I’ve just been rereading an editorial I wrote 10 years ago. Such things happen to all of us from time to time when we stumble across a note in a drawer or a friend we knew at the time.
If nothing else, it teaches humility.
The editorial had to do with the contradictory signals farmers were getting from the market, with strong prices saying it was to expand, and high land prices saying it was too big a gamble.
Surely, I said, by 2018 the winners and the losers would be clear.
In a way, I think they are. But not at all in the way we thought.
Back then, the crucial choice seemed to between being fast and bold with your expansion, or slow and cautious.
To help choose the right strategy, I could only go back to the three questions that business schools always teach for such quandaries.
The first question is to ask yourself about the long-term outlook for your principal products, and for your sector overall. We’ve learned a lot about this in the intervening years, including that our answer to this question has to be tightly bound up with our expectations for the Canadian dollar.
Overall, we’re less assured than we were a decade ago, especially because production has surged to incredible heights. But we shouldn’t overlook that global demand is amazingly strong. If we’d had today’s yields a decade ago, it feels like we’d have been selling crop for pennies a bushel.
It’s important to remember that we’re only one difficult season away from a potential weather market, although this is hardly the basis of a business plan.
That brings up the second question. It’s also very important. How is your performance in the field and in your accounts compared to other producers?
Nothing reduces risks more than being competitive.
Next, the business profs would tell us to ask how our financial resources compare to others in our sector. In other words, if times get tough, can you hang on? If the farm beside you comes up for sale, can you expand?
One of the great lessons of this past decade, though, is that we must add a fourth question.
How aggressively have you been adopting more sophisticated business management?
I highly recommend you read Maggie Van Camp’s excellent “Governing the farm” article in our March 13, 2018 issue, based on her interview with Saskatchewan seed grower Steve Tomtene. In fact, get your magnifying glass out.
Steve’s solutions don’t have to be your solutions. Every farm is different, not only in size. But are you matching his willingness to look everywhere he can to adapt what he finds to his own needs.
His story wasn’t there to tell 10 years ago. Now it seems a harbinger of what must come.
Are we getting it right? Let me know at [email protected].