Glean insights for your finances, management and more
Continue to be cautious with your balance sheet and know all line items.
Surround yourself with the right people and reward great team members.
Align office functions with best business practices in corporate America.
The need for belt-tightening is yesterday’s news, which is why Top Producer Seminar speakers focused not on financial basics but on practical strategies to limit risk and bolster profitability.
During close to 30 mainstage and breakout presentations, experts including economists, business consultants and traders explained how farmers can capitalize on opportunities. As agriculture slowly works its way out of a down cycle, there will be numerous avenues to success for producers who take care of their team members, spend time in the office and grow strategically rather than speedily. Here are some of the takeaways you can apply to your business.
By Nate Birt
Why You Should Prioritize Efficiency
For the next four years, U.S. producers can expect corn prices between $3 and $4.50, and soybean prices between $9 and $9.50, says Mark Jensen, senior vice president and chief risk officer with Farm Credit Services of America.
As a result, farmers should think through several marketing factors at this time of year.
“One, how do I manage my physical inventory? Two, what’s my overall marketing plan? Thirdly, how do I manage basis?” Jensen says.
Another area farmers need to emphasize is working capital, Jensen says, and they also need to evaluate efficiency. Understand whether your operation is making money on an accrual basis. If you find yourself 30¢ per bushel short on cash-flow needs, and you have production costs that are too high, you must either have the working capital to buffer it or a strong balance sheet to leverage equity, he says.
Solutions for farmers looking to build their financial muscles include restructuring real estate loans, selling grain inventory, fixing interest rates and reducing family living costs.
Beyond the farm gate, producers should consider how the new presidential administration and other global economic factors could shape trade.
Bullish factors include projected U.S. growth of between 3% and 5% in the near term; a growing global population; and 400 million people entering the middle class worldwide through 2050, Jensen says.
By Sara Schafer
R.E.L.A.X. in the Year Ahead
Agriculture is a cyclical industry. That means “good times don’t last forever, nor do bad times,” says David Kohl, professor emeritus of agricultural finance at Virginia Tech University. He also serves as president of the consulting firm AgriVisions.
“There will be more opportunities in the next seven years than there’s been in the last,” Kohl says. “But there will also be more opportunities to fail. It will be your choice.”
His advice is to focus on five areas of your business summed up by the acronym R.E.L.A.X.
Resilience: A lot of farm businesses have grown faster than their business practices. You have to plan, strategize, execute and monitor to keep up with expansion.
Excellence: Be outstanding in many different areas of your farm operation.
Liquidity: When you have liquidity, you have flexibility.
Attitude: You have the right attitude by being around the right people. Stay away from the victims who blame
others for their problems and the know-it-alls who have forgotten how to learn.
X-Factor: Control the uncontrollable. Do scenario planning. Manage what you can, and manage around the things you can’t.
By Nate Birt
Forget Farming And Act Like A Business
When Iowa producer and business consultant Ryan Bristle left the corporate world and returned to farming, he immediately appreciated the occasionally more relaxed pace of production agriculture—and the need to double down on incorporating business practices.
“The real world isn’t really like all the pictures,” says Bristle of Russell Consulting Group. “It isn’t like the Paul Harvey commercial from the Super Bowl a couple of years ago. The real world is much more businesslike, intense and stressful.”
That means producers must prepare their operations to capitalize on future opportunities. For example, they should:
Explore New Technology. Robotics will use data in ways yield maps can’t. Shops will employ 3-D printers, and automated agronomic testing will speed access to crop information. Look for manufacturers to develop ultra-low-volume formulations of chemicals for drone application.
Control Assets. Machinery is a major expense for many producers, meaning now is the time to right-size your fleet. The equipment slump is likely to last for another three to five years, Bristle predicts, so take advantage of savings in used equipment, and negotiate from a position of strength on new purchases. Consider sharing machinery to spread costs across acres.
Manage Commodity Cycles. Producers are in a commodity-price trough now, but there will be tremendous opportunities ahead for those with strong balance sheets and a disciplined approach to business, he says.
Develop Key Metrics. Evaluate your balance sheet to ensure working capital, equity and living expenses are in order.
By Anna-Lisa Laca
4 Traits of an Effective Farm Incentive Plan
As labor becomes harder to source, holding onto employees is more critical than ever. Paying a living wage might not be enough to keep employees happy. Many farmers are looking for benefits to improve retention.
An employee incentive plan is one way farm owners can keep key employees, says Peter Martin of K·Coe Isom.
“Quit just handing out money,” Martin says. Instead, build these qualities into your incentive plan.
1. Frequent Payment. The more often you can pay your team members, the better, Martin says. “Ideally, we would do this monthly, but at a minimum quarterly,” he says.
2. Transparency. It’s critical details of the incentive program be understood by all employees. “You’ve got to walk into this willing to be transparent,” he says.
3. Employee Control. Team members should know exactly how to achieve their incentive bonuses. Managers and laborers should have different metrics for reaching their bonus.
4. Focus On Growth. Incentive programs should benefit areas of expansion for the farm, Martin says. Incentives “shouldn’t cost you anything when you consider the benefit the farm is receiving as employees meet goals,” he says.
To view presentations, read articles and watch videos about the Top Producer of the Year award finalists, visit TopProducerSeminar.com.