5 Best Management Practices for 2019

February 15, 2019 04:46 PM
Farmers must have a goal of being a high-revenue and low-cost operation. 

Why are some farmers more profitable than others? How do some farmers find opportunity in tough times? “Production is important but focusing on the business side of farming has become the dividing line,” says Jim Knuth, senior vice president, Farm Credit Services of America. 

The macroeconomic forces at play in the grain markets point to continued low-margin environment for farmers, Knuth says. This means farmers must have a goal of being a high-revenue and low-cost operation. 

“Today’s farmers need to spend as much time running their business as they do running their combine or tractor,” he says. “Focus on getting better, not just getting bigger—bigger alone won’t solve issues.”

Focus on financial acumen.

With today’s thin profit margins, a guess at your financial standing won’t cut it. “You cannot look at the financials or business management practices once a year,” says David Kohl, professor emeritus of agricultural finance at Virginia Tech University. “You have to constantly monitor them. What created deviations? Was it something we did positively or negatively from a management decision?”

Manage time wisely.

Farmers should follow the 80:20 rule, encourages Danny Klinefelter, professor emeritus and Extension economist at Texas A&M University. “Around 80% of your results come from 20% of what you do,” he says. “It’s that way on almost everything. Do first things first. So many people never reach their long-term goals because they spend too much of their time doing second things first. Prioritize. Delegate or hire it done; you can’t do it all.”

Be proactive in cutting costs. 

Farmers who are surviving and even thriving in the fifth year of a down cycle in grain production are using a few key business strategies, Knuth says. “They have found the sweet spot between maximizing profits versus maximizing yield or minimizing costs,” he says. “To adjust to this low-margin environment, they have sold under-performing or non-performing assets.” Also, they have proactively negotiated cash rent prices and are using or exploring flex leases. 

Kohl encourages farmers to look at their business and identify three areas to improve, such as your grain marketing, asset utilization or yields. “Try to be 5% better in about three areas—never more than three—or you lose focus,” he says. 

“A 5% increase in price received, a 5% decrease in costs and a 5% increase in yield will often produce more than a 100% increase in net returns,” Klinefelter adds. “The effect is cumulative, multiplicative and compounding.”

Execute a marketing plan.

To be successful in grain or livestock marketing, farmers must make it a priority by dedicating time, Knuth says. “It’s not the last thing to do, the first thing to do.” Knuth encourages farmers to study normal market cycles and do pre-harvest marketing. Also, don’t try to shoot for the highest market price—just a profitable price. “If you try to chase the last dollar, you rarely catch it,” he says. “We tend to see market highs and market lows in the rearview mirror.”

Aim for continual improvement.

The most dangerous phrase in business, Klinefelter says, is: that’s how we’ve always done it. “It is an economic reality that for your business to succeed and continue successfully beyond you, management must learn, adapt and continuously improve at the rate set by the leading edge of the competition and not by your comfort zone,” he says.

Today’s successful and profitable farmers are lifelong learners, Kohl says. He encourages farmers to attend three to five educational opportunities annually. This will help you look beyond your farm and garner new ideas. 

Back to news


Spell Check

Andrew Scot
London, AR
3/29/2019 02:31 AM

  We offer financial advice to our clients, companies seeking debt financing and looking for working capital to start a new business or expand their existing business. Interested parties should contact BETTER LOAN FINANCE for further information contact:betterloancompany@gmail.com

Andrew Scot
London, AZ
3/29/2019 02:30 AM

  Hello Everyone out there! My name is D Lewis, from Haleem,Netherlands I am using this medium to announce to the general public on how Andrew Scot Investments Company restored happiness to my home again, through the help of Mr Andrew, When all hope was lost they granted me a loan sum of $200,000 on the 30 of January 2019 to settle my debts and start up a business of my own. They saved me and my family from loosing our home as we were not able to pay out tax bills. I am writing this message cause I feel it might be important to you out there seriously in need of a genuine loan in other for you not to fall into the wrong hands in search of a liable loan,I strongly advice you contact this company via email(betterloancompany@gmail.com)

Reacheal Mills
Los Angeles, CA
2/16/2019 06:39 AM

  I AM FINIALLY OUT FINANCIAL BONDAGE THANKS TO MOORE LOAN COMPANY (mooreloancompany@yahoo.com) Or text +1(414) 454-9493. I am Reacheal Mills currently in California USA. I would like to share my experience with you guys on how I got a loan of $170,000.00 USD to start up a new business. It all started when i lost my home and belongings due to the bank draft I took to offset some bills and some personal needs. I became so desperate and began to seek for funds at all means. Luckily for me I heard a colleague of mine talking about this company, I got interested although i was scared of being scammed, I was compelled by my situation and had no choice than to seek advise from my friend regarding this very company and was given their contact number, getting intouch with them really made me skeptical due to my past experience with online lenders, little did i know this very Company "MOORE LOAN COMPANY". was a godsent to me and my family and the entire Internet World, this company has been of great help to me and some of my colleague and today am a proud owner of well organized business and responsibilities are well handled all thanks to of Robbinson Moore (mooreloancompany@yahoo.com).. So if really you are genuinely in need of a loan either to expand or start up your own business or in any form of financial difficulty, i advise you give Mr Josef Lewis of Progressive loan the opportunity of financial upliftment in your life Email: mooreloancompany@yahoo.com OR Call/Text +1(414) 454 9493. Thanks.


Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by QTInfo.com
Brought to you by Beyer