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Illustration for April 2019 cover story - three people - farmer and two people who work in agbusiness

Deep dive: What’s your weakest link?

With today’s razor-thin margins, one management weakness has the potential to become the farm’s Achilles’ heel.

So, what’s your farm’s weak point?

With the size and complexity of today’s farming operations, just about everybody has at least one. Yet, according to a recent nationwide Farm Futures survey question — “What roadblocks will your farm business face in the future?” — it would appear that many producers may look past “the person in the mirror” when it comes to identifying those weaknesses.

Respondents rated the following as challenges to their farm’s future:

  • 80% identified “long-term downturn in commodity prices”
  • 40% said “lack of access to land or other assets”
  • 2.6% said “lack of management experience”
  • 2.3% checked “lack of management knowledge”

No doubt low commodity prices and lack of land are beyond frustrating. But longtime farm management consultant and Farm Futures contributing editor Dick Wittman says that in a SWOT analysis (strengths, weaknesses, opportunities and threats), commodity prices and land availability would be considered external threats — over which producers have little or no control.

On the other hand, producers do have control of their management skills and practices, which would be considered either strengths or weaknesses, and are internal.

In today’s rocky ag environment with razor-thin margins, one management weakness has the potential to ultimately become the farm’s Achilles’ heel. 

Focus on excellence

The results of the Farm Futures survey suggest that many farmers might want to take a closer look when it comes to the question, “Is there something in my management I could be doing better?”

Wittman says that when it comes to recognizing their own weaknesses, it’s not so much that farmers have a blind spot, as it is that they often have a lack of awareness. They don’t know what they don’t know.

“Most people get into farming not because they like to manage people or finances, but because they want to grow something,” he says. “But the good ones realize that they have to manage people and finances and learn to balance what they want to do with what they have to do.”

To help farmers get a better handle on which areas of their management practices need shoring up, Wittman developed the Farm Management Proficiency Test to look at best practices in finances, human resources, governance and other areas of farm management. Access the test at this link.

Wittman says farmers who want to improve their management skills also can find a wealth of resources online. Options include workshops, conferences, Extension classes, small-business administration classes or college courses.

For those with an appetite for a more intense learning experience, Wittman recommends The Executive Program for Ag Producers, held every January in Austin, Texas, where farmers learn advanced agribusiness skills. 

Don’t let size matter

In today’s agriculture, getting the people with the right skills is crucial for long-term viability. While big operations can hire the types of people they need, smaller operations may need to be more creative, like outsourcing or sharing a function with another operation.

“Size should never be an excuse for not accessing the best talent,” Wittman says. “If you’re not big enough to hire a bookkeeper or CFO, you may have to hire an accountant or financial consultant. If you can’t hire an HR director, you can certainly hire an HR coach. You can be a one-man show. But you need to be doing it well, with a blend of insourced and outsourced talent.”

Farmers should consider applying some of the same TLC to their management skills as they do their equipment.

“I think it’s basic human nature to want to improve, and farmers typically have a process they use for pulling their tractors and combines into the shop for a thorough inspection, service and tune-up,” he says. “Shouldn’t we also periodically be putting our management processes ‘in the shop?’ After all, that’s the engine that drives our business.”

In the mini-case studies that follow, four successful operators share how they’ve addressed weaknesses in their own management practices, in four distinctly different manners.

These examples differ in their respective business models, but a common thread is all were humble enough to realize they needed help with some facet of their business, and they all took the steps necessary to address their shortcomings.

These operations demonstrate an openness to recognizing that they can’t be experts in every aspect of their business. The key is a willingness to do whatever’s necessary to move in the direction of excellence.

Find someone who can do it better

Halderman Farm Management in Wabash, Ind., manages 240,000 acres of farmland in 19 states for absentee landlords.

Now in its 89th year, the company has long nurtured a culture of seeking trusted partners to whom it can outsource certain functions, to do the job more profitably and effectively for clients.

“Back in the ’70s and early ’80s, we used to manage timber harvests ourselves, on the farms we managed,” says company president Howard Halderman. “But then in the early ’80s, the government came out with some new cost-share programs for timber management, and with that came consulting foresters. We quickly learned that they could manage the forests for us much more profitably and effectively.”

More recently the company is considering outsourcing some of its farm drainage projects to a company that can not only do a turn-key job — engineering, design, bid acquisitions, labor, materials and supervision — but also will contact neighbors interested in that service. This can result in a more effective project for the whole watershed, with some accompanying economies of scale.

“In our business, we specialize in managing farms, and our strongest area is leasing,” Halderman says.

“If we can find someone with specialized expertise in things like forestry management, drainage, grain bin system layout and design, or other functions, it helps our bottom line and our clients’ bottom lines.”

Adding key positions

Whiteshire Hamroc in Albion, Ind., is a multifaceted family business that includes grain production, swine genetics for the U.S. and Asia, swine barn construction, production of pigs for use in human medical and research applications, and retail pork.

Finding good help, particularly for livestock producers, has never been easy. But with the ultra-tight labor market of the last couple of years, it’s become exponentially more difficult.

The company was also experiencing a high rate of turnover in a few entry-level positions, resulting in the loss of significant time, money and experience.

“As farmers, we’re pretty hands-on, quick to jump in and work, and not naturally great at being people managers,” says Rebecca Schroeder, Whiteshire Hamroc president. “So we recognized that we needed some help and focus in the area of onboarding, generating applications, reviewing applications, screening applicants, etc., all of which was extremely time-consuming for our managers.”

But neither grain nor livestock producers are awash in extra cash right now, so the option of hiring an experienced human resources manager was not exactly a slam dunk. Nevertheless, the need to address the bleeding in their labor arena was severe enough that the decision was made to bite the bullet and hire an HR professional for employment development.

Two years down the road, Schroeder says it’s been a good move. Other managers now have more time to do a better job of the things they’re good at, working with pigs and employees. Although the turnover problem hasn’t been solved, it has slowed, and there’s been more time for developing employee skills. 

“I can’t put an exact dollar figure on how much it’s benefited us, but it’s definitely helped us a lot,” she says. “Our HR manager had to take some time off lately, and we really missed her. It really left a void.”

Becoming more intentional

“It’s amazing how five people who came from largely the same gene pool can be so different,” says Scott Maple, of Maple Farms in Kokomo, Ind.

The diverse operation, consisting of multiple ag businesses, is run by five managing principals, all of whom are closely related. Three years ago, the Maples enlisted a strategic planning firm to help identify and improve communication between the family members.

“In some ways, being related makes communication harder,” Scott says. “You make more assumptions than if you weren’t family, which can lead to frustration, not being on the same page and other problems.”

To address this issue, the Maples realized they needed to become much more intentional about how they communicate. Now, every morning they have a 10-minute meeting during which all tell what they’re going to be doing that day. On most days, there are no surprises. But about 20% of the time, someone shares something that everyone really needs to know.

Every month they have a “tactical meeting,” typically three to five hours, where they discuss budgets, markets and other significant business items. Then every three months, they try to have a strategic meeting where they discuss key elements of the business in depth.

To further improve their communication, the Maples tightened their respective job descriptions. Initially, that created some frustration with managers having to give up some authority in certain areas, but the move has proved its worth.

Daryl Maple says they learned during their strategic planning that they needed to communicate three times as much as they thought was necessary to keep things running smoothly, even if such communication felt redundant.

They also learned that they had different communication styles.

“The older managers wondered why the younger ones were always texting,” Scott says. “But we’ve learned that when you text, you don’t have to write down what was said, and you also have a record of it.

“We communicate better than we used to, but we can still improve,” he says. “Although we can’t put a dollar figure on improved communication, it impacts everything we do and has made us more efficient, which has to help our bottom line. But probably the biggest thing it’s done is to improve peace of mind.”

Create a board of directors

Don Zolman of Pierceton, Ind., has always believed in having a diverse assortment of businesses interests. Currently, he has a farming operation, a duck enterprise, a trucking company and a warehousing company.

Early in his career, Zolman began asking his major suppliers — his banker, fertilizer dealer, marketing adviser, chemical supplier, machinery dealer, tire dealer and others — to become part of his “board of directors.” He says in a diversified operation like his, he finds all kinds of things that don’t fall within his knowledge base.

Zolman makes it a point to identify people who are honest and trustworthy, very knowledgeable in their field, and are not “yes men” (or women).

“As a part of doing business with them, I expect them to provide me with expertise in their area,” he says. “I tell them, ‘If you don’t help me stay in business, I can’t be your customer,’ and it’s in each business’s interest to help me be profitable.”

Zolman says having a board of directors doesn’t get him off the hook when it comes to doing his own homework, but he finds it helpful to get their perspectives.

“I don’t hesitate when it comes to something in an area I’m not familiar with, calling them to bounce ideas off them, get their advice,” he says. “This unique concept has worked very well for me, and it doesn’t add any cost to my operation. And sometimes some of them call me and ask me for advice. I’ve also developed some good friendships as well.”

Boone writes from Wabash, Ind.

TAGS: Management
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