farmgate: Have You Adopted The Skills Of Successful Farm Operators?
Faced with lower crop prices than a year ago and higher input costs than a year ago—with the potential for profitability in doubt for many farmers, what expertise do you have that will contribute the most to your success? Is it machinery management? Is it the ability to select the right corn hybrid and get it in the ground on the perfect date? A recent survey identified those skills, so let’s see if you agree with some of more successful farmers in the Cornbelt.
Chief Executive Officer. That is the name plate on your desk and your office door. And Purdue’s Mike Boehlje says farmers need to become more like corporate CEO’s to successfully compete in today’s environment. He says that includes leadership, relationship management, and strategic thinking. Boehlje assembled the survey taken by the organizers of Purdue’s Top Farmer program, and in their December newsletter Jason Oliver and Bruce Erickson said farmers rated financial management skills and risk management skills as most important to their success, but when those were analyzed, success in financial management was dependent upon production management and personnel management.
As a result, Boehlje says, “While those CEO-type skills are likely important going into the future, the survey indicated that for farmers in business today, their success appears to be more built on the basics of producing their crops, tending to their livestock, and managing their work force.” What are those skills? They include:
• Production management
• Procurement and selling
• Financial management
• Personnel management
• Strategic positioning
• Relationship management
• Risk management
Those seven characteristics or skills were offered to several hundred farmers in survey to find out what they believed were the most important to have to be successful, and if they had actually adopted those skills. The scores indicated the respondents in the survey were short of adopting the important skills by 8%-15% for six of the seven. Personnel management was only rated 51% as an important skill, compared to the 81% given to financial management. At the same time, only 31% of the farmers indicated they put personnel management skills into practice on their farm.
The farmers who completed the survey were also asked a number of other questions that revealed information about their financial success, and when that characteristic was crossed with the importance placed on the skills, it was obvious that the more successful a farmer was, the more emphasis was placed on implementation of that given skill. For each of the seven, the greater the profit, the higher the adoption of each of the seven characteristics. While there was only a 9 point spread in the adoption of risk management skills from the under $50,000 profit to the more than $200,000 profit farms, there was a 21 point spread on personnel management and an 18 point spread on production management.
The Purdue researchers say prior studies have shown that farm profitability increased until the operator reached the age of 50; and that younger farmers who take on more debt are willing to adapt more skills to grow their business.
Summary:
Management capabilities are critical for success, and farm operators should look at their skills to determine which they have adopted and where improvements could be made. Financial and risk management often seem to receive the most attention, a subset of production management issues can easily bolster the potential for financial management success.
Posted by Stu Ellis on January 6, 2009 12:40 AM to farmgate