Editor's note: Columnist Chris Barron wrote the following commentary.
The prospect of tight margins for many grain producers has created considerable anxiety. Much like a sports team with several years of winning success under its belt, producers have had a similar level of success.
But we know all too well that maintaining a winning season every single year is virtually impossible. In the cycle of success, a coach and team occasionally have to face a new season with an entirely different set of challenges. Maybe they lost a few key players or the competition level increased due to a conference or division change. One or two variables could double the difficulty of competition within a year.
Rebuild Goals. As steadily increasing input costs and a 50% reduction in price opportunity have changed the playing field, farmers need to think of 2014 as a rebuilding year. While the conditions have changed, the rules are the same. For some, just staying in the game might be a win, but why not plan for success and set realistic goals to win a few games during the season? It’s a necessity if you don’t want to gamble.
Sports teams look for creative plays to surprise their opponents. They methodically work to improve their weaknesses, but their primary focus is on taking advantage of their strengths. Think of your farm—what can you do creatively or more intensively to enhance profitability and growth? Consider hybrid positioning, seed placement, equipment adjustments, crop scouting, nitrogen management and working to better understand the markets.
By the same token, while you’re managing costs, don’t unintentionally rob yield—it’s the one variable that can impact profit opportunity the most. Remember, a sports team with a killer defense can accomplish a great deal, but without the ability to score, it’s impossible to win.
Throughout the season, a sports team plays one game at a time—tweaking, fine-tuning or changing strategies all together based on their opponent and current circumstances. Getting started on the wrong foot or losing the first game or two doesn’t mean the season as a whole will be a failure. Evaluating the situation and making the necessary changes at any point during the season could turn things around for a positive outcome.
Think about breaking your farming season into several components. Start with a complete understanding of your financial condition. Net worth, working capital and cash flow will help you know the strength of your team. However, the most important part of your team’s strength is your
people. Do you have the right people in the right place at the right time with the right set of skills?
If you’re 100% confident in all of these things, your team is ready to play. If not, get yourself and your team focused on the challenges ahead.
Create Your Win. Walk through a variety of scenarios and see what the numbers look like under different conditions. Discuss all of the individual responsibilities for the season so that everyone clearly understands their role. Review the plans often and look for weak links in the chain. Focus on fixing the weak points and strengthening the strong points.
Teams that exemplify the greatest discipline will eventually overcome the greatest challenges. Your farming operation can do the same.
To maximize their effectiveness during the season, sports teams analyze tons of statistics.
Knowing your cost of production, yield goals, risk management and marketing plan are all vital for you to win. Focus on your numbers, but always remember the importance of relying on your own intuition. Keep this in mind; winning seasons have developed purely because of the desire, discipline and positive attitudes to win.
Chris Barron is director of operations and president of Carson and Barron Farms Inc. in Rowley, Iowa. He is also a farm business consultant and the author of the AgWeb.com blog, "Ask a Margins Expert." To submit questions and comments, email Chris at email@example.com.
- March 2014