Most Farmers work very hard and have done from an early age if they have been raised on a farm.
Growing up on the farm, they will have seen their father and mother work hard to get their farm on a firm financial footing. Most children from farming families were allocated jobs throughout their childhood to assist with the normal operation of the farm dependent on the type of farming operation and the time of the seasons; things such as helping with hay making, moving stock, operating machinery for planting and harvesting crops, helping at shearing time etc.
They were taught that hard work was how you got ahead, how you got things done, but although hard work is critical to most farming operations at some time in the farming cycle it is not, on its own, a way of creating a successful and sustainable farming business in today’s world.
Farming today is competitive, complex, and the rules under which farmers are now required to operate, are constantly changing. If farmers are spending all of their time working hard on their farm without allowing time for networking with other farmers and farming groups they will surely run into compliance issues sooner rather than later.
Whilst hard work is necessary it’s not on its own going to create a successful competitive farming operation. We will all probably know of people who didn’t put in the hard work because they were either too lazy or not disciplined enough – and they consequently failed at farming; and I am sure we all know of people who consistently work hard for long hours every week, milking cows, raising dry stock, sheep, deer, planting and maintaining crops, who also lost their farms.
Part of the problem and one of the reasons they lost their farms may have been that actually they were working too hard on the farm and not taking enough time to keep up to date with the changing environment in which they were operating and therefore did not keep up with regulatory requirements or with changing market requirement
Hard work does matter. It’s a necessary element of farming success, but hard work in itself isn’t enough.
“What you have to do to be successful, alongside working hard, is to pursue opportunities that can increase the strength of your business. You should make time to meet with other farmers at peer group meeting such as a farm advisory day, or a night class at the local community college.
As farm kids it was usually emphasized that the number one thing that mattered was putting in the hours. The work ethic being that if I work hard enough, success will follow. But the problem with relying on a work ethic of hard work alone means that we don’t know what we don’t know, particularly for young farmers.
By staying home working hard on the farm, we may never learn what we don’t know, or what we need to know to fully succeed in our farming operations. By looking outside of our own farming operation and identifying what others are doing and what is the current best practice and regulatory requirements, we give ourselves the opportunity to manage our farming operation to achieve the best possible financial outcomes.
2022: A New year with new challenges
It’s a new year and no doubt we’ll face new challenges. The global Covid pandemic has caused huge changes around every part of the agricultural industry both within New Zealand and around the world.
Instead of just working harder in 2022, given the fragile nature of international trade and economies (due to the Covid pandemic) linked to agricultural production, we need to assess our farming system’s strengths and weaknesses, so that we can eliminate the weaknesses and exaggerate the strengths.
We should challenge all of our on farm decision making to facilitate this assessment of where we are currently at in relation to our farming operations and how we are going to try to improve on that current position going forward into the New Year. We should look to get our friends and farm advisors to provide candid feedback on everything from financial management to practical farm operating decisions and once we have identified any weak areas, we need to commit to improving those areas in the next 12 months.
We need to set in place a plan to achieve those improvements and we need to remember that the most successful farmers are the ones that don’t just work hard, they also study the latest best practice farming methods & the latest regulatory requirements, the latest market requirements and then try to ensure that they stay ahead of the current trends in the market place. Those who succeed at farming don’t just do it with hard work; they also take the time to learn what they are doing (good or bad) and then implement systems to improve their farming operations to ensure that they stay in front of the pack.
Most farmers love to farm their produce but some struggle when it comes to financial management, business governance and strategic planning that can lead to more profitable, professional operations.
Many farmers seem to just coast by on gut feel and because they are making money, they don’t bother with in-depth best practice operational or financial studies. That’s something very few farmers actually do, and too many just get by on the financial side due to good luck as they are too busy out there doing the practical fun part of farming.
We should all create at least a simple budget that can project year-end revenues and be able to be updated at all times throughout the year, if there is a major change in the current market conditions that will affect our farming operations, either practically (change in product type demand) or financially (major change in commodity prices on the world markets which may affect the local pricing).
These are areas where many farmers just get by, or don’t do it at all, when in fact the need for better budget planning and financial management has never been higher than it is today due to the influence from Covid, effects of inflation and the sometimes vast sums of money farm operations require to be invested. You need a well thought-out capital expenditure budget, with analysis that allows you to optimize your decision making.
A lot of farmers make decisions to acquire equipment or implement operations that will cost hundreds of thousands of dollars and when making a decision of this scale they should always analyse all factors that may affect the outcome of this decision before making it, as opposed to thinking, ‘I can afford it and the bank will finance it.’
Having a continuous commitment to implementing professional business governance and financial practices will be a key factor in your long-term farming viability and sustainability.
What are you waiting for?
So how do you start identifying weaknesses and incorporating change to best practices in your farming operations?
You have to be honest about where improvement is needed in your farming operation as this will then identify areas you need to re-evaluate, maybe strengthen practical skill sets and make operational changes. It may feel like your farming operation needs a lot of work, but you shouldn’t get discouraged. Many farmers don’t know what they don’t know, but once exposed to information regarding the latest market requirements, best practice operational methods and regulatory requirements, they began “to understand what they don’t know” and make changes.
Many farmers join peer groups, which not only helps them learn by networking with similar farm operators, but also helps push them towards implementing change on their own farms. We all need to remember that continuous commitment to improvement is a key factor in long-term viability and sustainability of our farming operations.
Andy Loader