The success of agriculture depends on the planning of the farm business


It’s hard to be successful in farming or any other business without a plan. Many praise the romance of farming, but in reality farming is a business, in most cases a multi-million dollar business, and often involves multiple generations or partners.

Running a farm business goes beyond annual profit / loss. It’s more than controlling costs or even knowing how to get the most out of tax laws.

Here you will find an overview of some of the key issues regarding the business side of farming, from marketing strategies to managing people and handing over the farm to the next generation.

Beyond the basic business plan

Agriculture is fraught with pitfalls. Weather conditions, market fluctuations, family and production issues all have the potential to bend even the best-laid plans. This is where having a comprehensive farm plan that outlines the mission and goals of the farm comes in.

An overview of the operation can help you tackle all the components and how they relate, from the strengths and weaknesses of family members, to the inventory of assets and investments, to the creation of a retirement plan. and succession. Having a comprehensive plan in place will help guide the farm when the unexpected happens.

Some find that a SWOT analysis can help ease the process. The SWOT approach describes the strengths, weaknesses, opportunities and threats of the farm operation, as it increases communication between the family and other members of the business team.

Management of workforce resources

Managing farm workers can be one of the biggest challenges for farmers today. Near-record unemployment rates in many parts of the country are driving up labor costs, while labor and immigration laws can hamper the flexibility a farm operation needs to operate efficiently. As farms grow, more hired labor – often skilled labor – is needed, which adds attention to recruitment and retention.

Meeting a farm’s labor needs begins with hiring the right person. The process begins with assessing where the business is heading and the best path to get there. Probe your needs and what employee characteristics will be beneficial, then consider what you’re willing to pay. While farm workers seek pay, the main reason they stay, experts say, is job satisfaction. Periodic assessments that involve healthy discussions of job expectations and challenges will help reduce turnover and keep the operation running smoothly.

It can be advantageous to diversify

Diversification can be the key to the survival of today’s farm operation. Existing farms may have an advantage in niche markets. Often this involves making a small change in production or marketing strategies. Sometimes this involves identifying a creative local market or adapting farm business ideas gathered from other farmers.

Like any farming operation, the success of a farming business depends on producing a product of consistent quality.

Starting a farming business requires research. There are a number of crops that can fit into an existing operation, it’s a matter of determining which one is right for you. Options range from non-GMO and heirloom varieties of traditional crops to vegetables and crops like grain rye which can also serve as a cover crop to prevent erosion during the winter months.

What is the cost of farming?

Agriculture requires money. A lot of money. For new farmers, securing adequate working capital can be one of their biggest hurdles. Experts estimate that starting a grain business in the Midwest without family support could cost more than $ 5 million. If this entry-level farmer chooses to earn a four-year college degree, add an additional $ 20,000 to $ 120,000.

There are planting equipment, buildings and inputs. And don’t forget the land. Even a combination of land owned and rented at today’s prices quickly grows to astronomical numbers.

Maintain sufficient working capital

Agricultural capital needs go beyond start-up expenses. Farmers must be able to withstand drought and market fluctuations as they carry out daily and annual operations.

Available credit is tightening, with farm lenders increasingly monitoring farm balance sheets and their own lending policies.

Once the capital is exhausted, farmers can quickly find themselves in a difficult situation with their banker.

Sometimes an outside source is needed to take a fresh look at the situation on the farm. Through expertise, financial software and face to face consultation, creative solutions can be found to alleviate the crisis.

The most important aspect can often be the early identification of problems, and in all farming ventures, from traditional to experimental, farmers need to know the production costs, overheads and living expenses of the farm. family, and plan accordingly.

With a solid business plan and an open mind to new opportunities and problem solving, farm operators can weather the storms of a volatile agricultural industry, allowing generations to enjoy rural life and the satisfaction of farmers. feed the world and a job well done.


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