Making sense of the numbers

This series looks at how farmers, agriculture consultants and service providers are professionalizing agriculture by integrating the many skills required by today’s complex and challenging industry.
 You can follow the entire series here.

TUXFORD, Sask. — Bartt Chute hates looking at some of this year’s production and profitability numbers on his farm.

It’s break-even at best for a lot of crops when he includes fixed costs.

However, at least he knows where he’s standing. He think that’s not true for lots of farmers, who have become accustomed to years of high profits and not having to obsess about the basics.

Now that profits are disappearing from western Canadian grain farming, Chute thinks a lot of farmers need to get serious about studying their farms to see what adds up and what doesn’t.

“If you don’t have those numbers, you’re flying blind,” said Chute, who operates a grain farm near Tuxford with his wife, daughter and son-in-law. “You just don’t know.”

Chute is one of the early Prairie adopters of sophisticated farm marketing.

He became serious about pricing and hedging when he realized how much money could be lost from haphazard pricing and sales decisions.

He and a few other farmers invested in the Market Maximizer company when it formed two decades ago. Since then, he’s been actively involved in his farm’s marketing, seeking out farmers across the Prairies to compare and contrast not just sales strategies but also profitability issues.

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His son-in-law is a professional agronomist, so he also has expert on-farm agronomic advice that Chute combines with decades of his own farming and vocational agriculture training from the University of Saskatchewan.

However, in Chute’s farm office on this grey, windy day in late September sits Kim Gerencser, a farm management adviser from Regina who Chute hired to provide an even better understanding of his profitability numbers.

As well, he doesn’t trust himself.

“It’s essential that you have another set of eyes look at what you’re doing, to take the emotion away from the decisions,” Chute said.

“Every other business that operates in North America has some kind of an advisory board or a board of directors or something that gives them another set of eyes that looks at what they’re doing.”

Gerencser also belongs to the don’t-trust-yourself school of thought, having his own adviser-mentor to take a look at what he is doing.

“You cannot consult to yourself.”

Farm financial management advice isn’t as common or as popular yet as agronomy or marketing advice, but Gerencser, a former banker, thinks it is the next wave of advice in the ongoing professionalization of farming.

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However, he said a lot of farmers start to lose interest when they hear about what he does and the kind of analysis he offers.

“Their eyes glaze over,” he said.

“That baffles me when you think about the amount of risk they’re taking on.”

That’s not true for Chute, who is a numbers guy and wants to make sure his farm is set up right. He doesn’t want to leave his family in the lurch unexpectedly through some flaw in planning.

“I want to get a better handle on the profitability of the farm,” he said.

“I think there is a certain segment of the farming population that has been taking advantage of the high prices to invest in land and equipment, and I think some of them are maybe extended farther than they should be.”

Contact ed.white@producer.com

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