When you’re a farmer, it doesn’t take long to slip into financial difficulty. Management decisions in the 1980s, 1990s and into the early 2000s — especially around debt — helped contribute to degrees of financial hardship. The problems were often compounded by factors outside a farmer’s control, including low commodity prices, high interest rates and […] Read more
Author Archives
Leadership role increasingly important on today’s farms
There are aspects of managing farms today that didn’t appear on the radar screen in years past. One such aspect is human resource management. It wasn’t that long ago when the broader function of managing human resources on a farm did not warrant a lot of attention. This has changed. Even for more modest operations, […] Read more
Timing of focus on farm business management evolving
The landscape of farm business management continues to evolve and I think for the right reasons. Years past, it was extremely rare to have a July meeting with families about managing their businesses. There was a pattern of the work we did with farm families: November to mid-April — It was a busy time with […] Read more
Understand ‘why’ when facing management challenges
The following is an excerpt taken from an email I received from a farmer. “I just a had a scenario where I had two guys (employees) standing in my office doorway telling me two different things. “Guy 1 — We have US$1,300,000 hedged at 76.2 cents. We should look at our strategy on Monday. The […] Read more
Be aware of transition within transition for succession
When people talk about succession planning, they’re really talking about transitioning the ownership and management of the farm to the next generation. The transition of ownership will be to the next generation who will be actively farming and often, to siblings (or cousins) who aren’t … who own assets or shares but who won’t be […] Read more
Financial efficiency in multiple entity farm structures
The article I submitted last month discussed financial efficiency, which is defined as the ability of a farm business to use its resources (inputs) efficiently. There are three groupings of financial efficiency, in which expenses are categorized to yield margins and ratios: production expenses (fertilizer, chemical, seed, crop insurance, feed, veterinarian) operating expenses (fuel, repairs […] Read more
Measuring financial performance starts with budgeting
Analyzing and managing financial performance can be both simple and complex, depending on what you’re trying to understand about it. In it’s most simple terms, financial performance can be defined as sustained positive cash flow. Positive cash flow comes from the profit being generated by the farm business, and that’s where the complexity comes in. […] Read more
Gross margin efficiency benchmarks are important tool
Financial ratios can be useful tools to analyze farm business performance. A great example of this is gross margin efficiency. Expressed as a ratio, gross margin efficiency measures how efficiently a farm uses specific, productive inputs. To demonstrate, the calculation looks like this: gross margin divided by gross revenue equals gross margin ratio. Gross margin […] Read more
Make sure you are getting the best use out of your time
Here’s somewhat of a rhetorical question: what are you doing right now? And then a follow-on question: what should you be doing right now? The second question warrants some discussion. A farm business requires a considerable investment in capital — assets such as land, buildings, equipment, livestock and quota. However, an investment is also required […] Read more
Farm finances within family definitely worth investment
Few farmers wake up in the morning excited about the prospects of discussing farm finances with the family. This is especially true when the discussions involve the next generation. Farmers find these discussions difficult for many reasons: the topic encompasses a broad area and can include financial recordkeeping practices, purchase and sale decisions, capital investments, […] Read more
