Consider Employees, Not Just Acres

August 12, 2010 09:11 AM

 A number of farm operators successfully manage between 2,400 to 4,000 acres with part-time help, and many who expand to 7,000 and 10,000 acres with only a few more employees and no change in management systems. But when operations grow to the level of 15,000 to 30,000 acres – that’s when they seem to hit a glass ceiling, says Allen Lash, founder and president of AgriSolutions, Inc., who has consulted with expanding farm operations for more than 40 years.

"We see operations that get to this point with expansion and growth and just fall backward," Lash says. "They think all it takes to manage this size operation is to add more tractors and more people, but the reality is that their whole management system must change."

One person can effectively manage up to 10 full-time people, Lash explains—about what a 10,000-acre farm requires. In agriculture, one person can typically generate up to $500,000 to $600,000 per 1,000 acres, he adds. The result: size of an operation is determined by number of workers and managers.

That means the owner who was once performing the production tasks must move up a management progression as the operation grows. As more acres are added, more employees are added and the owner becomes a manager of managers who are directing workers; in this position, more time is focused on management of financials, human resources, growth and technology.

As even more acres and employees are added, that owner must move up to an organization manager, overseeing multiple layers of officers and managers, with a focus on communication and organization management.

Lash gives examples of operations he has worked with that doubled from 15,000 acres to 30,000 acres, with 15 to 30 employees. "But the owners didn’t change their management systems as they grew, and every single employee had to report to the owner," Lash says. "The systems just imploded. Now these farms are back down to 10,000 acres or less."

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