Not Your Grandfather’s Farm
The modern farm is a large, complex, leveraged, and demanding business that requires capable leadership. Who are the individuals stepping up to lead and manage these organizations?
Despite what you may have heard, the vast majority of today’s farms are still family owned and operated. They may structure themselves as a corporation or LLC, but that does not change the fact that they are run by families and often passed down from one generation to another.
Technological advancements have made farmers more efficient, allowing many to expand to sizes unfathomable by previous generations. Jeff Sims, a 4th generation farmer in Missouri remembers when he got started farming. The buzz at that time were these new tractors that had enclosed cabs!
Much has changed in Jeff’s 40 year farming career. He is now transitioning the farm over to the 5th generation by handing the reigns to his son Garrett. The farming business today is significantly larger and more complex than when Jeff took over.
“For years I was told that as these farms get bigger and more complex (and you’re) running it like a business, you need to hire outside help” Says Jeff. “You either have to hire it (elsewhere) or you have to hire from within. Family is a good point to start with, but…they need to have some experience. You have to bring value back and that’s where I wanted it.”
After college graduation, Garrett spent the first three years of his career working for a seed company before returning to the farm full time. He has quickly realized that there is much more to the job than farming. He’s had to develop a good understanding of finance, bookkeeping, data management, human resources, operations, strategic planning, marketing, and much more.
“The problem I’m seeing in agriculture” continues Jeff, “is that we’ve gone from these small farms 20, 30, 40 years ago where (for example) mom and dad had a farm…now we’ve gone to people that all of a sudden you have millions of dollars in assets that you’re controlling. You are running a HUGE business. Where is the training that went into that?”
Jeff’s question is a valid one. There are very few places where anyone could go learn this unique skill set. Only the combination of decades of farming, business management, combined perhaps with an MBA might even come close. How can the next generation possibly prepare themselves to take over larger businesses that carry much more demands, responsibilities, and risks than ever before?
Dick Wittman is a Farmer, Rancher, and Farm Business Consultant trying to help educate others on these topics. Dick has been involved in The Executive Program for Agricultural Producers (TEPAP) for several years. He has become a passionate advocate for farmers to look at their operations like an executive.
TEPAP is a unique program to boost business skills and learn from other top agricultural producers from around the world. The two-year process runs one week each January in Texas. I’ve heard it called the Harvard MBA for agricultural producers.
“Most farmers get into farming NOT because they want to manage people or finances, they get into it because they want to grow things” Says Wittman. “But if they’re going to succeed they realize they have to be skilled in finance, marketing, human relations, and all that stuff. So the areas that I see people having the most challenges is trying to elevate their financial management skills, their record keeping systems, their analytics, their ability to recruit and train and motivate people and keep turnover at a minimum. Very few farmers have a strategic planning process; they’re very much operational focused. So taking some of these management disciplines…takes a farm from just operating in a state of daily chaos to an organized, forward-thinking business that has a clear vision and they’re managing towards that vision.”
In addition to the TEPAP program, Dick helps train other consultants to work with producers on areas ranging from finance to strategy to HR and beyond. I hosted one of these consultants, Davon Cook, on a previous episode of the podcast to talk about farm succession.
I asked Dick if there was any common “low hanging fruit”, or a step #1 that a producer start with in order to get on the right track. His answer was to start looking at their financials on an accrual basis rather than just a cash basis.
“If you don’t have accrual data, then you have no platform for doing ratio analysis or performance analysis or any kind of analytics on how well you are doing as as business” he says.
Wittman urges all agricultural producers to pursue excellence in all areas of their business, including agronomy, finance, marketing, HR, family business dynamics, and governance.
“The really successful businesses today are the ones that are tackling every one of these areas with excellence in mind” he reiterates. “They’re not just saying ‘if I’m just a good farmer then all the rest of this stuff will fall into place’. They’re realizing that time at the desk, time on strategy, working on their business is just as important as working in the business.”
The modern farm business is complex. This can come with tremendous rewards, but also enormous risks. Those that will survive the challenging times for the farm economy will know how to develop excellence in every aspect of their business.
I encourage you to listen to both podcast episodes. They are linked on this post or can be found by subscribing to the “Future of Agriculture” Podcast on any podcast player.
“I don’t think there’s any element in society better able to produce food than the family farm business.” — Dick Wittman, Farmer/Rancher/Business Consultant