Several weeks ago, my Road Warrior travels took me to Red Deer, Alberta, between Calgary and Edmonton. Agricultural producers in this province think entrepreneurially and outside the box.
After one of my speeches, a producer discussed with me his strategy for his youngster who wanted to farm with him. His operation was mid-sized, but not big enough to support both of them. His strategy was to fire himself and make his son the boss.
Interestingly, the son took the bull by the horns in management. He stated that the son now comes to him for advice — a son who would not listen to him before. The dad also has found that working off the farm part-time brought new perspective and methods in working with people, which has been valuable as input back to the youngster.
On a side note, the dad shared a story with me about when cattle BSE broke out in Canada. His Holstein steers dropped in value from $700 to $100 at the market. His solution was to run an ad in the paper during hunting season that said for $500 hunters could have something tastier than a deer.
The television station noticed his ad and the story went nationwide. The result was that he received $500/steer and sold all available within 24 hours. Since that period, repeat buyers and referrals have purchased all the steers they produce.
I ALSO WAS in Embrun, Ontario, Canada, south of Ottawa, at a Royal Bank of Canada (RBC) Speaking Series event. Brian Little, the head of RBC agribusiness for Canada, shared the podium with me as we spoke to 175-plus producers and agribusiness persons. Brian discussed the management practices of key producers in their $7-billion agricultural portfolio. See how you compare:
First, they utilize advisory boards. This includes accountants, bankers/lenders, peer producers, etc. They are not afraid to put aside both time and money to utilize these experts and act on their suggestions.
The successful producers spend more time on planning and research than average. Specific topics include finance, human resources, marketing, succession, risk management and technology. Some will spend up to 85% of their time doing and 15% managing.
They “sharpen the saw” and analyze costs or are superior in expense management. Often, industries that are in the successful part of the cycle, such as grains, get away from the basics, creating missing teeth or a dull saw.
Next, they maximize technology. That is, they do not have to have all the latest techie devices, but they know what they need and can utilize it and then implement and measure for success.
Finally, they are adaptable and flexible to changing conditions. Today's world requires a high degree of flexibility in finance, human resources, marketing and operations.
How do you stack up to the best from Canada? I dare say these characteristics would bode well for any business model.
THE SUPER BOWL OF AG
Recently I took a Road Warrior stop at the Super Bowl of Agricultural Management — The Executive Program for Agricultural Producers (TEPAP) — in Austin, TX. If any of you want a high-energy jolt to your business, put this event on the calendar. Yes, it is quite costly, but the information, networking and sharing of expertise is second to none.
This year's group financials provide some interesting perspectives. The average business debt-to-asset ratio was 46%, ranging up to a high of 88%. Average financial withdrawals from the operation by management were $119,789.
Dave Kohl, PhD., Corn & Soybean Digest Trends Editor, is Professor Emeritus at Virginia Tech. He's published four books and over 500 articles on financial and business topics. You can reach him at firstname.lastname@example.org.