The picture is usually all wrong. When someone mentions farm management clubs, your mind sees a group of like-minded and very serious farmers — neighbours almost certainly — regularly meeting around a table to share their financials and to discuss ideas and experiences that could help each member.
Well, the real world is a bit more complicated than that utopian image. It’s a lot more helpful too.
While there are lots of information and marketing clubs in the country, few of them actually ask their members to share the kind of detailed and confidential information that would be required to create the actionable benchmarking targets that today’s farms need for high level management.
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There are simply too many realities of human (or farmer) nature working against it, not the least being mistrust of neighbours. Farmers can’t seem to get past the idea they are in competition for land with the guy who farms on one side, and that the guy who farms on the other side might use any information that you share to gain an advantage.
Sometimes, you might think your hesitation is based on good reasons, but it’s time to take a harder look. In fact, maybe everyone needs to just get over it if they want to survive in today’s agricultural economy, because those who are willing to share information, and who are even paying to do so, say they are winning because of it.
That’s the message from producers involved in high-level management clubs and from those who advise them. At the very least, they say, more farmers should think through whether such a process could help their own business.
In 2000, the Canadian Farm Business Management Council put together a booklet “Farm Management Clubs: a road map.” It outlined the different types of groups that producers might want to develop, dividing them into three groups — technical, marketing, and benchmarking — and it made two recommendations.
First, the groups could only work if they find a way to achieve a seemingly contradictory goal — the open and yet confidential sharing of information.
Second, they need to secure outside sources of funding, depending on the complexity of the group.
Leo Kosokowsky didn’t wait for funding. Instead he made the work of management clubs into a business.
1. Benchmarking for dummies
In the Internet age, it seemed someone just had to invent a way to use their digital smarts so all the rest of us could take advantage of the computer’s awesome number crunching power without our having to become computer experts ourselves.
The brains behind AgMpower, Kosokowsky is a Saskatoonbased farm management consultant and member of the Canadian Association of Farm Advisers, and he designed software that lets grain and livestock producers input their plans online and then get immediate feedback about target prices and efficiencies.
It’s sort of a management club, without the club ( www.agmpower.ca).
At AgMPower, you fill in a spreadsheet for each enterprise area within the farm. The software lets you check breakeven, profit and loss levels, and it calculates how a particular management decision will affect your net worth and overall financial position. And it does it all instantly.
You also get to compare your farm to others of similar size, crop district and soil zone to help you identify areas where you may be paying too much or too little. For a fee, anyone can use the program and access the averaged numbers to help in their overall management.
Meanwhile, all the information you contribute to the database is anonymous, which is how the average producer likes it.
2. THE EXECUTIVE CLUB
Many eyes are on the Executive Club, an elite group of 10 leading-edge farmers who use the AgMPower software, but also meet face-to-face to get to the bottom of one another’s financials.
At Executive Club, they tell it all.
“These are high-level, strategic discussions,” Kosokowsky says. What started as disclosure of per-acre numbers has evolved into sharing inventory, debt loads, debt/equity positions… basically a full disclosure of net worth.
“What members really appreciate is all the discussion that comes out of the numbers,” says Kosokowsky. “It always evolves from numbers into specifics.”
James Rybka agrees. He’s a relatively new member to the Executive Club and farms about 4,000 acres near Prince Albert, Sask. It isn’t a large farm compared to some in the group who are up to 15,000 acres. “It’s interesting to see if larger is better,” Rybka says. “Some of the results are surprising. Being efficient is what really matters.”
Belonging to the Executive Club helps members understand what efficiency looks like. “I look at the numbers and wonder how come this guy can do this so much better than I can. I can phone and he’ll explain,” Rybka says. “You have to be able to be critical of yourself. You can’t be right all the time.”
The group looks into inputs and expenses as well as business plans and models “with farmers who are not our neighbour so we can be candid and critique one another,” Rybka says. The members of the Executive Club have a confidentiality agreement and the group decides who can join.
Members of the group input their numbers in a standardized format, but it’s Kosokowsky who analyzes the data and facilitates discussion around it. And Rybka is happy to pay for his services. “This type of information is critical to the farming operation for most people,” Rybka says. “There is great value for the dollars spent.”
“If you’re not in touch with groups like this in the future, you won’t be in business,” Rybka says.
“These are really smart people,” says Kosokowsky. “I often ask myself why they need me. But they want a facilitator, a mediator, and they’re willing to pay for it.”
Members have opportunity to speak with one another online any time and they meet formally three times per year. “They don’t talk to each other between meetings as much as I thought they might,” Kosokowsky says. “But while they’re together they have a million things to talk about. Sometimes it’s hard to control them.”
As facilitator, Kosokowsky limits discussion of production details like what kind of herbicide someone used. The focus is on the bigger financial picture. One meeting will be a self-assessment of what worked, the next will look at strategies for the next year, followed by planning, and then they’re off into another crop season.
“The purpose (of AgMpower) is to help farmers make better decisions so they are more profitable,” Kosokowsky says. “Their confidence in decisions is tripled because they have current information they trust.”
3. WORLD-WIDE CONNECTIONS
Leading farmers want leading information, says Al Scholz, management consultant and author. Scholz has written about the importance of networking and sharing information in his study on the best practices of leading farmers.
“The purpose of these exclusive clubs is peer review,” Scholz says. Some producers are soaring past the point where other information sources can help, he explains. “The farm advisers, accountants and lawyers can’t help them to get beyond where they’re at.”
The peers these farmers turn to are no longer their neighbours. Instead they might come from the U. S and Australia. Networking is happening further and further afield and resulting in alliances that improve management and help to capitalize business ventures, Scholz says. He uses the example of Saskatchewan and Australian beef producers who have developed a successful joint semen/ embryo project.
“Farmer alliances in other parts of the world are the next level of global farming that goes along with the global economy,” says Scholz, adding the success stories provide a business case for this type of management where forging alliances, networking, and going to out-of-province or out-of-country conferences is common.
These farm managers travel to Australia for a week’s holiday, attend a couple of conferences and write off the expense.
“Leading farmers tell me they are looking for even one idea,” Scholz says. “They are looking for creative ways to make money.”
And it’s important to keep tabs on what leading farmers are doing because their activities are an indicator of what average farmers will be doing in 10 years, he says. It’s also good for agribusiness and for governments trying to develop forward-looking agricultural policy.
Scholz believes the data and examples set by farmers such as those in the AgMpower executive club are a benchmark in and of themselves. He is less optimistic about the ability of local clubs to add management value to the farm. “An open membership club is limited in what it can do in terms of taking business to the next level,” Scholz says.
It seems though that there is room amongst even the leading producers for a low-level, open membership club.
Executive Club member James Rybka also belongs to the Northern Fringe Club, a 30-member farm club north of Prince Albert, Sask. The focus of the group is completely different, he says. It’s about networking with his neighbours.
4. Northern Fringe Club
“Farming is an isolating kind of profession and we can start to think we’re in competition with our neighbours. But we’re not. Our competition is the world,” Rybka says. Northern Fringe group brings in speakers, hosts summer barbeques and provides a “good social networking group.”
Rod Zelensky would agree. He farms about 2,500 acres north of Prince Albert, runs a small beef herd and chairs Northern Fringe (incidentally a group also started by Leo Kosokowsky.)
“I joined because of the speakers they brought in and the tours I could be part of,” Zelensky says. “And I continue to be a member for the networking. The information meetings and speakers are valuable, but the reality is I always come away with at least one good idea or thought I pick up from networking with other producers there.”
While controversial ideas, such as the role of the Canadian Wheat Board, are discussed and debated, there is no animosity amongst members. They can share a coffee despite their differences. “You get to know each other and trust one another enough to have these kinds of discussions,” Zelensky says.
Northern Fringe stops short of sharing financials though, which doesn’t come as a surprise. Facilitating was offered to the group but they declined. “We’re pretty informal,” Zelensky says. “Not a complicated group at all.”
But before you write them off as a social club, note this. The group has managed to receive not only sponsorship from their local ag suppliers for their activities, but also discount deals to members based on volume. “It’s attractive for companies to come talk to 30 producers. It saves them a lot of legwork,” Zelensky explains.
Over the past 10 years the group has run the Land Roller Club, owning and renting out two land rollers, allowing them to pay some dividends to members.
Zelensky believes the group provides management support in terms of a sounding board for ideas. “We’re a positive group with mutual respect,” he says. And maybe most importantly “whether times are good or not, you find out you’re not alone.”
Like most things, it turns out, you can get what you need if you know what you’re looking for. Exclusive clubs might provide a less personal and more objective means to better fiscal management, while local clubs provide a comfortable sense of home.
Rybka knows what he wants. So does Zelensky. Maybe we’re closer to utopia than we think.CG
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“ If you’re not in touch with groups like this in the future, you won’t be in business.”
— James Rybka
