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The Bottom Line: Putting It All Together

January 28, 2013
By: Moe Russell, Farm Journal Farm Journal columnist
the bottom line
  
 
 

Farming is becoming more complicated by the day. I’m sure there are times when it seems like you’re trying to negotiate through a maze, and all the responsibilities you are juggling keep you from making any progress. The responsibilities and challenges aren’t going away, though, which means you have to sort it all out in a way that’s best for you, your family, employees and business.

There are four primary "hats" that producers wear every day. First, as plant and production manager, it’s your responsibility to make sure the crop is planted, sprayed and harvested, or, in the case of livestock, raised, cared for and marketed.

The second hat is the financial manager’s. Managing margins is the name of the game—and as we all know, that’s easier said than done.

The third hat is the marketing manager’s. Price volatility, worldwide supply, demand and production issues and weather can make everything else look like child’s play.

Finally, people management entails getting the right people with the right skills in the right place at the right time, with the right set of expectations and the right set of rewards. Even if you don’t have employees, working with family members is just as important and often more challenging.

I have never met a farmer who is good at wearing all four hats—and that’s OK. Understanding what you’re good at and honing those skills is more important than trying to do everything. Acknowledging what you don’t know or don’t like to do and hiring someone else to handle it can make farming easier, more profitable and more fun.

The challenge is sorting it all out and maintaining focus along the way. The diagram at left, provided by a Canadian company called Agri-Trend, depicts a holistic approach to a farmer’s top priorities. At first glance, the process looks simple. Executing it can be difficult, however.

Share the responsibilies. Hiring someone to help out in one or more of these functions is the common thread among highly profitable producers.

There are an increasing number of individuals and agribusinesses who provide niche services to help farmers who don’t have the resources, equipment, time or desire to tackle a particular job themselves.

How much should you spend, and what should you expect for a return on your investment? My rule of thumb is three to 10 times more. If you spend $5,000 per year to have someone help you and wear one of your hats as an adviser or employee, your bottom line should increase $15,000 to $50,000. If it doesn’t, it’s not a good investment.

Think about it this way: Would you do your own root canal? Of course not—you don’t have the skill set. The same can be said about your dentist; he can’t grow a crop like you can. Interdependence and dependence is where maximum bottom-line profits are realized.

Moe Russell is president of Russell Consulting Group in Panora, Iowa. He provides risk management advice to clients in 34 states and Canada. For more risk management tips, visit his website at www.russellconsultinggroup.net. To submit questions, call (877) 333-6135 or e-mail thebottomline@farmjournal.com.

Take Your Operation to the Next Level

March 12Fishers, Ind.

Fishers Banquet and Conference Center

ProfitCollege

Learn how to execute variable-rate technology with Farm Journal Field Agronomist Ken Ferrie. Then integrate those agronomic benefits into your balance sheet with Farm Journal columnist Moe Russell and Top Producer columnist Chris Barron.

Early bird registration: $169 (before Feb. 19)

Regular registration: $199

To register, call (877) 482-7203 or visit www.FarmJournalProfitCollege.com

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FEATURED IN: Farm Journal - February 2013

 
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