Sometimes you have to take a leap of faith to move your farm to the next level.
There will always be caution flags signalling that this isn’t the right time for a major move: the economy is unstable, the long-term weather forecast is worrisome, the price of land is too high, you’re just not ready.
These caution flags can come from friends, family and analysts.
You can never be certain whether this is actually the right time for a major farm expansion, for quitting your job to farm full time, to move back to the farm, to make a seismic change in the direction of the farm.
Small decisions are made all the time, but incremental change isn’t always enough. To remain relevant and competitive, farm businesses need to advance. As they say, if you aren’t moving ahead, you’re falling behind.
For young people wrestling with whether to take over the family operation, circumstances will eventually force a decision. The same is true for aging farmers. Eventually, they aren’t going to be farming anymore.
Timing can make you look like a genius or a fool.
Expanding a grain farm in the early 1980s was bad timing. Soft commodity prices, soaring interest rates and drought-reduced production caused land prices to steadily drop in much of the Prairies from the early 1980s to the early 1990s.
Many went out of business, while many others wore the financial wounds for a long time.
It’s been the cautionary tale that was used to discredit expansion aspirations for an entire generation. What if we hit another huge downturn like we did in the 1980s?
Of course, expansion about 10 years ago was the best of timing: record low interest rates, great farm profitability, rapidly rising land values.
In hindsight, many of us wish we had borrowed more money and been more aggressive.
Has the window of opportunity closed? Is land now too expensive to make major expansion viable?
Land always seems expensive relative to its productive value. Only in the rearview mirror does it ever appear to be a bargain.
In the beef business, expanding the herd just ahead of the BSE disaster of 2003 was the worst timing. Expanding three or four years ago would have been great timing.
Raising elk was a lucrative business in the early 1990s when the market for antler velvet was booming. Unfortunately, the market has never really recovered from the disruption caused by chronic wasting disease.
On the other hand, bison production has survived and thrived. As well, organic production of all types has proven to be much more than a passing fad.
The supply managed sectors of dairy and poultry, which have been under threat from international trade negotiations for the past 25 or 30 years, still include some of the country’s most profitable and stable farms.
Production quota has been a great investment despite all the caution flags.
Sometimes analysts get it right, but they can’t see the future either. Unbridled optimism is usually reserved for those who have a product or service to sell. Those who are selling advice tend to err on the side of caution.
Small steps aren’t always possible. You can’t be a little bit married or a little bit pregnant. Farming can be a hobby, but to be successful it needs some scale and a profit motive.
Do your homework, crunch the numbers and acknowledge the risks. But in the end, you need to follow your heart and your gut instincts. Reward rarely comes without risk.