The future stretches and sways like a Prairie grain field, endless and heavy with possibilities. Like storm clouds, though, threats and risks also gather.
What strengths and skills will farmers need to succeed in the future we’re rushing toward? With the turnover between generations accelerating, it’s a question that is coming squarely into play on a growing number of farms.
Do your kids have what it takes? Or, if you’re a young wannabe farmer reading this, how do you make yourself into a person who has those skills?
Country Guide asked some of Canada’s most respected agricultural educators if they see trends in knowlege or skills gaps among today’s farm hopefuls. Then we asked how their schools are filling those gaps.
Two are on the front lines of the future of agriculture, including Mark Fournier, instructor at Olds College and Ken McEwan, director of the University of Guelph’s Ridgetown Campus, the lead college-level program for Ontario agriculture.
They hear and see — and test — the next generation before our sons and daughters get back to the farm.
First up though is Larry Martin, former professor at the University of Guelph and currently partner and instructor at Agri-Food Management Excellence. Over 200 farmers have graduated from the Canadian Total Excellence in Agricultural Management (CTEAM) program that he has facilitated and instructed since 1998.
These are farmers who believe they have the aptitude to succeed, which is why they invest the $7,500 to take CTEAM, and compared to when Martin first starting teaching the program, they’re getting younger, and also more intense about growth.
Participants want to expand and push further, and CTEAM is designed to help them look at how their farm fits into the industry and to discuss it with others who have a bigger-picture perspective and hands-on experience. Increasingly, they tend not only to be younger, but also to be growing their operations both in size and in complexity, says Martin. And they’re highly self-motivated to improve.
They also tend to be good at turning what they learn into action, and using it to build success. “They’re willing to take risks, but only take measured risks,” Martin says. “And they’re always looking for new or different things.”
Typically the people signing up for CTEAM enter it needing to better understand strategic planning and execution, he says. Often they don’t even see that they need help with planning until they start into the program. Before they enrol, only about one in seven have a formal written plan.
As part of the two-year program administered in four, four-day sessions across Canada, participants develop a three- to five-year business plan. Almost all implement these plans, and equally impressively, over half update their plans to accommodate changes they’ve made along the way.
“They have a higher appreciation for financial management, and can now build on the knowledge and apply it to their farms,” says Martin.
The HR hurdle
That doesn’t mean it’s all easy. In fact, there’s one skill set in particular that Martin sees many students needing to work on.
A major limitation to growth on these farms is that farmers lack knowledge in human resources management, and the CTEAM process is designed to enhance their knowledge of how to delegate and have the systems in place to manage people.
One of the first insights, then, is that to succeed, tomorrow’s farmers need to understand that they will have to get better at HR.
“To grow, you’ve got to manage managers,” says Martin. “This can be difficult if you’re accustomed to doing things for yourself.”
During after-class get-togethers, CTEAM participants share their problems, plans and dreams with others who understand. Discussing their businesses with similar-minded farmers enables them to find the holes in their plans, as well as gaps in how they manage.
Within this group they can freely discuss risk, marketing and expansion plans, and, says Martin, they tend to caution each other.
At each of the four sessions, the participants must verbally present their updated and improved business plan, and get feedback from other members of the class. They’re able to share their numbers and plans freely because their neighbours aren’t there. The small-group dynamic also means the farmer-students tend to put extra effort into their presentations because they don’t want to embarrass themselves.
That brings in the second insight about today’s successful young farmers. The reality is that the world is changing rapidly, so they commit to continual learning, and Martin has revamped the course material many times over the years, especially the strategic planning portion.
Today the students want more feedback and guidance. “There’s a higher appreciation for what’s needed to succeed,” says Martin. “And higher expectations of what they want to get out of the program.”
A passion to succeed
Mark Fournier, instructor at Olds College in Alberta, thinks the No. 1 requirement for success in farming is passion — followed by planning, perseverance and profits. “They’re going to be doing this 24 hours a day, seven days a week, so they need to be motivated,” he says.
Fournier says this level of farming passion quickly shows itself at the college level. If the students are forced to go, or are simply not committed enough, they don’t do well and are usually culled out by Christmas. Although they’re a small percentage, this group is just not ready to dig into farming every day using real money or to deal with real risk.
They also need an appreciation for financial skills.
Wanting to farm and having the resources and skills are completely different. Fournier says knowing how to budget and forecast is imperative. His class does a 12-month rolling cash flow, so they know their position at quarterly and one-year intervals and can take needed corrective measures right away.
The most important ratio his students will need is current ratio. “Cash is king, if you want to keep operating,” says Fournier. “Profits don’t put food on the table; money in the bank does.”
Fournier also shows students how scale and specialization can impact revenues. He tells his students that they either have to be as big as possible or go for a niche. To illustrate, he shows them on paper how to expand quickly, and then they run cash flows, current ratios to see the vivid impact of interest rates on returns in black and white.
The Facebook challenge
Generally the students from farms understand there will be good and bad years, says Fournier. However, from what he hears, the students don’t talk a lot about risk. They’re more concerned about what their roles will be when they go home, and about their time frames for succession. “They need to interject risk analysis into their thinking,” says Fournier.
“If you have five generations behind you, you’re less likely to want to take on higher risk levels,” says Fournier, who is also a huge believer in ensuring his students can calculate their break-even prices. Knowing what your costs are per bushel and what you need to get out of that bushel to live is powerful. He asks them: “If you need five or 10 per cent to live, and then prices drop, what discretionary costs can you cut?”
They also need to understand leveraging. These students are going to be taking on long term 20- or 30-year mortgages and we don’t know what interest rates are going to do that far ahead. “This generation is used to low interest rates, so I make them look at debt servicing at seven or eight per cent,” says Fournier, who also asks lenders to come to Olds to explain debt management and their young farmer loan programs.
“They need to know how to sharpen their iPads,” says Fournier. At Olds, all students have iPads with spreadsheets. The idea is to train them to do real-time financial management in the tractor as they make decisions on the fly.
Ironically a great challenge for the Facebook generation going through college now is they don’t know how to connect with real humans, face to face. Fournier suggests to his students when they go home to the farm that they take some time to join the crew at the local coffee shop. Just listen at first and eventually you’ll be asked to join in. “Not only do you learn from the older generation, it is a way to be a part of the marketplace,” says Fournier. “Be collaborative.”
Don’t sugar coat it
In Ontario, Ken McEwan, professor and now director at University of Guelph’s Ridgetown Campus sees many of the same trends, and the same opportunities and challenges.
Historically, successful farmers were able to do many things well, especially in production and business areas and in working with people. However, now it takes more than just knowledge, McEwan says.
To succeed now, farmers also need to have a vision, know how to manage a staff, and have the necessary energy to take on the many challenges associated with primary production.
The curriculum for the associate diploma in agriculture at Ridgetown College tries to expose students to the many different components of operating a viable farm business, including production, business management and human resource management. Many of the production courses can be taken as electives to suit the interests of the individual student, such as precision agriculture, dairy production, and greenhouse management.
Over the years, McEwan has seen success and failure come from all sorts of skill and personal traits. “Student optimism might be modestly improved with the higher commodity prices,” he says. “But most young people pursuing a career in primary production do so because they enjoy the challenges.”
Today McEwan also sees the importance of adapting to and adopting technology, including everything from auto steer to plant genetics. New farmers now need to understand the global marketplace too, he adds. “Historically, a lot of emphasis was placed on U.S. farm policy but now one needs to have a working knowledge of global trade and foreign government policy.”
McEwan doesn’t sugar coat the real impact that issues of scale and the startup costs for a competitive farming operation have on the likelihood of success. “Students who possess a farm background and have supportive parents often do well because of the capital intensity associated with operating a commercial-scale farm,” says McEwan.
But that isn’t a guarantee. McEwan has also seen such farms fail when there’s a lack of planning or motivation, or an inability to change. Says McEwan: “It is very important to have a workable succession plan and realize it is a process that takes time.”
This article was originally published as “What they’ll need to succeed,” in the November 2014 issue of Country Guide