Forget Farming And Act Like A Business

January 26, 2017 11:00 AM
Forget Farming And Act Like A Business

When Iowa producer and business consultant Ryan Bristle left the corporate world and returned to his home state to farm, he immediately appreciated the occasionally more relaxed pace of production agriculture—and the need to double down on incorporating business practices from the corporate world.

“The real world isn’t really like all the pictures,” says Bristle of Russell Consulting Group, who spoke Thursday, Jan. 26, during a breakout session at the 2017 Top Producer Seminar. “It isn’t like the Paul Harvey commercial from the Super Bowl a couple of years ago. The real world is much more businesslike, much more intense and much more stressful.”

That means producers must prepare their operations to capitalize on future opportunities. For example, they should:

Explore New Technology. Robotics will leverage data more so than traditional yield maps. Shops will benefit from 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 application by drones.

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. Collaborative machinery sharing is another trend farmers can use to spread costs across more acres.

Manage Commodity Cycles. Greed and fear drive markets, Bristle says. 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 the business.

Develop Key Metrics. Evaluate your balance sheet. Working capital should represent 50% or more of your balance sheet. Maintain owner’s equity of 60% or greater and keep living expenses at 10% or less of your annual income. Aim for 6% return on assets and a 16% return on equity.

Keep these rules in mind when preparing your business for the year ahead and beyond.


Thank you to the sponsors of the 2017 Top Producer Seminar!


Premier Sponsors: Advance Trading; BASF; Bayer; Beck’s; Cargill; Case IH; Channel; CropZilla; Dow AgroSciences; DuPont Pioneer; ESN; FarmersEdge; Farmers Business Network; John Deere; K-Coe ISOM; Soybean Premiums; Top Third Ag Marketing; Verdesian.
Co-Sponsors: AgYield; CliftonLarsonAllen; Gulke Group; Rabo AgriFinance; Zaner Ag Hedge. 
Supporting Sponsors: Alltech; BMO Harris Bank; Transition Point Business Advisors

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Spell Check

bad axe, MI
1/27/2017 07:03 AM

  Let's see how this is going to go if I think like a business. Trump going to tariff any thing coming into this country 20 to 35 % . So the countries we trade with will put a 20 to 35% tariff on anything going to them from us. So the only farm products that will benefit from this is sugar since we grow only 50% of are needs and maybe some small produce sectors. So that means soys, corn, drybeans and wheat will have a 20 to 35% tariff on them that are exported. Wow that sounds good to me $7 soys, $2.50 corn, $3 wheat and $20 drybeans. With higher interest rates come from the fed. $200,000.00 dollars of credit market debt in this country for every man, women and child. You think the 80's were bad for the farmer when they were forced from the field to the factory . This is going to make the 80's look like a church picnic.

S. P.
Williamsport, IN
1/27/2017 08:15 AM

  Don't worry too much, Mexico will send the goods, Trump won't pay the bill and free health care for all. We'll all be rich. After all I know more than the generals.

AgEcon Professor
University of Missouri, MO
1/27/2017 11:20 AM

  Key metrics statement makes no sense. TA =total assets, TL = Total Liabilities, Return to Assets is Net Farm Income(NFI) - Unpaid Family Labor (UFL), Returns to Equity is NFI - UFL - Interest Expense (TLxInterest Rate). If Returns to Assets is 6%, Returns to Equity is 16% and Interest Rate is 5%, must have owner equity of around 10% to be mathematically possible.


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