Published on: 13:02PM Aug 08, 2011
Dramatic changes in farm business management mean decision-making is more complex, a team is needed to make decisions, and personal growth and development opportunities both within and outside of agriculture are needed.
Over the last 50 years, we have gone from feeding hay and grain to balancing rations for amino acids. With crops, we have gone from planting seed from last year’s crop to selecting varieties with specific nutritional traits.
Have the leadership and management of our farm businesses progressed as dramatically? In this article, I argue they have not, and I identify three key elements of a framework to address today’s complexities.
Let us begin with the farm where I grew up and which my brother Dave currently leads and manages. We had a farm like dozens in the neighborhood with a couple hundred acres and 30-40 cows. My father did essentially everything with some help from my brother and me. Mostly he worked very hard. As I remember, only the ag teacher and the county extension agent had college degrees. My father, like most other farmers, rarely consulted with them or anyone else.
Today, my brother crops in excess of 4,000 acres. Although Dave remains the ultimate decision-maker, he relies heavily on a long-time employee for operational decisions. He also relies on numerous consultants and utilizes research-based information from around the globe. Further, his investment in personal growth has taken him to various countries with the Michigan Bean Commission and outside of agriculture as a member and two-time president of the local Rotary Club.
Today, my brother farms the land that comprised most of those dozens of similar farms in our neighborhood. The farm businesses that remain are much larger and infinitely more complex.
Successful leadership and management of today’s farm businesses calls for recognition of three key farm management elements:
1. The roles of the owner/leader/manager are dramatically different.
2. Decision-making is not centralized in one person and is more complex.
3. Leading and managing the farm business now require principles and skills that are best acquired by participating in personal growth and development opportunities both within and outside of agriculture.
New Focus in Owner/Leader/Manager Roles
Not far into our 50 years, we began to see headlines like, “When hard work is not sufficient,” referring to the need for excellent decision-making in addition to hard work. Most of this increased emphasis on decision-making and farm management was focused on the crop and livestock enterprises. The highest priority of the top decision-maker had transitioned from hard work to crop and livestock operations management.
The turbulence of the last four years has highlighted the next transition that excellence in operations management is no longer sufficient. At least one owner/leader/manager must shift his or her top priority to the chief executive functions. Hard work and exceptional operations management remain necessary for farm business success. Today, however, they alone are not sufficient.
Today, at least one owner/leader/manager must have the financial and strategic status and future of the business as their top priority. I often say someone must roll out of bed in the morning thinking about the future of the business instead of which fields to plant or which cows to cull.
Decision-making Structures and Complexity
The above-described explosion in leadership and management roles, the increasing size of farm businesses, the complexity of the decisions, the unique and often obscure opportunities that abound, and the threats that lurk at every turn require a dramatic change in management of the farm business – a team is needed to make the critical future-determining decisions.
Our current farm owner/leader/managers are exceptional decision-makers. They are adept at collecting information and seeking input to make decisions. They, however, often lack the experience and skills to lead and participate in team decision-making. Team decision-making requires the involvement of team members in both the information gathering and in dialogue and debate to reach a decision. This discussion, debate, synergy and team support for the final decision is increasingly necessary for farm businesses to thrive.
Fifty years ago, the family involvement was almost universally one family. Today, most farm businesses have members of more than one related and/or unrelated families. The challenge is to develop team decision-making structures that enable the farm business to operate successfully while continually providing career enhancing opportunities for current and potential family and non-family partners.
Greater Leadership and Management Expertise Required
Today’s farm businesses have access to innovative crop and livestock research and education that will continue to serve them well. In my opinion, the same cannot be said for farm business management. Owner/leader/managers of farm businesses must greatly expand their reliance on leadership and management expertise and education.
Where do they look for expertise on team building, chief executive functions, chief financial officer functions, etc.? Certainly they can continue to look to Cornell Dairy Executives, TEPAP, Dairy Strategies, and a short list of other specialists in agriculture. They, however, must increasingly look outside of agriculture.
This search should be guided by the recognition that farm businesses are predominantly family businesses. The research, professional development and consulting expertise in that field that can work collaboratively with what exists within agriculture.
In the introduction, we noted that while my father rarely left the farm, my brother has benefited from expertise within agriculture, availed himself of opportunities outside of agriculture, and even circled the globe in his continuing growth as a leader of a farm family business. Successful farm owner/leader/managers will increasingly learn how to lead and manage with the help of a broader set of agricultural and non-agricultural sources of expertise.
The challenge of leading and managing a farm – a family business – is immense. By focusing on the three elements outlined above, great strides can be made toward farm business success.
I continue to develop this framework as we further develop the Farm Business Success in Turbulent Times Program. I encourage you to share your ideas and thoughts with me.
Full steam ahead,
Bob Milligan is Senior Consultant, Dairy Strategies, LLC, and Professor Emeritus at Cornell University. Contact him at 651 647-0495 or [email protected].
Milk Futures Will Remain on Edge, Along with Nerves
EHedger Afternoon Grain Commentary 8-8-2011