Do you ever make business decisions for sentimental reasons?
Hard-nosed business people decry the fact that farmers often let sentimentality overrule practicality.
Farming is a business, they argue. It’s no different than other businesses and there’s no room for an unreasonable attachment to land or belongings.
It’s true that emotional attachment shouldn’t be the ruling force on your farm, if you hope to be successful. However, a cold, stoic approach to a family-owned business isn’t appropriate either.
If you’re part of a multi-generational farm, there’s a justifiable pride in knowing that your grandfather or great grandfather homesteaded the land you’re now farming. Your current prosperity and lifestyle is based on a lot of toil and sacrifice from the generations that came before.
Does that mean there will always be a farmer in the family? Does it mean the land can never be sold outside the family? No, but the attachment to history is a strong bond to consider.
During the history of a farm, there are often times when an unbiased financial analysis might indicate that selling out makes the most sense. In fact, you can almost always make this argument.
Just look at farmland values and how high they are compared to the productive value of land. By this measure, we should all cash in, take our money and run. Land has always been worth more than its productive value would dictate, but the gap has widened.
Land has also proven to be a great investment, particularly over the past decade. In addition to being farmers, we’re really land speculators. Where else could you have parked money to see such a dramatic growth in value?
Of course, this hasn’t always been true.
From the early 1980s to the early 90s, land values fell in many parts of Western Canada with a particularly steep decline in Saskatchewan. The farmers who sold out or who were forced to exit the business missed out on the big upturn.
Some producers held on by their fingernails. In the end, it has proven to be a good business decision.
When a farm has no family successor, do you sell the land or rent it out? The decision to rent may be a business decision, but it may also have sentimental undertones. You don’t want to be the one who sells the family farm. When land is ultimately passed to a generation with no connection to the farm, it’s much more likely to be sold.
Sentimental value sometimes goes beyond the land and the farm’s history and can reach epic proportions. Maybe you want to retain and eventually restore that old tractor that was your dad’s or your grandpa’s. That might make a nice hobby, but you don’t want the farm littered with old equipment.
Can you imagine not culling an aging cow for some sentimental reason? This probably happens more than we care to admit.
Are there practices that continue on your farm even though they make little sense? Are some things done a certain way because that’s how they’re always been done?
Of all the different types of family owned businesses, farms are probably the most prone to sentimentality overriding common sense. To a certain level, it’s understandable and can even be beneficial. But recognize when it gets in the way of sound business decisions.