In a time of tight budgets and volatile prices, producers are understandably focused on the costs and the bottom line. But building and sustaining a thriving farm operation requires more than just managing dollars and cents, according to a farmdoc Daily article by Michael Langemeier of Purdue University.
“In general, differences among farms are the result of differences in prices paid for inputs, the availability and ability to take advantage of niche markets, differential learning or organizational structures, or differential strengths and resource endowments,” he writes. “Resource based theory of the firm focuses on differences in strengths and resources. According to this theory, identifying and utilizing unique resources that are difficult for other farms to obtain is critical to sustaining a farm's competitive advantage.”
In other words, what makes your farm operation unique may also provide the foundation for its ongoing success.
If you’re not sure what differentiates your farm, dairy, or ranch from others, Langemeier suggests thinking about the following four questions.
- Does your farm possess a resource or capability that enables you to respond to environmental threats and opportunities?
- How many competing farms already possess your resource or capability?
- Do farms without your resource or capability face a cost disadvantage in obtaining the resource or capability?
- Is your farm organized to exploit the full potential of your resource or capability?
Depending on your answers, you may realize where your farm’s weaknesses—or strengths—can be found, according to Langemeier.
To read the full article, click here.