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What business management area would you improve on your farm?What business management area would you improve on your farm?

A young farmer conference gave the chance to see their business IQ in action.

David Kohl

April 6, 2021

2 Min Read
<p>Club owners can use many metrics or key performance indicators (KPIs) to offer insight into operational success and arm themselves with data to make educated decisions when budgeting expenses. (Photo by Thinkstock.)</p>

After one year of being stuck at home, my first face-to-face conference was a three-day event with aspiring young farmers. Even with social distancing and the proper precautions, the level of engagement was beyond my expectations, particularly after being socially isolated for a year.

One of the exercises the young farmers completed during the event was the business IQ assessment. A special nuance was that the young farmers’ sponsoring loan officer did the same task separately. After completing the exercise, each individual was asked to identify three management areas to improve. Let’s examine the results of this exercise.

Completing a cash flow and upgrading the farm record-keeping system both tied as the number one area to improve on the young farmers’ list. Next on the list was to develop a personal family living budget. This was particularly encouraging for these young farmers because the management of personal finances is often linked to the ability to grow and meet debt service requirements.

Transition management was high on the list for improvement. Many of the participants are involved with family businesses that are incorporating the next generation. However, informal discussions revealed that this group of young producers were frustrated by the senior generation's complacent attitude to get the process going before it was too late.

Related:Farm business planning: Tool for the times

The next item on the list for improvement identified by the young producers was to develop cost of production metrics. Many of the participants were involved with multiple enterprises and they could see the need and benefit for specific budgets in each area of the business. One frustration expressed by the group was how to allocate fixed and overhead costs across various enterprises. A simple, quick, and dirty method can be used to allocate fixed costs as a percent of revenue generated by the enterprise.

Moving to the lenders, they placed transition management as the number one item on the list of management improvements for the young producer group. This was followed by developing and executing a marketing and risk management program, whether for a commodity or value-added business model.

The next item on the lender’s list was the development of written goals. The lenders indicated this step could go a long way in improving the communication process of working with their lender.


The young producers actually graded themselves tougher than the lenders. On average, the business IQ scores of the young producers were 2 points lower than the rating given to them by their lenders.

Related:3 traits for post-COVID farm business success

Source: Dr. David Kohlwhich is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

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