Farmers looking to grow their acreage are not uncommon. Those who are willing to do what it takes to get there, however, is another matter altogether, says Allen Lash, CEO of Family Farms LLC.
Lash, who presented at this week’s Top Producer Seminar on Thursday morning, says there are four basic principles farmers should embrace if they want to break through a management level that allows their farms to grow. For a typical Midwest corn and soybean operation, that is at an acreage level of 10,000 acres.
The four factors are:
· Organization Success
· Entity Structure Issues
· Capital Access
· Control Systems
Organization Structure. Developing a management attitude is often the most difficult task for many farmers to embrace. Why? Most farmers are used to doing the tasks of farming and not managing the people who do these tasks.
"This is not unique to agriculture," Lash says. "It’s any business. And it’s not about managing the task doers, it’s about managing the people who manage the task doers."
Those who don’t want to move to that level are often faced with hitting what Lash calls a glass ceiling on farm size. Delegating tasks to employees makes it possible for farmers to develop a sound entity structure.
Entity Structure Issues. Businesses need to consolidate their entities and coordinate activities across their entities.
Capital Access. As farms grow larger, financial partners must be evaluated and come to the realization that the same financial partners may not fit the needs of larger operations. At the same time, the information farms provide to these financial partners may not be adequate anymore. With higher financial requirements, the more information your financial health will be required.
Control Systems. This is a major concern for many farmers who grow to the point where they aren’t the task doers. By giving up the day-to-day work, they are losing control of the factors that drove them to their original success.
"You maintain the control by setting expectations and making sure there is follow up. People will do what you inspect, not what you expect."