We’ve all heard it. There’s that proverb that says farmers make their worst decisions in good times. Well, after the last decade, it’s pretty clear that it just isn’t true.
When we think about innovation in farming, it’s no surprise that we all rush to point at farm machinery, smart phones, new genetics, and new field and barn practices.
As we at Country Guide get into 2021, however, it’s clearer than ever that if we want to be on the cutting edge of today’s farming, and if we want to be talking about the innovations that matter the most and have the greatest financial impact, we have to be talking business.
That doesn’t mean that what happens in the field and the barn doesn’t matter. I’m not saying that at all. No one thrives in agriculture without excelling at production.
The standard rule in MBA programs is that, no matter what the industry, any CEO should spend 80 per cent of their time making sure they’re producing the right product at the right cost and at the right time, and 20 per cent on business management.
That has always sounded about right to me, and still does.
But let’s get back to what I said at the top of this column. In the last decade, which innovations have paid off the most on Canadian farms?
Of course I can’t prove that it’s true on your particular farm, or even for farms overall, but if we’re talking net income, not gross, and we’re including net worth too, ask yourself how the incorporation of Canada’s farms would compare with, say, self-steer technology.
Yes, yes, I know, grain carts and huge-capacity combines have made it possible for a single crew to harvest more acres in a day than anyone could have imagined a decade ago. But what about the impact of succession agreements and capital gains management?
I can go on and on, i.e. what about benchmarking of the type that CTEAM’s Larry Martin has pioneered and that is now being used by BDO, and innovative systems used by other advisors, that help identify exactly what targets you should be setting for individual cost centres, and how much of your own effort you should be expending where.
We should also take into account the benefits of accessing professional advice, whether that’s an accountant, a lawyer, or, more innovatively, an advisory team of all your key advisors, all working together.
Then, of course, there are the benefits of peer groups, which, if you talk to farmers who have joined them, are hard to dismiss. Plus the benefits of HR management, of on-farm meetings, of mentorships and a mid-career education strategy.
We’re thinking about this at Country Guide at this time of year because we’ll be writing about all these strategies and more in the coming weeks and months.
I scanned the list the other day and wondered how many of these stories we would have considered writing five or 10 years ago.
Agriculture is different today. Business skills are a big part of the reason why.
Are we getting it right? Let me know at [email protected].
Updated, Jan. 27, 2021: The article previously mentioned BMO when BDO was intended.