instead of just reacting to immediate needs.
“Everything should be goal-driven,” he said.
On the same page
Farms are generally family businesses, which requires that LaVine take on a role similar to that of a therapist: Helping husbands, wives, children and other family members understand the company’s priorities.
LaVine gives the analogy of two donkeys tied together, each pulling toward a different pile of hay.
“If you’re working against each other, it’s going to be a wiggle. If you’re working together, you can have both hay stacks,” he said. “It’s better for us to ensure everyone is working together on the same page.”
Tracking trends and analyzing past expenses is especially important at a time of steep inflation for fertilizer and other agricultural inputs.
For example, farmers who understand how much the cost of nitrogen has affected their past profits will be better able to anticipate the impact of a major hike in price.
“How can you possibly forecast if we can’t see what’s in the past?” LaVine said.
A solid grasp of finances enables growers to know how much they can gamble on a new crop, such as quinoa or hemp. It can also prevent unwise investments, such as overpaying for property.
“I’ve seen some really smart people be pretty silly with their farm business management,” LaVine said. “You’ve got to know when to hold them and know when to fold them.”
Grew up on a vineyard
Having worked at Chemeketa since 1999, LaVine is now teaching farmers whom he first met as “baby bumps.”
LaVine’s own experience with agriculture began in Modesto, Calif., where he grew up on a vineyard managed by his father, Paul, an extension agent.
After participating in FFA as a youth, LaVine went on to study agribusiness management at California State University-Fresno.
He then took a job with a lender in the Farm Credit System network, which took him to Hawaii for more than 20 years.
LaVine went back to school to obtain a master’s degree from New Mexico State University before joining the faculty at Chemeketa.
The diversity of Hawaiian agriculture is similar to that of Oregon agriculture — though with mostly different crops, he said.
The experience as a lender also prepared LaVine for his career as an instructor, since both jobs involve navigating complex financial situations with farmers.
Growers can be intimidated by the superficially different questions asked by various lending institutions, he said.
If they keep good records, though, the process is easier to negotiate, regardless of the lender, LaVine said. “It’s been fun teaching over the years that they’re all asking for the exact same information.”