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At the edge

Five strategies that the new generation of farmers are embracing to take their farm businesses to the next level

Jake Ayre. photo: Sandy Black

“A wise person once said to me ‘if you don’t stretch, you don’t grow.’” That’s straight from Jake Ayre, the chair of Manitoba Young Farmers who crops 1,900 acres north of Minto together with his parents Heather and Andrew, sister Caitlin and an employee.

It’s become his mantra, and a mission.

“Be open-minded and try new things,” Ayre continues.

Country Guide had asked Ayre what he’s learned about farm management. “The world is changing, and new ideas and technologies are constantly arriving. I know it can be difficult and scary to embrace this, but I feel if you want to be successful, you have to go outside your comfort zone.”

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Nor is Ayre alone. For the scoop on what it all means for him and other cutting-edge farmers, read on.

1. Become a tech pioneer

“Our farm has always been early adopters of trying the newest technology, and we like to keep all our equipment up-to-date,” says Tara Sawyer, regional chair (Alberta) for Canada’s Outstanding Young Farmers Program, and farmer with her husband Matt and his parents of 4,200 acres in Acme, Alta.

The Sawyers clearly believe staying on top of the latest technology is essential to gain cost savings and ensure the highest profits. As an example, she says, “we moved to a high-clearance sprayer with GPS-guided sectional control shut-off capabilities… which saves us fuel, time, crop protection products and other inputs.”

Similarly, this year, Ayre and his family incorporated two software products that record, store and upload their data into cloud-based programs. “One product records our planting data, which enables us to see each field that was planted and gives us information on acres, fertilizer used and hybrid,” he explains. “The other product was installed in our combine and records yield data across the entire field. Once uploaded, the data was then populated and yield maps and data were created. Both of these tools have been great on the farm this year, and have made record-keeping much easier. We are now looking at utilizing this practice for our fertilizing and spraying next year. I believe that programs like these will be common in the future.”

At the same time, Shannon Lueke, a farm management consultant with MNP national accounting, tax and business consulting firm, cautions that employing new technologies without understanding or being able to realize the benefits is counterproductive. “Know which ones you need to employ on your farm and understand the cost-benefit,” she says. “Also understand that technology in agriculture is in a growth stage and will experience many growing pains. Be patient.”

2. Focus on retention

Sawyer believes that while farmers have always treated their employees well, today’s smart farmers are taking the relationship to a new level to protect the profitability of their operations. “Farms are getting larger and so is the equipment, but on our farm we know that we need to have a team that’s ready to go to help us get that crop in or off of the field, and we are very grateful to have our team to help us do that,” she says.

“Treating our employees well, paying them a good wage, letting them know they are appreciated, looking out for their well-being are key points we focus on our farm. We only have a few seasonal workers that help us, but they are invaluable to the success of our operation. Good farm help is hard to find, and once you have good people, you have to make sure they want to stay.”

Staff turnover means farmers have to put time into finding and training new employees, says Sawyer. It’s time better spent on other things. “It’s so much more efficient to keep people who do their jobs well and know the ropes,” she says. “Turnover is a business expense that should be avoided. It’s a smart new business practice to make sure our employees feel like family and are invested in the success of our farm.”

3. Assign individual roles

Manitoba Young Farmers co-chair Colin Penner farms 3,600 acres near Elm Creek with his parents Cal and Gloria, his wife Lori and his brother and sister-in-law Scott and Andrea.

He believes another new practice being adopted by smart farmers is making sure roles and tasks are defined in ways that make the most sense. “Even if roles are more loosely defined rather than formally defined, it’s a good idea for everyone to have their roles,” he says. “It really works well when a member of the younger generation takes something like safety or new technology that they are interested in, and they are encouraged to run with it and make it their own.”

Both to prevent burnout and also boost overall farm efficiency, Penner advises a regular look at tasks and who should be doing them. “An example on our farm is adjusting the combine to prevent losses,” he says. “This year, I was the only go-to guy for adjustments. I took over this task from my grandpa years ago and my dad and brother really never got into it. In some ways, I like things to be done well, but I’ve realized that really someone else should be doing it. During harvest, I am the main person for hauling grain from the field to our storage and so if the combine needs adjustment and I’m not right there, I’m a bottleneck.”

Penner has come to the conclusion that the combine adjustments should be done by the main person combining, whether that’s his mom, dad, brother or the hired man. “It will really improve the quality of work life for all of us, which is best for our business,” he says. “I also noticed a few times this past fall, that I was doing combine adjustment when everyone else was having supper break and I didn’t get to visit with my wife and kids at that time. It’s one of the few times during harvest that I can get to see them, so it’s a quality of life issue too.”

Lueke agrees. “Know what to stop doing,” she says. “Play to your strengths. Identify the things that you are not good at and enlist help with those tasks. Do more of what you are good at and stop exerting energy on the things you are not good at.”

4. Take financials to the next level

In Lueke’s view, farmers taking their businesses to the next level are becoming extremely familiar with their financial details, such as cost of production and profit margin targets. This involves knowing what the potential production revenue is for the farm. “Yes, producers are subject to risk,” she says. “We cannot predict the weather or the markets, but a producer must know what he/she is capable of growing in decent conditions so as to be able to align its cost structure and balance sheet measures properly. Be honest about what your land or livestock herd can contribute on the top line.”

Lueke adds that cutting-edge farmers understand the cost structure of the farm, and whether their production expenses line up with their potential gross revenue. “If you do not know this, work with a farm business consultant to help you figure it out,” she says. “What about your overhead costs? If you want to plan for 15 to 20 per cent profit margin, perform the exercise of aligning your costs with the potential gross revenue.”

In addition, perform a sensitivity analysis. “When you know the gross revenue potential for the farm and its cost structure, now you can test the downside, or upside,” she explains. “If your base revenue and cost structure give five per cent profit margin, is that good enough? This means the farm can only withstand a five per cent downturn in production and/or price before breaking even. Is that enough buffer? What if the margin is zero? Understand this before the production cycle begins so the farm managers can take action on required changes.”

5. Look forward now

As a farm focused on future success of the business, the Sawyers are actively engaging their teenaged children.

They encourage their kids to keep getting more knowledgeable about farming, if farming is what they want to pursue. “4H is a great example of a program that takes youth and makes them into great farm leaders,” Sawyer says. “Youth today understand that there is a rural/urban divide that needs to be addressed, we need to connect and have conversations on where our food comes from, how we grow the food and why we use the practices we do to grow safe, sustainable products.”

And with their three teenaged children, Sawyer and her husband have already had many talks about their interests and passions and how the farm could be diversified by them.

“Our farm can’t support all of them without diversification,” she says. “There are many opportunities, such as agritourism, farm-to-table events (we are only 50 minutes outside of Calgary), greenhouses, distillery, but everyone will have to be passionate about what they are doing for it to be a success.”

At the same time, Sawyer says, “we have never put the expectation on our kids to farm. We are also encouraging them to look at other careers within the agriculture industry if working on the farm isn’t their passion. It’s an open discussion.”

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