Farmers are incredibly self-reliant, but that can also be their downfall.
As CEO of the Family Business Institute, Wayne Rivers sees a wide variety of industries from the inside. So, how do farmers stack up against manufacturers, car dealers, general contractors or even McDonald’s franchisees?
"Your bond with land is unlike anything we’ve ever seen," said Rivers, imagining what it must be like to pick up dirt on a family farm that may have been in the hands of great-grandparents 100 years before. Many manufacturers, by comparison, could care less whether they are making products in Detroit or Birmingham; they’ll go wherever it’s cheaper.
Rivers said he is equally impressed with the industry’s self-reliance. "It completely blows my mind," he said, telling the story of one farmer client who needed to run water from a river 200 feet up a bluff. Instead of calling in an engineer, this farmer built the system himself. "I can’t believe some of the things you guys are able to do," Rivers said.
At the same time, an unwillingness to seek outside help may be an industry "blind spot," Rivers said. The consultant told the story of one farmer who had an extremely high cost of field maintenance yet refused to spend money on a system that might measure and contain it. "That same day, he bought two combines," Rivers noted.
Human resource management is another area of weakness, Rivers said. Farmers are too focused on the things they love—their crops, their equipment and their family. "Everything else is a necessary evil," he said, including the "hired man who needs to be treated as part of the team."
Rivers criticized farmers for hiring the guy from down the road, "because he’s a warm body and has a commercial driver’s license." Instead, he advised farmers to put together an exhaustive job description, then publicize it near and far. "You want to get 100 applicants, which increases the chance of getting a great person," he said. "Ag can be an industry that’s very desirable to be in."
Rivers said he is amazed by the "almost inhuman" number of hours some farmers work. The practice not only takes its toll on marriages but can lead to employee burnout. "You need get smarter about how you treat people," he said.
Farmers need to treat themselves better, too. "What’s the purpose of your business?," he asked. "Is it not to give you more life? Is it sucking the life and energy out of you? If that’s the case, don’t you need to get a little more out of it?"
He said the industry could use an attitude adjustment when it comes to paying taxes as well. "You all will move heaven and earth to avoid paying a dollar of tax," he said. "I’ve never seen anything like it. You may buy three years of fertilizer so you don’t have to pay tax. The idea that the tax tail should be wagging the farming dog doesn’t make any sense."
Rivers said he is impressed with the industry’s ability to determine input costs and calculate profits before planting even begins. He’s less enthralled with the industry’s financial accounting. "The final numbers don’t go into the management accounting system," he said. "You don’t track estimated versus actual costs. Many of you don’t know precise gross margins, costs of production or costs of equipment."
"You’ve got to get out of the tractor seat and into the office," Rivers advised. "You’ve got to look at the business as a chief executive officer. Most of you don’t know your costs. You aren’t allocating things like rent."
What’s the biggest thing ag can do to improve? "You’ve got to know your numbers better," Rivers said. "You need to think like a manufacturer. You’ve got to get in touch with your numbers."
See full coverage of the 2013 Top Producer Seminar.
Thank you to the 2013 Top Producer Seminar sponsors and co-sponsors:
Agrigold, Agrotain, Asgrow/Dekalb, Apache Sprayers, BASF, Bayer, Cargill, Challenger, Dow, ESN, Firestone, DuPont Pioneer, RCIS, SFP, Syngenta, Top Third Ag Marketing, Advance Trading, Integris, Michelin, Novozymes, Kennedy & Coe, Illinois Soybean Association, Water Street Solutions