Today’s farm operations are growing ever more complex. There are crucial production, financial, human resource, marketing and other management decisions to be made, and it is impossible for farmers to be expert in every facet of the business.

Enter farm business advisors.

Hiring advisors and consultants isn’t a new concept, as farmers have outsourced accounting and legal management for years. But now, the range of available specialists is wide and some of their practices are far from traditional.

According to research from Farm Management Canada, farmers who routinely work with business advisors are significantly more likely to regularly and consistently implement business management practices. These include using a written business plan with a clear vision and future goals, and reading and analyzing financial statements.

Trish Fournier is a business advisor who set up her own firm — South Coast Advisory Solutions — nearly two years ago. When small or medium-sized businesses have sophisticated needs but it is not practical for them to hire full-time executives, she has a creative solution.

Fournier becomes part of the farm’s team, taking on roles as a CFO-for-hire or a strategic advisor or management coach for as long as she’s needed.

A new kind of advisor

Fournier worked as financial manager and then CEO of Lake Erie Farms for 20 years until the company exited the industry in 2019. Compared to most farms, the structure of this tobacco and greenhouse business was unique — it was family-owned but not owner-operated.

“The business had transitioned down through multiple generations and the family was spread out in three different countries so they went the route of hiring people to manage the company,” says Fournier.

Throughout her career, she saw many benefits to having a formal board of directors and staff management team working together.

“Having different perspectives and a range of skill sets on an ongoing basis was beneficial for Lake Erie Farms,” she explains. “I worked with different growers in the tobacco and greenhouse sectors and we made a really good team. Whether it was a problem or opportunity, I would come at things from a completely different angle than they would, and it would get them thinking outside the box. We always ended up with better results than any of us could have come up with on our own.”

When word got out that Lake Erie Farms was winding down and Fournier was selling off divisions of the company, she started to receive queries about her next move.

“It got me thinking that there is a real need in small business — particularly in agriculture — to have someone who can become part of the management team, more so than your traditional advisor.”

She knew it wasn’t practical for most farms to hire executive managers full-time but wanted others to experience the benefits of doing so. That’s when the vision of her new role came to her —businesses could bring experience and new skills to their teams if they could hire an executive and share that person’s time.

Traditional farm advisors typically meet with clients annually and often review historical data, while traditional business consultants typically follow a template with a set number of meetings and a report presentation. But Fournier’s model is not one-size-fits-all. “I’m more looking to become an ongoing team member.”

She currently works two days per week as a CFO-for-hire for one farm client. She meets with others as a strategic advisor or management coach on a weekly, bi-weekly or monthly basis, depending on their needs.

Business planning is key

Fournier sees formal business planning as the key to optimizing daily management decisions and laying the groundwork for future growth. Writing a superb plan also attracts investors and instills confidence in banks and lenders, she adds.

As farms grow in size and management complexity, farmers are pulled in many directions and often in areas they are lacking skills and comfort in.

“Farmers really want to spend time doing what they are passionate about and consequently those areas tend to be where they can have the most impact,” explains Fournier. “But when they get pulled away or stuck in the details, they’re not able to think about the business from a strategic point of view or use analytic tools to manage smarter.”

By injecting time into the business planning process and writing a formal plan, farmers are forced to think beyond the here and now and focus on what they envision success to look like.

“By looking at strengths, weaknesses, opportunities and threats in a very deliberate way, it helps create a strategy. Once you have that, you can break it down into smaller pieces and create an action plan,” Fournier says.

When a solid business plan is in place, farmers can better prioritize business activities and better communicate with people about their business, and they are more confident in decision making. Living out an annual business plan and using it to assess performance also improves family harmony and reduces stress.

How advisors can help

If business planning is new to you and your business, there is no shame in asking an advisor to guide you through the process. “Like all new things, it might be outside your comfort zone to start but management advisors are experienced in doing this with many other businesses. We know what questions to ask and what tools to use,” says Fournier.

If you already have a business planning practice, advisors like Fournier can support the implementation of your plan and help to hold managers accountable moving forward.

Advisors can also bring skill sets to the table that may not be represented on your internal management team. Fournier specifically sees a need for this in family-run businesses. “Family farms are especially disadvantaged by being isolated and often that means the people involved are looking at things similarly.”

In terms of financial management, for example, farmers may only be reviewing financial statements at the end of the year. Through what she calls the “digging deeper component,” Fournier would advise combining interim field and operational data with annual financial ratios to analyze trends. When you do that on a timely basis, you can make production decisions and see the financial difference they make. You can learn a lot from the data, make adjustments and become more efficient, she says.

Fournier is used to being the outside perspective challenging the status quo. But time and time again, she has seen new ideas spark more creative thinking and ultimately better business solutions.

“If you’ve got a management team where everyone respects each other and their different skill sets, you’re going to have a lot more diversity and be stronger as a whole.”

Adding to the team

So, is Fournier’s advisory model working in agriculture? Well, Ryan Schuyler of Schuyler Farms thinks so.

He and his brother Brett are the next generation of managers in their family’s business of producing apples, sour cherries, corn, soybeans and sheep near Simcoe, Ont. They joined their father and uncle in the farm corporation 10 years ago.

The brothers have since led the business through significant growth, including an amalgamation that added 800 acres of orchard and a cherry processing facility to the operation overnight.

But notable expansion usually brings new management challenges. As the business became more complex, the Schuyler brothers recognized the need to expand their management structure by adjusting current responsibilities and adding new roles.

After seeing the success of Lake Erie Farms, they added Fournier to their team to advise them through their management transition. Although the Schuylers were already using a written business plan when they initially met, they have further developed it together.

To Schuyler, planning is essential to success in agriculture. “If we didn’t have a business plan, we would just keep doing things because they have always been done. The business is evolving too quickly to just put your head down and farm,” he says. “We have to be constantly looking at what we can do differently and to figure that out, we have to have someone sitting back and analyzing our operation.”

Why consider a senior management advisor?

Trish Fournier, South Coast Advisory Solutions, shares 10 ways a senior management advisor can add value to your small or medium-sized business:

1. Expert advice: Day-to-day access to experience-based advice leads to more informed management decisions. It also broadens your business network, which can help you identify new opportunities and ideas.
2. Expert analysis and real-time management reporting: Receiving accurate and reliable financial information in a timely manner provides an ongoing analysis of business strengths and weaknesses and allows you to adapt in real time.
3. Strategic clarity: A well-developed company strategy — including a vision, mission and values — frames the future of your business and aligns your actions with your goals.
4. Growth: Developing your business through improved planning, performance and productivity means sustainable growth based on sound business fundamentals.
5. Risk management: New insights prepare your business for upcoming shifts in the industry and help to minimize operational risk while significantly reducing uncertainty.
6. Profits: Improving sales, minimizing costs, streamlining operations and controlling inventory, payroll and other factors lead to increased profitability and improved liquidity.
7. Systems and processes: Putting systems in place to optimize staffing and reduce errors gives leaders the confidence to delegate tasks or be able to take a holiday.
8. Communications: Superior results come from good communication, including strong collaboration and conflict resolution.
9. Team building: Ensuring the right people are on the right team in the right roles is key to success. Mentorship is crucial to developing  the skills of key employees and future leaders.
10. Personal health: Improved time management and greater productivity reduces stress and anxiety while bettering your overall work-life balance, both physically and mentally.

– This article was originally published in the March 2, 2021 issue of Country Guide.

The post Summer Series: Building a better farm business appeared first on Country Guide.

Glacier FarmMedia – Transitioning management and ownership of a farm business from one generation to the next can present many challenges. While there are numerous resources to support farm founders in assessing their business and planning their transition into retirement, not many advise young farmers on how they should prepare.

Elaine Froese, a farmer from southern Manitoba who has spent most of her career working as a farm family coach, has advice for the incoming generation. 

“I think founders are wanting their successors to prove themselves so I often ask young farmers what they are doing to prove their passion and commitment to keeping the farm viable and profitable going forward,” she says. 

Froese’s first recommendation is for young farmers to become self-aware by identifying their skill set and passion. Personal style assessment indicator tools can help. Knowing why they want to farm and being able to clearly explain why it’s important to them is key, says Froese.

Identifying values is another crucial exercise for young farmers, including how they rank teamwork versus independence.

“Are they willing to work in tandem with the founder or do they want a sub-enterprise that they can call their own?” she asks, noting that some farmers start by running a custom operation under the umbrella of the larger business as a way to gain experience and prove their commitment.

It has become clear that the next generation of farmers values having a life outside of work. “They want to have time with their family and they want to stay married, so they will not work 100-hour weeks like they’ve watched their parents do,” says Froese.

As with many tough issues, this newer school of thinking requires effective communication about reasonable expectations. In other words, the younger generation needs to be able to explain why they value time away from work, even though there may be judgment about this from their family.

Froese urges young farmers to see a financial planner to discuss their personal wealth as soon as possible. By developing lifestyle and debt servicing plans and getting a will and life insurance in place at a young age, they will be more comfortable knowing what their business plan is going to cost when it is time to see an agricultural lender.

In a situation where the older generation is not open to discussing transition, Froese recommends young farmers try to find out if fear of conflict is one of the reasons.

“I’m just curious why it is so hard for you to come to a family meeting. Is it fear of conflict?” is a suggested way to ask.

If the answer is yes, it’s important to make transition conversations safe and respectful by hiring an objective, trained third-party facilitator. In a world of virtual events, there is no reason why a farm family can’t have an effective meeting with a facilitator in any location over Zoom, says Froese.

She encourages the use of “I think”, “I need” and “I want” statements to express emotions. For young farmers trying to start the transition discussion, this could sound like: “I think it’s time we have a facilitated family meeting. I need to have certainty about my future. I want you, as my mom and dad, to be protected.”

Frustrated young farmers can also write a letter of intent to their parents to explain their thoughts and feelings and ask them to consider a facilitated family meeting, suggests Froese. “Being clear is kind,” she says. “You get the behaviour you accept.”

The post Summer Series: Top transition tips for young farmers appeared first on Country Guide.

If you’re an avid Country Guide reader, you know that farm business planning continues to be a popular topic of discussion among advisors and management gurus.

Since the “Healthy Minds, Healthy Farms” study was released by Farm Management Canada last May, we have talked to farmers across the country who are regularly using a written business plan and reaping the benefits.

This winter we shared the stories of how a farm business plan drives Hannah Konschuh’s daily activities, how putting a plan on paper for the first time was a game changer for the O’Rourkes and how focusing on specific components of the plan provides the Cronins stability during uncertain times.

Statistically speaking, these farmers represent the minority. It turns out 74 per cent of Canadian farmers do not have a written plan.

But now that you know more about this management practice and how it contributes to financial success and improved mental health, maybe you’re giving more thought to starting your own plan. Or perhaps you are newly in the driver’s seat of a family operation and looking to adopt new management practices.

Regardless of your current situation, the big question remains: How do you get started?

Set strategic goals

For Kim Gerencser, senior manager with MNP’s farm management consulting team, the first step is to establish clear, tangible goals.

When guiding clients through the business planning process, he initially asks what their goals are. More often than not, his question is met with blank stares.

“Getting started with a business plan is probably the hardest step of the entire process because managers need to decide what they really want to achieve,” says Gerencser, who also serves as chair of the Canadian Association of Farm Advisors (CAFA).

Setting a goal to be as profitable as possible, for example, is not specific enough. “What do you want your farm business to look like in five, 10 and 20 years? Is the 20-year goal to successfully pass it on to the next generation?” Gerencser asks.

To break down this task, he suggests starting with short-term goals and evaluating what equipment or infrastructure needs attention within the next five years.

“It can be really challenging to define your goals but without this very clear first step, the planning process is doomed to fail before it even starts,” he says.

Assess the business

The next step is conducting an internal audit, or honest evaluation of the current state of the business. This means assessing the financial position but also where your farm is at in terms of management and production capabilities and human resource capacity.

In addition, Gerencser adds that family support and the physical and mental health of key owners and managers should be evaluated.

“What are your strengths? What are your limitations? Where is the business positioned to excel? Where is it positioned to struggle?” he asks. “We need to get a clear snapshot of where we’re at on day one so we know what we’re working with.”

Heather Watson, executive director of Farm Management Canada, encourages the use of the Online Farm Business Self-Assessment Tool. She advises that multiple members of the management team can complete the assessment and compare their results before continuing to help support the planning process.

The analysis completed at this stage can then be used to assess the previously established goals. If the goals are not realistic given the resources available, the first step of the process can be revisited. “It doesn’t mean that you have to change your goal but perhaps you can lengthen the time frame and add a new short-term goal that involves strengthening your resources,” explains Gerencser.

Plan your implementation

Once the evaluation is complete and attainable goals are confirmed, it’s time to determine what tactics need to be implemented.

Gerencser says it’s a phase in the planning process where a lot of people hit a roadblock. It can be overwhelming to identify what changes need to be made within your business, which means inertia can set in.

If this is the case for you, he stresses the importance of reaching out for help. He recommends seeking advice from your accountant, lawyer or banker first — an advisor who has seen many business plans but also knows your business.

“Asking for help is incredibly important but don’t just make one phone call and stop at that,” he suggests. “Make several calls to gather several different opinions so you can make the most informed decision possible.”

If your goal is to expand your business by 15 per cent in the next 10 years but cash flow has been identified as a challenge, for example, an advisor like Gerencser could help. Initially, he could analyze cash inflow and outflow but his findings may lead to the involvement of other advisors.

“If gross margin is insufficient, I could point that out but I’m not an agrologist so I likely can’t help you fix it,” he explains. “If the operating expenses are too high, I can help identify some strategies to help you rectify that but if overhead is too high, we may need to involve your banker.”

Write it down

As strategies and tactics are developed, it is key to record them in a written document. Many advisors, provincial ministries and organizations like Futurpreneur have their own business plan templates, but it is important to note that not all sections may be applicable to your farm.

Gerencser suggests part of the honest evaluation may be identifying what parts of a business plan are critical and which are less applicable to your situation.

Watson agrees that business plans can take many forms of complexity and the best planning resources are relative to the format and function the users are looking for. Above all, she notes that a solid plan includes both strategic and operational elements.

“Some people forget the strategic piece and maybe assume a business plan is the same thing as a budget,” she says. “The budget is part of it, but having a vision, goals and priority activities to meet those goals is key to creating the operational element.”

Gerencser knows the planning process seems daunting. It’s not the type of project you can tackle in an afternoon and it does require significant effort, especially when creating a plan for the first time.

Even so, he has no doubt that having a written plan is worth it. Says Gerencser, “The immediate and future benefits of going through this long and sometimes difficult process can be immeasurable.”

What’s in a plan?

A written business plan is a key tool that sets your farm business up for success. While the necessary components vary from business to business, here are eight sections that most farm business plan templates include:

1. Executive summary
A concise summary of the key points of the business venture and the purpose of the plan.

2. Business and ownership profile
A description and summary of the company’s past achievements and plans for growth. This section includes the ownership structure and the qualifications and experience of each owner.

3. The strategic plan
Present the vision of what you want the business to look like in the future and a mission of what the business is doing now to be viable and sustainable. This section includes an analysis of internal and external strengths, weaknesses, opportunities and threats (SWOT), outlines key performance indicators and lists short-term and long-term goals.

4. The marketing plan
Describe the industry you operate in, what products you market, who your target customers are, the quantities you plan to sell and the distribution channels you plan to use. If applicable, this section can include steps for attracting and retaining customers as well as strategies for pricing and promoting your products.

5. The production plan
Provide an outline of your operation. Describe the resources, production processes and key inputs required for production as well as a basic cost structure. This section is sometimes called the operating plan.

6. The human resources plan
Present the organizational structure including key employees and their education or experience. This section includes strategies for recruiting, hiring, training and disciplining employees. Detail salary and compensation information, a labour policy and a succession plan, if applicable. Name the external advisors who play a role in the management of your business.

7. The financial plan
This section details the business model for earning revenue. For existing businesses, include financial statements from the past five years and a monthly cash-flow forecast for the upcoming year. For new ventures, include projected financial statements for the first three years of operations and a monthly cash-flow forecast for the upcoming year. The financial statement should include an income statement, balance sheet, cash-flow summary, financing schedule and key ratio analysis.

8. Risk management and contingency plans
Present an assessment of potential risk events or incidents and describe the current processes for identifying, measuring and managing risk and detail management response strategies.

Sources: Alberta Ministry of Agriculture and Forestry; Farm Credit Canada; Ontario Ministry of Agriculture, Food and Rural Affairs.

– This article was originally published in the April 2021 issue of Country Guide.

The post Summer Series: A practical guide to writing your farm business plan appeared first on Country Guide.

While direct farm marketing has grown in popularity in recent times, it isn’t new to everybody. Some farmers have years of experience in this field, and if you’re considering starting a new direct-to-consumer business, perhaps this is the group to learn from.

Country Guide recently talked to three regional winners from Canada’s Outstanding Young Farmers, i.e. farm operators between the ages of 18 and 39 who demonstrate excellence in their profession.

Our go-to sources are the people behind Cutter Ranch, Wholesome Pickins Market & Bakery, and Our Little Farm, and they were recognized for their success in running direct-to-consumer operations with businesses that stack up in head-to-head competition with our top livestock and grain-and-oilseed farms.

With over four decades of experience between them, these farmers reflect on what they’ve learned on the front lines. We asked, what advice would they give someone looking to start a similar direct marketing operation?

Start small, act big

Tyler McNaughton & Sacha Bentall
Cutter Ranch, Fort Steele, B.C.
2018 B.C./Yukon Outstanding Young Farmers

Tucked in the southeast corner of British Columbia at Fort Steele, Tyler McNaughton finds business value in connecting first-hand with customers and making them feel part of the farm.

He and his wife Sacha Bentall started Cutter Ranch nearly 15 years ago. Today, the business provides lamb, beef and pork directly to consumers in the East Kootenays region as well as Vancouver.

In addition to keeping the customer top of mind, McNaughton encourages new direct farm marketing businesses to start small.

“We started with a very small sheep flock and really focused on learning how to farm the animal correctly, sell the animal and develop a business around that,” he explains. “The smaller your operation starts, the smaller your mistakes are going to be. And there’s inevitably going to be challenges, especially with a startup.”

But there’s a vital followup. Small business owners don’t have to act according to size. When you behave like a bigger company and do everything with business tenets in mind, you get sharper. And the sharper you can make the business when it’s small, the more success you’re going to have when it grows, says McNaughton.

Study your chosen sector, he says, so you have a really clear understanding of everything from how you’ll get the inputs you need in the beginning to how you’ll get the end product to the consumer at the end.

“You can be a small farm, but you still have to behave as if you are a grocery store, to a degree,” McNaughton says. “Continuity of supply is very important because customers are conditioned to wanting an array of products and convenience. In terms of timing production, we have to make sure we always have supply available.”

He also believes continual investment is key. Upgrading tools and equipment over time is partly why Cutter Ranch is well positioned for future growth.

In addition, he’s learned that farming and running a meat retail business are two very separate roles. While he and Sacha have always been considered full-time ranchers, the meat business is essentially their second job.

“The food market is evolving,” he says. “We have room to grow and we’ve also been at it long enough to feel confident investing in the farm, developing relationships and going after new opportunities.”

Get the right help

David & Jenn VanDeVelde
Wholesome Pickins Market & Bakery, Delhi, Ont.
2022 Ontario Outstanding Young Farmers

We don’t need to reinvent the wheel,” Jenn VanDeVelde explains. “A lot of people are doing direct farm marketing and almost all of those people want to share ideas and help each other.”

VanDeVelde, who operates Wholesome Pickins Market & Bakery in Delhi, Ont., with her husband David, values community and strongly advises other farmers to get involved in industry groups and associations if they want to get into direct marketing.

Resources available through groups like Farm Fresh Ontario and Berry Growers of Ontario have been invaluable to their operation, VanDeVelde says.

Equally important is seeking support from a farm advisor has benefited Wholesome Pickins, too. When their business quickly grew from a few employees to more than 20, the VanDeVeldes didn’t have the human resource policies and procedures to handle it. Instead of trying to learn on their own, they hired a consultant to set up a management system that’s easy to follow.

“It’s important to recognize when something isn’t in your wheelhouse and bring in someone who can help you,” she says.

Although their business now has a staff of almost 40, and although it would be easy for Jenn and David to stay behind the scenes attending to their essential managerial roles, the couple are rigorous about spending time getting to know customers.

They call it their key to success in direct farm marketing. Both make a conscious effort to be present in the farm store to speak with shoppers on a regular basis.

Asking for feedback and listening to customers has resulted in new products being added to the market and high customer satisfaction, which has likely played a significant role in the overall growth of the business.

“Word of mouth is your greatest advertisement, every time,” says VanDeVelde. “When people talk about you and tell their friends about you, you’re going to be able to grow and expand just based on that.”

She encourages anyone building a direct farm business to be their authentic selves. What does that mean? In short, be true to your own values and make decisions that align with your beliefs. It will resonate with people, she says.

Wholesome Pickins started in 2006 when the couple began diversifying their fourth-generation tobacco and grain farm by growing strawberries and selling them to consumers out of their driveway.

By 2010, they renovated a shop and gradually added fruits and vegetables, milk, cheeses, meats and more. Another expansion took place when a kitchen was added in 2013.

Today, they offer baked goods and a line of savory meals in addition to their own fruit and 70 to 90 vendor products.

VanDeVelde says every item available in the market has to pass the authenticity test. They source as many products as possible from Norfolk County and the rest from other locations within Ontario.

Although they are known as a “one stop shop” for cottagers travelling to and from Lake Erie, they don’t offer items like pop. “You can go anywhere to buy a can of pop so that doesn’t feel authentic to us. We want you to come here to buy Hitchhiker lemonade and other products that are made in Ontario, because those are the stories that matter to us,” she says.

Lay a solid foundation

Jim Thompson & Geneviève Grossenbacher
Our Little Farm, Lochaber-Partie-Ouest, Que.
2021 Quebec Outstanding Young Farmers

It’s a question that Jim Thompson has been asked before. He’s a Quebec-based farmer who has mentored numerous people interested in organic vegetable production, the sector he has worked in his entire career.

To Thompson, it’s common sense that you shouldn’t start a direct farm marketing business without experience or an education in agriculture. But it’s common sense that he has seen some ignore.

“People seem to think that what we do is easy, and that they can quit their good-paying job to start growing vegetables,” Thompson says. “But this is a business where capitalization is high and the margins are often small. Without experience, you can lose your shirt quickly.”

Thompson spent six years working on vegetable farms and took a self-learning approach to studying agriculture academically before he and his partner Geneviève Grossenbacher started Our Little Farm in 2011.

Now, they grow 35 different types of vegetables and supply them to 375 families per week during their 16-week season. He credits the success of the farm to the solid foundation he and Grossenbacher were able to build based on their past experience.

But besides education in agriculture, Thompson’s biggest piece of advice for someone starting out in the direct farm marketing industry is to get to know the customer they want to sell to.

“A general marketing strategy is to segment the market into a target market, but that is hard to do for niche marketing because you might be overmarketing to a group that is actually not interested in your product,” he explains.

If Thompson was to look at the potential market of customers in the Gatineau and Ottawa area, for example, traditional marketing principles may encourage him to target neighbourhoods with higher household incomes. But it’s possible that this demographic frequents restaurants and spends a lot of time travelling, and that there are more families in lower-income areas who are interested in organic vegetables. You have to be careful about making assumptions, he says.

“Talk to potential clients to learn what they want,” advises Thompson. “Don’t expect that they are excited to eat what you’re excited to grow.”

He believes it’s important for customers to feel a connection to the farm. Those who buy from Our Little Farm appreciate that their food baskets come with a newsletter of recipes to make with the included vegetables.

“If you’re going into direct marketing, you have to think about the need you are fulfilling,” he says. “I’m not selling vegetables, I’m selling what to make for dinner.”

The post Taking a direct mindset to farm marketing appeared first on Country Guide.

In past, there wasn’t that much choice. The family farm got handed down from one generation to the next by way of the leader’s first-born son.

Claudio Fernández-Aráoz, author and executive fellow for executive education at Harvard Business School, says there was a time when most businesses transitioned this way because the measure of potential was physical strength and the strongest candidates were young males.

This shaped our perception over time and caused us to become unconsciously hardwired to think that men make the best business leaders.

Decades have flown by since physical strength was the key indicator of potential, but past choices and historical norms still influence decisions today.

There’s another side of the coin too. If parents in past automatically opted for the oldest son, the oldest son often automatically felt the job was his for the asking.

Those feelings of entitlement can still run strong. When children grow up working on the farm they may feel they deserve leadership and ownership.

On more and more farms today, however, this can become a problem with a solution. “The idea of entitlement can be very daunting to some families,” agrees Kelly Dobson, founder and performance coach at LeaderShift Inc. in Brandon, Man.

“But it can actually be addressed quite quickly.”

In fact, it can be one of the fastest issues to clear up during farm transition planning. “Entitlement,” Dobson says, “gets built up over unspoken beliefs about how the farm is going to work going forward. Once expectations are stipulated very clearly on behalf of the parents, the beliefs can be disbanded quickly and entitlement can vanish.”

That still leaves the big question without an answer, though. If the first-born bias is outdated and there’s no room for entitlement, how do you decide who actually is the right choice for the next leadership gig?

Get real about the job

Kim Siegers-Robinson, family business advisor and founder at Empower Planning Inc. in London, Ont., recommends you start by establishing a family employment policy.

“We need to be clear on what it looks like to work in the farm business, especially in a larger situation where there are many cousins in the family and not enough room for everyone,” she says. “A family employment policy creates a framework for accepting that there is a business structure and the future of the farm is not just based on family dynamics.”

Siegers-Robinson says the policy should outline what will be expected from family members who want to work in the business full-time. Do they need to pursue post-secondary education? Will the business fund their education? Do they need to work off the farm before coming back?

A family employment policy should also define the path for shifting from being an employee to being a leader and what is required in order to be a sound owner.

On the flip side, it’s equally important that it outline what happens if family members don’t meet the criteria or aren’t performing in their role.

“For people to feel it’s fair, there needs to be a fair process where voices are heard,” says Siegers-Robinson. “I like to see the generations develop this type of framework together because if they define it together, they will live by it together.”

Ownership versus leadership

On the farm, owner-operator is a commonly used business model but Siegers-Robinson advises her clients to think about these roles separately. Ownership and leadership are not necessarily one and the same.

Instead, Siegers-Robinson categorizes the roles family play in a business by four functions: owning, leading, working and supporting.

Leaders and workers have obvious day-to-day roles, but owners may act as workers and not leaders, or may not work in the business at all (in the case of minority shares for legacy purposes). Supporters could be spouses or other relatives who work off-farm jobs but come back to help during busy seasons.

“There’s a difference between owners and leaders; if families don’t split those two up, you have everybody cramming to be leaders because they want to own the farm,” Siegers-Robinson says. Instead, leaders should be chosen based on their interest and capabilities.

Who has leadership potential?

Whether there’s an employment policy in place or not, Dobson finds that many parents have an intuitive sense of who is the best natural leader in the family.

There is often a child who would likely be more comfortable working in the business and being an owner, Dobson says, or there may be one who shows more interest in owning and running the business.

“If parents are unsure who the leader is, they could be looking for a child who has a willingness to learn that’s twice as great as their willingness to take over,” explains Dobson. “In other words, it’s not as much about taking control of the farm as it is that they’re willing to learn all aspects of the business, including the areas they’re not strong in.”

Corporate parallels

Finding and developing future leaders to succeed current executives is a challenge in the corporate world, too.

Stacey Redford, head of human resources at Syngenta Canada, works with leaders of the company to identify ideal candidates for future leadership roles. They use a grid to evaluate people in two ways — one measures current job performance and how well they uphold the values of the company, and the other indicates a person’s potential to take on more and become a leader.

“As part of the succession process, we identify roles that are critical to the organization but we also look at what skills are critical,” she explains. “Strong collaboration, communication and big picture thinking are vital as a leader.”

Syngenta uses individual development plans and “pause to talk” exercises as a way for employees to communicate where they want to go in their career and what type of roles they’re looking for. Some people may demonstrate leadership potential but are actually not interested in leading people, says Redford.

Skill development

Once someone has been identified as a good candidate for leadership and shows interest, the next step is to look at training and development. At Syngenta, Redford notes that this includes opportunities to work on special projects as well as more traditional classroom-style learning.

For farmers who are looking to transition out of their business, she recommends figuring out which skills are going to be most important for the next generation and what type of development would be helpful.

Then get concrete about how you are going to help your future leader acquire the skills and the knowledge they will need. “It’s possible to transition a lot of knowledge over time but you need a longer runway and you have to be intentional about it,” Redford advises. “If you aren’t thinking about sharing knowledge over the next five years, you’re potentially closing that window for learning.”

In Dobson’s experience, farm families can’t start leadership development soon enough. In fact, he suggests that one of the earliest ways that parents can evaluate their children’s interest is to be as transparent as possible so the children understand the connections between the job and the overall business outcomes.

“The single largest missed opportunity is starting too late, which creates a very steep climb for a family member coming in to lead the business at an older age,” Dobson says. “There is a lot to learn and there is a lot of institutional wisdom to glean all at one time.”

On a day-to-day basis, Dobson advises leaders to begin by making time to inform and communicate with the next generation and include them in tasks they wouldn’t ordinarily do.

On his own farm, he takes his children to meetings with advisors and discusses business decisions with them so they build an understanding from a young age.

In addition to internal mentoring, formal coaching and courses like the National Farm Leadership Program can help to prepare future leaders for the job.

Outside employment is great for development too, says Siegers-Robinson. If the next generation learns how to lead away from the farm, they bring back confidence and they’re able to negotiate their return because they’re starting from a position of strength, she says.

Consider Plan B

But transitioning family leadership doesn’t always go as planned. In some cases, there isn’t anybody in the younger generation to become the leader. Or maybe there are good workers, but not good leaders.

While there is usually pressure and emotion involved in continuing a family business, Siegers-Robinson encourages current leaders to think about their legacy through a different lens.

“What a family has really created is wealth,” she explains.

Difficult as it may seem, in other words, not choosing a successor can be the right leadership decision, too.

Says Siegers-Robinson: “Sometimes you have to have that tough conversation and ask if you would rather squander the wealth that has been created, or if it would be better to monetize the sale of the business to somebody else.”

The 4 Big Questions

Who will make the best future leader on your farm? Leadership consultant Kim Siegers-Robinson suggests evaluating leadership potential by assessing four areas.

There’s a different way of looking at this too. if you’re young and want to be considered for future leadership on the farm, what can you do today to get better scores on each of these four areas?

Contribution: What contributions is this person making to the farm? (This does not mean how many hours they have worked.)

Character: Could they fill a leadership role in this business? What have they done to demonstrate their maturity level and values?

Risk tolerance: Can they bear risk? Not everyone can live with the level of financial risk that’s involved in farming.

Presence: Are they respected by employees, suppliers, in the community, etc.?

The post Which child will you pick to take over the farm? appeared first on Country Guide.

The couple had started their farm careers by growing tomatoes for sale through a wholesaler. Then, when the market changed, they adapted and expanded and began producing a variety of vegetables they could sell via a community-supported agriculture (CSA) model.

And it worked. They had succeeded with wholesale. Now they were succeeding with direct-to-consumer. The farm was making money. So it’s no wonder they were starting to trust their judgement.

But then the two diversified again. They launched the Canadian Ginger Company and set their sights on bringing a very novel product to market by working through traditional distribution channels. They had experimented with growing ginger for years, they had their production protocol down pat, and it seemed like getting into large retail chains was clearly the way to go for maximum exposure and steady sales. 

Except it wasn’t. Instead, marketing their new product through retail chains failed on both scores. In fact, sales flopped at larger locations and the Muellers had to rethink their business plan. 

So the couple turned back to what they knew — direct-to-consumer marketing. And now they have built their own success through social media and an online store. 

That means the Muellers are part of a small but growing group of farmers across Canada who are beginning to learn direct-to-consumer can deliver on marketing for a wider range of products than anyone thought. 

Like the others, the Muellers are finding this type of distribution creates a ripple of positive effects. First, there is the strategy of “making the price” rather than “taking the price” — a winner for the farm’s bottom line. Plus the buyer also gets what they want. In fact, in addition to getting a great quality product, buyers get two extra values: an opportunity to learn how and where their food was grown, and the chance to feel they’ve got insider access to a unique find.

[RELATED] Changing places

Health-inspired growth

Ron and Cindy both grew up in farming families and met while obtaining master’s degrees in horticulture at the University of Guelph. In 2007, they purchased a small farm with a half-acre greenhouse and Cindy left her full-time horticulture job to start their business. Ron continues to work off-farm in the horticultural crop protection sector. 

The newly purchased greenhouse was set up to grow tomatoes so Cindy continued production with the help of four employees, while raising the couple’s three young children. Most of the production was marketed through a wholesaler and sold at the Ontario Food Terminal. 

“When the price dropped because tomatoes were coming in from Florida and Mexico, we knew we had to change the operation somehow,” she says, adding that there were many sleepless nights while they figured out what direction to take. 

Around the same time, Cindy was diagnosed with a rare autoimmune disease called dermatomyositis. Conventional treatments resulted in intolerable side effects and she decided that adopting a holistic lifestyle was the route to take. “Through my own research and a few naturopathic doctors, I decided that growing my own food to heal myself was important,” she explains. 

The Muellers transformed one greenhouse bay into organic vegetable production. They began growing a variety of vegetables for their own consumption and in 2010, they started a CSA harvest box program, Fisherville’s Finest, to share the harvest with others. By 2014, they doubled the size of their greenhouse.

Boxes of fresh, local vegetables are available weekly from April until Christmas and are offered at two pick up locations. The variety includes tomatoes, peppers, cucumbers, spinach, kale, swiss chard, cabbage, potatoes, carrots, onions and more. 

“When COVID-19 hit, we had a lot of people come to us because they didn’t want to go to the grocery store,” Cindy says. “It was a really big boom and so far, we’ve been able to stay at that level of sales.”

Ron and Cindy also supply 100km Foods Inc., a local food distributor from Toronto that picks up produce at the farm twice per week. 

[RELATED] The sweet scent of lavender

Opportunity to diversify

As the CSA business was growing, Cindy was also consuming ginger and turmeric to try and improve her health. As horticulturalists, she and Ron grew curious and set out to learn how to grow these unique plants themselves. 

“We started with a few pots of ginger and after five years of trial and error we figured out the right soil mix and growing protocols,” says Cindy. “It’s tricky to grow and gardeners aren’t able to grow it because it’s a tropical plant that needs extreme heat.” 

Ginger grows from sprouted roots and pushes up annual leafy shoots that can grow eight to ten feet tall. The Muellers plant small sprouted pieces of ginger root seed in January and harvest the tender pink rhizomes from August until November. 

As Cindy experienced health benefits first-hand and discovered numerous peer-reviewed research studies, she was convinced more Canadians could benefit from fresh, young ginger. 

So the Muellers increased their production and started discussions with potential retailers. By 2018, they established the Canadian Ginger Company and became the largest producers in the country. They harvest 4,000 pounds of ginger annually, but Cindy says it’s still considered a small operation because they supply such a small market.

Turning a challenge into success

While the product is beautiful and customer satisfaction is high, she refers to fresh ginger as a “marketing nightmare.” Why? It’s new and consumers don’t know a lot about it.

“We call it fresh baby pink ginger root because it looks different from the brown root that people are used to seeing at the grocery store,” Cindy explains. The fresh product, which is not fibrous, is used as a vegetable whereas the brown cured root is a more mature version that is used as a spice. 

When the ginger business launched, she created Facebook and Instagram pages to share behind-the-scenes photos from the greenhouse. Ron and Cindy attended the Royal Agricultural Winter Fair in Toronto as vendors in 2018 and were taking some online orders, but the focus of their marketing strategy was to finalize contracts with larger retailers for the following seasons.

“We learned that being able to grow something successfully and being able to market that product, especially when it is a brand new version of what everyone is used to seeing, are two very different things,” says Cindy. “We were also very naive to the struggles associated with entering the retail vein, especially chain stores.”

[RELATED] Quebec leads indoor urban agriculture trend

They were thrilled when they finally got the green light to supply 36 Longo’s stores and 10 Goodness Me! natural food markets in the Greater Toronto Area (GTA) in 2020.

Unfortunately retail sales were a fraction of the projections and the Muellers learned the hard way that their product needed a different marketing approach. 

“It didn’t fly because there’s only a small percentage of people who buy ginger and those people are looking for brown roots where you find the onions and potatoes,” explains Cindy. Since Canadian Ginger Company products are fresh, they were located in the refrigerated produce section of the stores. 

Last year, she decided to increase her social media presence and began posting short videos from the greenhouse to introduce herself and show the process of the ginger harvest. She also showed herself cooking with and dehydrating ginger to give people ideas on how to use it. And it didn’t take long before online sales increased. 

Using a combination of organic posts and paid ads, her marketing efforts are now focused on Facebook and the online store is the company’s primary sales channel. 

“We sell to a few restaurants and breweries but primarily we are shipping to individuals right across Canada,” says Cindy. The majority of customers are interested in purchasing fresh ginger and turmeric for health or cultural reasons. 

While it has been a long and sometimes challenging road to get where they are today, she is proud of their small farm business. “I have immense passion for what I do and I think that the food we grow for our family and the CSA family is healing people and the planet.”

Cindy has become a nutritionist to further share the benefits of her products and is working on developing ginger tea blends that she will launch online this winter. 

Online connections

Andreas Boecker, associate professor and chair of the department of food, agriculture and resource economics (FARE) at the University of Guelph, isn’t surprised that social media has been a winning strategy for the Canadian Ginger Company. 

“It’s a perfect example of how social media can support the introduction of a product,” he says, noting that a common challenge with novel products is that marketing requires more emphasis on explaining the product’s use and its benefits. Ideally, people who have tried the product can share testimonials and even become volunteer social media advocates. 

Farmers who post videos they have made themselves showcase authenticity and lend credibility to the unique value of their product. “For an individual farm with a limited amount of fresh produce to be sold, social media will always be the communication channel of choice,” Boecker says.

Since shipping in Canada adds a substantial amount to the price that the customer is paying, he adds that it is a good sign if a company is experiencing success distributing this way. It means they are selling something unique that provides a benefit and that customers are valuing the benefit.

The post The ginger difference appeared first on Country Guide.

When the summer season brought heat and drought to Western Canada, poor yields meant many were unable to deliver on their contracts and had to buy themselves out at high prices. 

That outcome stung the entire industry. In some cases, the financial consequences were significant and even farmers who were not impacted by the drought were left thinking that it very well could have been them. 

As David Derwin, portfolio manager at PI Financial Corp. in Winnipeg, Man., puts it, 2021 was a textbook example of why you want to have adaptability and flexibility built into your marketing plan. 

Two market reactions

Market volatility has continued in 2022 and grain experts from across the country say most farmers are reacting in one of two ways — they’re either taking the initiative to improve their marketing strategies or they’re paralyzed by uncertainty and aren’t taking any action at all. 

“Farmers wear a lot of hats and are extremely good at being adaptable on the production side of their operations,” says Derwin. “The benefits of having more flexibility on the marketing side is really the lesson that many learned or better understood after last year.” 

[READ MORE] These three farms have made fundamental changes to how they market. Should you too?

He’s encouraged that more farmers are reaching out to learn more about grain marketing tools. Most have recognized that more can be done to market their products, but they acknowledge they don’t necessarily know how, Derwin reports. 

Derek Squair, president of Saskatchewan-based Exceed Grain Marketing, says his business is experiencing similar growth. He believes the majority of farmers today are seeking some type of marketing support, meaning the group that is sitting on the sidelines in fear is a smaller one. 

“All kinds of factors are putting the spotlight on marketing right now and farmers are asking what they should do in these volatile times,” says Squair. 

What farmers find, though, is that the sector is changing. It’s a different place than it was even a couple of years ago. 

Changing market trends

Neil Townsend, chief market analyst at FarmLink, says today’s marketplace feels more global than ever before. The change can be seen as a positive because there are a growing number of markets interested in buying Canadian products, but it also means there are more factors outside of agriculture that have a big influence on pricing and market direction. 

The pace at which the market moves has been steadily increasing over the last 10 years but in the last three years, the volatility has escalated, according to Squair. 

“The markets are changing daily, sometimes hourly, and we have to constantly be on top of it,” Squair says, noting that more dollars than ever before are being invested in commodities, which causes volatility for both buyers and sellers. 

And even though farm businesses are growing in size and scale, individual farmers are still small players compared to the grain, food processing and export companies. 

Between these market factors and production uncertainty, Derwin encourages every farmer to continually ask how they can become more adept at marketing. 

When someone brings this question to him, he narrows in on what their exposure is and what opportunities and risks they are facing. “It’s about finding ways to protect the downside and also take advantage of the upside,” Derwin says. 

Derwin often recommends what he calls the multi-tool of grain marketing — options. While futures and options may have been viewed as speculative tools a few decades ago, he says they are now used as a more disciplined approach to managing revenue. 

“The role options can play is separating pricing decisions from delivery decisions,” Derwin says. “If the price is good, you can take advantage of it and protect your grain without promising your grain.” 

Especially for farmers who experience stress and worry about market fluctuations, Derwin suggests thinking about options purely as price insurance, not connected to production. 

“If you buy some downward price protection and the price goes down, that’s great because insurance is going to kick in,” he says. “If you use options and it goes up, you’ve spent money on the premium but like buying insurance on buildings, you aren’t necessarily upset that they didn’t burn down.” 

To demonstrate these types of marketing strategies, both Derwin and Squair use different types of examples and mock trades as educational tools. Regardless of prior knowledge or experience, this type of guided, hands-on learning builds confidence. 

Financial technology

“It’s impossible to know it all,” Squair says, “so a lot of what we do is research crops around the world and pass that on to the producer so they can make marketing decisions based on what’s going on in Germany, for example.” 

Costs are important, but most grain marketing advisory services say they focus on keeping their fees realistic. Across multiple businesses in the industry, it would be difficult to find any service that would be five figures, says Townsend. 

As technology advances, farmers have learned how to operate the physical side of their business efficiently. Now, Derwin sees the focus starting to shift to financial technology. 

“Awareness is building and more people are starting to learn more about the different marketing tools that exist,” he says. “It takes them some time to get comfortable with the tools and then when they reach out, someone can help take them to the next level.”

The post Taking grain marketing to the next level appeared first on Country Guide.

Increasingly, though, today’s farmers are applying their management skills to the job. How can they set themselves up for better results?

There are a multitude of marketing strategies, tools and services available and certainly more than one right way to use them. 

What these new farmers are finding, however, is that there are also strategic options at the heart of every farm’s marketing plan — whether they get called “strategic” or not — and they can make huge differences, even when applied across sectors and geographies.

To put it to the test, Country Guide talked to three regional winners from Canada’s Outstanding Young Farmers program, which aims to recognize excellent farm operators between the ages of 18 and 39. We asked them, “What are you doing to up your marketing game?” Here’s what we learned.

Added Capability

Jason and Laura Kehler, Kehler Farms Ltd., Carman, Man., 2016 Manitoba Outstanding Young Farmers

Jason Kehler had used forward contracts for many years, but as the business grew, its combined accounting, marketing and production needs became overwhelming. He and Laura were burning the candle at both ends, and they knew they had to make a change.

In 2019, Kehler recruited Trevor Wiens to join the team as a chief financial officer and director of grain marketing, and he feels adding the role has only improved the business.

“I stepped back from the marketing role and Trevor now manages it. He is doing a better job because he’s a numbers guy who can devote more time to it and really take it to another level,” Kehler says.

Where Kehler hadn’t been comfortable with futures and options trading but also didn’t have time to learn more about them, Weins has been able to dig in and learn how to use these tools to improve their results. 

Today, Kehler and Wiens meet on a weekly basis to discuss what’s going on in the markets and to finalize marketing decisions.

“I would have to say that one of our biggest faults as farmers is thinking we have to do everything ourselves,” Kehler says. “I’ve learned that I have to trust people, put them where they are strong and give them the tools to be successful. Our farm is much better off with good people around than it would be with me trying to do everything myself.”

Kehler had learned about marketing grain the same way he’d learned how to grow it — starting at a young age, he watched and worked alongside his father and grandfather. 

When he became a partner in the business, Kehler Farms Ltd., the need to make marketing decisions was limited because grain was sold through the Canadian Wheat Board (CWB) and potatoes were grown on contract.

“Starting to market our own grain added a different dynamic to the business but it’s been a vast improvement,” Kehler says about the CWB being eliminated 10 years ago. “We’ve never looked back.”

Now, the Kehlers grow potatoes, corn, edible beans, wheat, oats and ryegrass on 6,700 acres in southern Manitoba. They negotiate a fixed-price potato production contract each year but market the other crops on an ongoing basis.

The marketing plan is strategically focused on managing storage, risk and cash flow. Investing in increased storage capacity over time has made a significant difference.

“Dad liked to have the bare minimum amount of storage and I found that forced us to make price decisions that we wouldn’t have had to make otherwise,” Kehler says. “Now we build bins every year and my goal is to have enough storage for a good crop so that I can sit back and make good decisions.”

A Call Away

Jordan and Jennifer Lindgren, Lindgren Farms Ltd., Norquay, Sask., 2018 Saskatchewan Outstanding Young Farmers

Like the Kehlers, Jordan Lindgren also made the decision to seek external marketing expertise to improve his business. But instead of onboarding a full-time employee, he chose to hire a grain marketing firm and start working with a market advisor.

Lindgren, who farms 14,000 acres of canola, wheat, peas and oats with Jennifer and their four young children, was previously making most of the marketing decisions himself.

He graduated from the University of Saskatchewan with a diploma in agriculture before joining his uncle and father in the farm business, purchasing their shares when they retired in 2014 and 2017. 

In the beginning, it was a combination of learnings from university and lessons from the previous generation that shaped Lindgren’s marketing plan. “After a few years, I got a feeling for when we need cash flow, what we have for storage, and when we have employees to move grain,” he says.

Lindgren was using a variety of tools to manage risk, including a trading account for futures and options contracts. To stay informed, he attended market outlook meetings hosted by a local retailer and subscribed to newsletters from a few market analysts.

But as the business grew, so did management responsibilities. Lindgren decided it was time to work with someone who is solely focused on commodity markets.

The grain marketing firm he chose provides daily market reports by email but the service he values most is one-on-one consulting with an advisor.

“It’s constant communication,” Lindgren explains. “We talk every other day by phone to discuss what’s happening and what they’re expecting to see in the market. They’re constantly watching and analyzing the data, which is what farmers don’t have time to do.”

While hiring a market advisor doesn’t remove all of the risk, Lindgren has learned that it can take a significant weight off his shoulders. The stress of trying to guess where the market is going, making sure grain is being priced and keeping track of when it needs to be delivered has been lifted, he says.

The advisor uses real costs of production and other cash-flow information in order to make customized recommendations, which Lindgren sees as an added benefit because it makes farmers take a sharper look at their profitability and make more educated marketing decisions.

Looking ahead, he plans to continue working with an advisor long-term. He finds the service to be inexpensive relative to the potential return.

“Hiring a market advisor is a cheap way to protect your bottom line,” Lindgren now thinks. “Nobody can pick the high all the time but they have a pretty good idea of what’s happening in the market. They are certainly making me far more money than they are costing me.”

A Sharper Focus

Gurpreet Lidder, Lidder Produce Ltd., Keremeos, B.C., 2022 B.C./Yukon Outstanding Young Farmer

While the Kehlers and Lindgrens have found success by involving more people in their marketing efforts, the opposite is true for Gurpreet Lidder at Lidder Produce Ltd.

Lidder is a second-generation fruit farmer from the Similkameen Valley, who primarily grows apples and cherries, along with some peaches, pears and nectarines. 

When he graduated from the University of British Columbia and joined the family business, his parents were selling their produce at a roadside stand and through a local co-op. He soon steered the company in a different direction, breaking away from the co-op and marketing directly to small retail chains in the Lower Mainland.

After a period of steady growth, Lidder further executed his vertical integration strategy by building a packing facility in 2018. The expansion opened the doors for him to market to larger commercial retailers and start exporting.

“Now we can take our product, pack it and sell it,” he says. “We’ve been successful in eliminating the middlemen, like brokers and wholesalers, and going directly to retailers.”

A weekly request-for-quotation (RFQ) process is used to sell Lidder’s fruit to Loblaws and Sobeys. (Annual fixed price contracts are a thing of the past. Not unlike other farm commodities, environmental factors can significantly have an impact on market prices.)

With smaller retailers, such as Langley Farm Market which has six metro Vancouver locations, Lidder is usually pricing contracts month by month.

But Lidder remains focused on volume of product, not volume of retailers.

“I’ve always learned that 80 per cent of business is repeat business,” he explains. “I focus on less than 10 retail customers, trying to figure out their needs and how to better cater to them. I think as long as we continue to do that, we will continue to earn their business.”

Lidder also values long-term relationships over short-term gains. He does not overcharge retailers when there is a product shortage and in return, he has found that they will be fair to him when there is excess on the market.

While the farm has grown to 240 acres and the distribution channels have changed over time, the roadside stand where Lidder and his siblings grew up working still plays an important role. 

Primarily due to location, the stand attracts passionate foodies who drive hours specifically to purchase excellent quality fruit.

Lidder uses them as a test market and has learned he can accurately predict consumer trends based on their adoption of new varieties.

Long term, his goal is to continue growing and keep the focus on quality.

“If you grow high-quality fruit, you can differentiate yourself and you’ll always get paid well,” Lidder says. “Too many people focus on packaging or marketing strategies and forget that product quality is most important.” 

The post Strategic marketing appeared first on Country Guide.

Size, sector and location aside, what traits do the owners of these farms have in common? How do they stay on top of their management game? 

“First and foremost, they have a business mindset and they know where they want to take their operations,” Paddock says.

And they’re expert at digging into the numbers. 

When Paddock finished school with a degree in agricultural economics, the industry was in the midst of some of its toughest times. The farm debt crisis had reached its peak in the mid-1980s and interest rates soared past 18 per cent. Land and commodity values collapsed.

Although Paddock had grown up on a family beef farm near Guelph, Ont., she didn’t see herself as a farmer, but she was keen to stay involved in agriculture.

• [READ MORE] Does your farm plan position you for a summer payoff?

Despite the challenging climate, Paddock had her eyes open to the finance sector. She accepted a job with the Royal Bank of Canada, moved southwest to Chatham, Ont., and began training as an agricultural account manager in 1985.

“It was actually a pretty depressing time,” she admits. “I was hearing really heartbreaking stories of farmers who, notwithstanding good management, were going out of business because the interest rates were just too high and their operations couldn’t cash flow.”

Thankfully, that farm crisis ended by the early 1990s and most of Paddock’s 37-year career was spent in a declining or stable rate environment.

Now, she’s retiring from her role as vice-president of agriculture at RBC, and interest rates are starting to move in the only direction they can go — up.

Is it time to get nervous, or frightened? 

“A lot of the account managers at the bank right now have never lent in a rising interest rate environment. And by the same token, many next generation producers have never operated in one,” Paddock agrees.

Like commercial clients

One thing is certain. Interest rates are back on the table, and there will be some challenging conversations in the near future. 

But there’s a difference this time. Not only does it seem unlikely that rates will spike as high as they did in the ’80s, Paddock is also confident that today’s bankers and producers are well positioned to manage changing risk environments.

In fact, the business and financial acumen of agriculture and agribusiness clients stands out as one of the major developments she has witnessed over the last few decades.

• [READ MORE] Telus targets the farm

When Paddock began working in finance, she recalls many people referring to farming as a lifestyle. And while there certainly are some unique aspects of agriculture that can blur the line between work and home, most farm clients today think of their operation as a business first.

Business planning practices are significantly more common than they used to be. Perhaps the banks can take some credit for advancing the quality of financial analysis clients complete each year as part of their loan agreements, but Paddock also points to groups like Farm Management Canada for promoting and teaching best practices in farm management. 

“Tools like sensitivity analysis, cash-flow projections and risk management strategies have evolved to a place where most farm clients are now approaching business the same way mid-market commercial clients are,” she explains.

Strategies for success

In terms of financial management, successful producers are intentional and do not follow boom-and-bust cycles, Paddock has observed. 

In other words, they don’t go out and spend all of the additional money they make when prices are strong. Instead, they consciously retain working capital and bootstrap their balance sheet, and reap the benefits down the road.

• [READ MORE] Five moves to make in 2022

“If cash is conserved during good times, they can go out and perhaps be more aggressive about acquiring assets in the poorer times, because their balance sheet is strong and can support growth,” she explains. 

Paddock adds that the most successful farmers she knows understand and appreciate the entire supply chain. 

What does that mean? Says Paddock: “The farmers who end up being most successful realize business relationships and pricing needs to work for everybody in the supply chain in order for the supply chain to be healthy.” 

Business comes first

Paddock has seen first-hand how having a clear, consistent strategy improves focus and helps to guide decision-making and resource allocation.

She references Iowa farmer and professional speaker Jolene Brown, who coaches farmers to operate as a business-first family instead of a family-first business. It’s a structure that improves productivity, profitability and peace of mind, according to Brown. 

Paddock also notes that top producers tend to think about succession early on and start transitioning management responsibilities long before they’re in their senior years. 

“The most successful operations are bringing the next generation into positions where they can actually make decisions relatively early,” she explains.

Addressing risk matters

As farm businesses grow in size and complexity, Paddock believes effective risk management will continue to increase in importance. 

She urges all farmers to take the time to identify the risks they face and evaluate them. This includes assessing business risks (including production, market, human resource and weather risks) as well as financial risks (including the operation’s debt, leverage, working capital and interest rate exposure).

• [READ MORE] Interest rates biggest farm finance risk

“There’s a huge impact between business risk and financial risk,” she says. “In a situation where a farm has high financial risk, the owner needs to look at ways to reduce their business risk so their total risk doesn’t get out of hand.” 

The next step is to make a conscious decision about how to address each risk. If a risk is identified and a manager chooses not to do anything to mitigate their exposure, that is making a risk management decision, she emphasizes. 

To manage interest rate risk, for example, she recommends strategies like laddering exposure by spreading debt over both short-term and long-term rates. In the current rising interest rate environment, farmers can also evaluate the opportunity to convert variable rate loans to fixed rates.

Farm advisors are partners

While many aspects of agriculture have evolved over the course of Paddock’s career, the importance of open and honest communication with the bank has not changed. 

“Bankers are financial partners,” she says. “When they are able to really understand the business and get a deeper appreciation for the producer’s goals, they are better able to make suggestions on how to position the business to achieve those goals in the future.” 

Even though it may be difficult to discuss finances when things aren’t going well, Paddock says proactive communication with the bank during hard times is key. The sooner the conversation begins, the more options there are available. 

She encourages farmers to pick up the phone and talk to their banker as part of their risk management assessment. In the current interest rate environment, any banker would be pleased to have a conversation about interest rate forecasts and what options are available to mitigate risk, she says. 

After 37 years, Paddock is an optimist. Seeing clients grow their operations and achieve their goals is very rewarding, she says. 

And she’s learned that there’s never a dull moment in the business of farming. Just when you see a set of circumstances that has never occurred before, you also see a farmer doing something new and innovative, and a new market evolving.

The post Speaking of success appeared first on Country Guide.

Maybe it started with a progression from Mom’s hard-copy ledger to a series of Excel spreadsheets. Or was it a transition from spreadsheet hell to a desktop software that the accountant recommended?

Today, many farmers have moved to web-based platforms that do more than record debits and credits. There are a number of comprehensive packages on the market that run payroll, track inventory, automate tax filing and generate customized reports for in-depth financial analysis. 

But before you ask if you’re using the right software for your operation, farm advisor Denise Filipchuck suggests a different question. Do you have the right person doing your books in the first place?

In-house or outsource it?

In some farm businesses there is a member of the family or the management team who doesn’t mind office work and has the expertise to maintain accurate and up-to-date books. 

But Filipchuck, a farm management consultant and certified financial planner based in Swan River, Man., finds it’s often a job that gets put off because nobody enjoys doing it. 

“Sitting down at a desk and doing the bookkeeping gets left until the last minute on many farms because there are so many other jobs producers would rather do outside,” she says. 

In these situations, Filipchuck recommends looking outside of the business for help. 

When she talks about her own bookkeeping service, farmers are often surprised at how minimal the cost is. They quickly realize they could spend their time doing what they are good at — operating the farm — and hire someone who specializes in bookkeeping. 

“Outsourcing the books takes a load off their shoulders right away and it ends up being faster and cheaper than doing it on the farm,” Filipchuck says.

In her business, Filipchuck Management Inc., bookkeeping clients adopt a monthly routine of using a scanner app to submit statements and invoices. Since the books are updated every month, it’s easy to access reports and see a current snapshot of the farm’s financial health at any given time. 

The hourly fee for this service replaces the need to choose a software, learn it, dedicate time to data entry and troubleshoot when needed. Outsourcing this non-core function of the business to a professional bookkeeper ends up being a net benefit for most farmers. 

Accountants and other farm advisors can usually recommend a list of bookkeepers who have a solid reputation and are familiar with agriculture. 

Peak efficiency

For those who decide to keep the book work on the farm, it’s a question of how to make the process as efficient as possible. Much of the answer stems from choosing the software with the best fit. 

Coralee Foster, BDO Canada partner in Mitchell, Ont., advises farmers to talk to their accountant before making any financial software decisions. Some have a preference for what their clients use. Some firms are also able to offer training and support on certain platforms.

When comparing the available options or revisiting your purchase decision, Filipchuck recommends beginning with the end in mind. 

“Think about the value that you ultimately want to get out of the accounting software, including report generation and level of detail, and then look at the features of each available product,” she says. 

Filipchuck has seen farm clients gain efficiency by moving from spreadsheets to accounting software, and from basic software to a more comprehensive package. 

Country Guide recently asked farmers and farm advisors across the country about their experience with accounting platforms. While every farm’s management needs are unique, it’s clear that three software companies currently serve the majority of Canadian farmers — Farm Credit Canada (FCC), QuickBooks and Sage. 

Desktop versus web-based

In the past, these companies primarily sold desktop products like AgExpert Analyst, QuickBooks Pro, QuickBooks Premier or Sage50 (previously known as Simply Accounting). 

While these options are still being used by some businesses, the focus of the industry has largely shifted to web-based applications. 

Why are software companies recommending the migration? In short, it improves the customer experience.

Web-based software, or cloud accounting, allows users to access their data at any time on any internet-connected device. In addition to the convenience of being able to update your records from anywhere, it also makes it easy to share your data with your management and advisory teams.

Other benefits include automated data backup, built-in security precautions and frequent updates.

Traditional desktop software is typically expensive because it involves a significant upfront cost, an additional fee for upgrades and in some cases, another annual charge for accessing customer support. Web-based products tend to have a less costly, inclusive monthly or yearly subscription fee that is often based on customized features and services. 

So, if cloud accounting is the way of the future, how do the online products from the leading companies in Canadian agriculture stack up? These reviews encapsulate what we have learned. 

The bottom line

Foster sees a variety of bookkeeping practices among her clients and is familiar with the evolution of FCC, QuickBooks and Sage products.

“These softwares are all fairly user-friendly and all of the family farms I work with could easily run on any of them,” she says. “They all have a basic format or can be expanded upon significantly if you want to use all of the modules.” 

Since there are so many similarities, much of the software decision comes down to the preference of the farm bookkeeper and their farm advisors. It’s key to talk to your accountant first, Foster reminds.

Sage

Sage (sage.com), a global market leader in business technology, recommends small business owners use Sage Accounting.

Accounting Start allows one user to create and send unlimited invoices, integrate payments, automate bank reconciliations and calculate GST/HST returns. The most popular choice, Accounting Standard, gives an unlimited number of users the added ability to send quotes and estimates, run more advanced reports, forecast cash flow, and manage purchase invoices. Upgrading to Accounting Plus enables multiple currency banking and invoicing capabilities as well as inventory management. 

All three Sage Accounting packages include a bilingual English-French interface. 

Sage also offers a range of add-on products to meet human resources and other business management needs. Sage Payroll and Sage HR, for example, integrate into Sage Accounting. 

Pricing: Sage Accounting Start, Standard and Plus packages cost $15, $35 and $55, respectively, per month. Sage Payroll starts at $20 plus $3 per employee per month. 

Sage offers 30-day free trials on accounting and finance products. The company often runs sales and other promotions (such as getting any version of Sage Accounting free for three months).

Support and training: Sage users can access a library of online resources and the Sage City community forum anytime. The company also offers the option to connect with a company representative by phone or online chat during specified hours. 

Sage University offers online training courses available in many different languages. Both self-paced modules and live webinars are available, depending on the product. 

What farmers and farm advisors are saying: Sage Accounting seems to have fewer farm users than our other two reviewed products but is still common among businesses of all sizes. It is not industry-specific but is known to be fairly user-friendly and can be customized for agriculture. The tiered pricing model makes the software affordable for those who need fewer features but the many add-on product options may be valuable to larger operations. Sage is used by over 16,000 Canadian accountants and bookkeepers, making user support widely available.

AgExpert Accounting

FCC offers the only accounting software designed specifically for Canadian farmers. Their product, AgExpert (agexpert.ca), is used by 16,600 clients nationwide. 

The standard features of AgExpert Accounting include transaction recording, bank reconciliation and reporting. The software allows users to generate reports such as a general ledger, balance sheet, income and expense statement, trial balance, net worth statement and accounts payable and receivable. 

Users can upgrade to a premium version which includes features such as GST/HST Netfile, payroll, AgriStability worksheets, invoices and statements, inventory management, transaction templates and attachments, and additional report generation of a cash-flow statement and budget. This version can be used for up to five sets of books. For those who were previously using AgExpert Analyst, the premium version of AgExpert Accounting also includes a data migration service. 

Pricing: The basic version of AgExpert Accounting with standard accounting features is available at no cost. The premium version is $399 annually. 

FCC also offers AgExpert Field, a web-based platform for planning, tracking and analyzing the activities involved in growing a crop. The premium versions of both AgExpert Accounting and AgExpert Field are available in a bundle for $499 per year. This bundle fee is waived for one year for FCC clients who take out a Young Farmers Loan.

Support and training: All AgExpert Accounting users have access to an online support forum, blog articles and introductory webinars. Those who have upgraded to the premium version can also access unlimited technical support directly from FCC by phone or remote computer access. 

In addition, there is a network of AgExpert certified advisors in each province who offer one-on-one consultations and training. One-day online training is $899 and two-day training is $1,399.

What farmers and farm advisors are saying: AgExpert Accounting is a popular choice, especially for larger operations. Since it is made specifically for farm businesses, the software includes industry-specific charts of accounts and other data entry prompts by commodity or government program.

Some farmers start off with a simpler software and move to AgExpert Accounting when their business has grown and they need the advanced capability of detailed inventory management.

It is known by farm advisors as a powerful program and is used by many agriculture-specific bookkeepers.

QuickBooks

Intuit’s QuickBooks (quickbooks.intuit.com) is one of the most popular entry-level accounting products on the market.

QuickBooks Online Self-Employed allows users to track income, expenses, sales and mileage. In additon, it can capture and organize receipts, run reports, invoice and accept payments and sort business and personal transactions. 

The EasyStart version adds the capability to send estimates and progress invoices and organize income and expenses by tax category. By upgrading to the QuickBooks Online Essentials, users can also track time, manage bills and payments, and record transactions and make invoices in multiple currencies. The Plus version offers enhanced tracking of project profitability and inventory. 

QuickBooks Payroll is available as an add-on product. 

Pricing: QuickBooks Online Self-Employed costs $15 per month. The EasyStart, Essentials and Plus versions cost $22, $44 and $66 per month, respectively. QuickBooks Payroll is $20 plus $4 per employee per month. 

QuickBooks offers 30-day free trials and often runs sales (such as save 50 per cent for the first three months) on web-based products. 

Support and training: QuickBooks Online users can access articles, video tutorials, recorded webinars and a community discussion forum 24/7. They can also connect with a company representative by phone or online chat during specified hours.

There is a network of Quickbooks ProAdvisors who can provide additional customer support. The database of these accounting professionals can be searched by city and province.

What farmers and farm advisors are saying: QuickBooks is a popular option for farm operations of all sizes. It is not industry-specific but is known to be one of the most user-friendly products on the market and can easily be customized for agriculture. The tiered pricing model makes the software affordable for young or smaller businesses who need fewer bells and whistles. Since there are millions of QuickBooks users worldwide, there is a significant network of expert guidance available.

The post A path to better bookkeeping appeared first on Country Guide.