Management

10 Leadership Habits That Make Employees Want to Stay

Thu, 16 Apr 2026 16:01:33 GMT

Hiring good employees is only half the battle. Keeping them engaged, motivated and committed to the job often depends on the relationship they have with their employer. Pay matters, but day-to-day interactions, clear communication and trust can have just as much influence on whether employees stay and perform at a high level.

Management and leadership expert Bob Milligan says supervisors who focus on strengthening relationships with their teams often see gains in productivity, motivation and long-term employee retention.

“We focus on improving our relationship and mutual trust with family and friends,” Milligan says. “It is easy to forget that the supervisor-employee relationship is also an interpersonal relationship.”

He outlines 10 practical strategies farm leaders can use to build stronger, more effective workplaces.

1. Practice Active Listening

When people think about communication, they often think about speaking. Milligan says listening is just as important, particularly for employers.

“Active listening means you are listening with all your senses,” he explains. “You are listening to understand both the message that is being delivered and the underlying emotions.”

Because farm leaders hold a position of authority, employees may hesitate to speak openly. Failing to listen can send the message that their input is not valued.

2. Ask Questions

Employees are more likely to share ideas and concerns when they are invited into the conversation.

“The best way to involve them is to ask questions,” Milligan says.

Two simple questions he recommends asking regularly are: ‘What is going well?’ and ‘What could be going better?’

These prompts help employees reflect on their work and provide constructive feedback.

3. Encourage Employees to Share More

Even when employees begin sharing their thoughts, they may stop before fully explaining their perspective.

“To be certain you have everything, ask ‘tell me more’ or another variation ‘and what else,’” Milligan explains. “I have found this question almost always yields additional valuable information.”

This approach signals genuine interest and helps managers better understand the full situation.

4. Circle Back After Important Conversations

After meaningful or emotional discussions, a quick follow-up can reinforce trust.

“In these situations, it is good to circle back in a day or two to check in,” Milligan says.

The purpose isn’t to restart the conversation but to see if the employee has additional thoughts or unresolved concerns.

5. Strengthen Employee Decision-Making

When employees ask how to complete a task, supervisors often provide a quick answer. Milligan suggests using these moments as opportunities for development.

Ask the employee how they would handle the situation.

“You are providing an opportunity to think, which improves decision making,” he says. “The other big advantage is that next time the employee may not have to come to you.”

6. Introduce New Responsibilities in Small Steps

Employees often want to grow in their roles but may hesitate to take on more responsibility because they fear failure.

“Research into human behavior shows that part of human nature is to grow,” Milligan explains.

To reduce that fear, he recommends introducing new responsibilities gradually.

“You cannot get to Z without going through A, B, C, D, E, and F,” he says.

Breaking responsibilities into manageable steps allows employees to build confidence as they develop new skills.

7. Be Transparent About Follow-up

Some supervisors avoid checking in after training or feedback because they worry it will feel like micromanaging. Milligan recommends setting expectations ahead of time.

“To avoid this concern, inform the employee in advance that you will be following up to answer questions or provide anything else they need,” he says.

When employees expect follow-up, it becomes a supportive step rather than unwanted oversight.

8. Set Clear Expectations

Unclear expectations can quickly create frustration and damage trust.

“Think about a time when you were unclear about what was being expected of you,” Milligan says. “I suspect you were frustrated and potentially lost trust with the person not providing clarity.”

Clearly outlining expectations for behavior and performance helps employees understand their roles and responsibilities.

9. Provide Quality Feedback

Effective supervisors use three types of feedback: positive, redirection and negative.

“High quality, specific positive feedback enhances the employee’s confidence and desire to continue to excel,” Milligan explains.

Redirection feedback helps employees learn and improve, while negative feedback should be used sparingly and framed around choices and consequences rather than reprimands.

10. Lead by Example

The final tip focuses on actions rather than words.

“It is crucial that you ‘practice what you preach’ or ‘walk the talk,’” Milligan says.

When leaders fail to follow the same expectations they set for employees, trust erodes quickly. Modeling the behaviors you expect reinforces credibility and strengthens the workplace culture.

Together, these strategies highlight how everyday leadership habits can shape workplace relationships. By listening carefully, communicating clearly and modeling strong behavior, supervisors can create environments where employees feel respected, supported and motivated to perform their best.

Leadership Is Costing You More Than You Think

Thu, 05 Mar 2026 15:04:55 GMT

When deciding how to make ranches more profitable, there is often one overlooked area of improvement — leadership. Strong leadership on ranches impacts profitability through improved employee retention, continued learning and more confident decision-making. Tom and Terryn Drieling are true examples of how investing in leadership builds a more profitable ranch and an enjoyable lifestyle.

“I think it’s our role as ranch managers to provide an opportunity for the next generation. It’s our responsibility for everybody to have an opportunity regardless of what their background is,” explains Tom.

He has managed a unit of a ranch in the Nebraska Sandhills for more than 10 years, and Terryn works as seasonal help in addition to operating her own business, which helps people in rural communities improve their own lifestyles and leadership skills.

“I think that having good leadership is so important because it kind of sets the tone for the rest of the crew,” says Terryn. “If you have somebody in the leadership role that can create a good work environment and bring everybody together, you’re going to have a more enjoyable workplace and improved production and efficiency.”

Tom has been very intentional about improving his own leadership skills, and the results are clear to both his crew and general manager.

He shares, “The work I was doing for myself was extravagant enough that my boss saw it. We saw that in profitability, the motivation of our guys, the production of our herds and the way we interacted with the other units.”

He is a big believer in utilizing continuing education opportunities to improve leadership, but making the decision to do introspective leadership work is what has made the biggest difference.

“When we first started here and Tom took over the unit manager position, there was definitely some communication hangups,” shares Terryn. “But over the years, Tom has really done a great job of being introspective and doing some inner work, and learning different ways to communicate with people.”

He spent time learning not only which communication styles work best for him but also those he works with on the ranch.

She says, “Watching that transformation has been really cool…the culture has shifted and now everyone else is starting to do the work too. It’s fun when we crew up.”

While impactful, this wasn’t an overnight shift. It took time and lots of effort.

Tom says, “Now I’m kind of working on my tone and my delivery when I communicate, and I’m not going to lie to you, it’s taken time, it’s taken a ton of work.”

Improving leadership on operations starts with you and doing a self-audit of sorts.

“In stockmanship, the first thing that we need to have to handle our cattle in a low-stress manner is self-awareness. We need to be aware of our energy and what that is conveying to our animals,” explains Terryn. “The second thing is social awareness. We need to be aware of what our animals are telling us. And animals are really good at reflecting things back to us…start there.”

Animals can tell you if you came into a situation with big energy, angry, anxious or calm.

Terryn says, “And then you can take it back to your human-to-human interactions and you can see how people respond to you and reflect back and see what’s going on inside of you and use that as information to improve your own leadership.”

During this process, it’s important to remember that nobody gets it right all the time. We are humans.

“You’re not going to have perfect communication all the time. What’s important is repair,” says Terryn. “If you come into a situation and it doesn’t go well, you can always go back and say, ‘Hey, I am really sorry. I came in really hot and I’m sure that did not feel good.’”

In situations where leadership from employers feels lacking, remember to lead up!

She shares, “You can kind of foster some of that leadership within yourself by asking the right questions, opening lines of communication and providing positivity in a slew of negativity. Because I really do believe in the stockmanship phrase, ‘good movement draws good movement,’ and good movement starts with us.”

As Tom reflects on the benefits he’s seen from improving his own leadership skills, he encourages others to invest in their employees and genuinely care about their well-being.

He says, “Always be continuing education. Invest in yourself, invest in your employees. I don’t think enough credit is given to the guys that are operational. I think they get taken for granted. Invest in those people.”

Employees have lives outside of work, and that can’t be forgotten.

He says, “I want my guys to come home at the end of the day, 100% healthy. They have their own lives… I want to do everything I can to leave those guys to do their job, but supply them with the ability and the tools to know I have their back. If you need something, call me. If you need a direction, call me. If you need a tool, call me.”

Transparency in communication also can’t be overlooked.

“Try to be transparent in as many things as you can, but attitude is everything and the tone that you come to work with and the tone that you interact with your employees sets the entire tone for your company as a culture,” Tom shares.

Remember, good ranch leadership doesn’t just impact today’s generation, it impacts the ones to come too.

Tom says, “I think it’s our duty as leaders and ranch managers or production agricultural people to help the next generation be more qualified for our roles than what we are. They’re going to have to provide more with less.”

Listen to the full conversation on the Casual Cattle Conversations podcast .

Overcome the No. 1 Challenge in Passing Down Your Family Farm

Mon, 30 Jun 2025 18:41:37 GMT

Between now and 2048, about $124 trillion is expected to exchange hands from older to younger generations in the U.S., according to Cerulli Associates, a Boston-based market research firm.

For perspective, that dollar amount is approximately five times the size of the 2023 U.S. Gross Domestic Product (GDP), which totaled $27.72 trillion.

How will farmers fit into what many people are calling the “Great Wealth Exchange” over the next two decades? Much of it is specific to land, according to the American Farmland Trust (AFT). It predicts 300 million acres of U.S. agricultural land will change hands in the next 20 years.

Based on $5,000 an acre for farm ground, Paul Neiffer, the Farm CPA, estimates that would be a transfer of between $1.5 trillion and $2 trillion in land from older farmers to younger generations.

“If you throw in rangeland, that’s another trillion, so $3 to $4 trillion at most is where I think we’re at,” Neiffer says.

The Reason Succession Often Fails

A common issue is that while 69% of farmers plan to transfer their operation to a younger family member, only 23% have a plan , according to AgAmerica Lending LLC.

But the No. 1 issue that trips up people in the succession planning process is most people – farmers included – focus more on the mechanics involved in transferring assets than on keeping their family relationships intact.

That’s according to Amy Castoro, CEO and president of The Williams Group, a family coaching and consulting organization. Her firm does relationship planning to help family members make sure they’re still speaking to each other after the wealth transfers.

Many times, she says, the friction in the transfer of wealth has little to do with money and material goods and a whole lot more to do with whether the family members involved felt loved.

A Formula For Success

The Williams Group did a 20-year field study and from that developed a formula for how people need to focus their time and energy in the succession process.

The company recommends spending:
60% of your time on building family trust and developing good communication practices;

25% preparing your heirs to take over the operation, laying the business and fiscal groundwork for the farm to continue under their leadership;

10% of your time getting on the same page about your family’s values and having a family mission;

5% of your time on the estate planning mechanics, the nuts and bolts of how the assets will transfer.

In addition, The Williams Group advises that you work with your heirs to:

Strike a balance between control and collaboration.
Embrace the next generation’s perspectives.
Bolster intergenerational solidarity.
Embed high-trust behaviors.
Co-design standards for readiness.

Start The Plan Sooner, Not Later

If you want to see your farm succeed with the next generation of family members, make sure you have the right structure in place – and set it up sooner than later. Don’t put it off, Neiffer advises.

Once you have a plan in place, you have a tool you can modify to fit what your family and farm need over time.

“Having a plan in place can help alleviate stress, even if things change down the road,” Neiffer says. “Keep in mind that farming is a dynamic business and your plan needs to be, too.”

Your next read: Big Questions Remain For Next Gen Farmers

The Importance of Dairy Heifer Selection

Tue, 06 May 2025 13:12:19 GMT

According to Michael Overton with Zoetis, merely raising a heifer does not automatically guarantee her a place on your farm, despite the opportunity she represents to upgrade the herd. At the 2025 Western Dairy Management Conference in Reno, Nev., Overton emphasized the significance of evaluating each fresh heifer’s ability to improve the herd compared to the current cows.

Evaluating Heifers for Upgrade Potential
Producers should assess every heifer entering the herd, questioning whether she represents an upgrade over the lowest value cow currently in place. Overton suggests that if a heifer stands out as an upgrade, she should replace a current cow in the lactating herd.

“If she represents an upgrade, bring her in. Let her join the lactating herd, which means she replaces a current existing cow,” he said.

This assessment is crucial as it influences the overall quality and productivity of the herd.

Significance of Heifer Replacement Rate
Key factors in the heifer replacement decision include both the quantity and quality of heifers produced. Although heifer replacement rate is a poor monitor, it’s essential in planning for future herd needs. High genetic potential, suitable growth and development, good health and age-appropriate first calving are critical indicators of a successful heifer.

“Heifers coming into the herd should represent an upgrade over the cows that are leaving the herd,” he says. “If not, we’ve got some serious flaws in some of our decision making.”

Planning for Future Heifer Needs
The dynamics of heifer replacement rates involve assessing past trends and projecting future needs. Overton says producers often overestimate the number of heifers that make it to calving. Thus, understanding historic performance over the past 24 to 36 months is vital for accurate future predictions.

“As you increase the quality of the heifers that come in, you put more pressure on the existing cows, and that’s a very important concept to remember, that’s where we’re always striving to try to improve the quality of heifers that is coming into the herd,” he says.

Understanding heifer completion rate is key when managing herd dynamics. Producers should focus on various stages, such as the percentage of heifers that conceive and actually calve, and the percentage of heifers reaching specific age milestones. Additionally, monitoring the percentage of heifers sold or died in various age brackets provides insight into herd health and management effectiveness.

Quality Matters
Quality improvement among heifers results in more cows being replaced. Quality encompasses factors such as future profit potential and desirability, with specific characteristics including high genomic and production potential, adequate size shortly after calving, optimal conditioning, ideal age for first calving and lack of carryover health issues.

Heifer completion (liveborn to calving): key stages and measures:

Percent of heifers that conceive that actually calve
Percent of heifers reaching 365 days of age that conceive
Percent of heifers sold from 91 to 365 days of age
Percent of heifers died from 91 to 365 days of age
Percent of heifers sold by 90 days of age
Percent of heifers died by 90 days of age

Quality refers to characteristics related to future profit potential and desirability of heifers.

Economic Considerations
Overton advises integrating economic evaluations into decision-making. Calculating the net replacement cost involves assessing trade-in values between market cows and the cost of new acquisitions. The impact of milk prices further underscores the need for strategic economic planning.

Ultimately, optimizing heifer selection is a strategic move that profoundly influences herd quality and productivity. By focusing on evaluation, planning and economic considerations, producers can ensure their herd remains competitive and efficient.

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3 Steps To Honestly Evaluate Your Farm's Performance

Thu, 27 Mar 2025 14:18:04 GMT

You’re only ever in three stages of life:

As good as you think you are
Better than you think you are
Worse than you think you are

Most of the time it’s No. 3. “But, Shay, my feelings!” Settle down, this isn’t to make you feel bad about yourself. It’s to reflect on how you’re treating yourself.

Step 1
The first step is expectations and goal management. Your perception of how well you are doing is probably dictated by the ability to achieve your expectations. Do your expectations only live in your head? Then you need to write them down. People who write down their goals are 80% more likely to achieve them. Then you need to evaluate, are these realistic expectations?

Step 2
The second step is prioritizing. You can only improve what you measure, and you shouldn’t measure what you aren’t willing to manage. Whether it is time management, work-life balance, profitability projections, marketing plans or yield goals, if you don’t measure how you’re doing, how will you ever improve? On the other hand, why are you worried about the markets if you aren’t going to forward market? Does stressing about the price of fuel matter if you’re going to keep the grain cart tractor idling all day at $175 per engine hour anyway? Prioritize what matters and measure it diligently.

Step 3
The third step is being honest with yourself. It’s important to look at each aspect of your business and rate yourself. You can come up with your own metrics, but it might look something like this.

Are my financial reporting mechanisms in order: cash flow, balance sheet, accounting system, tax preparation, etc.?
How would my team rate my leadership and engagement over the past 90 days?
Am I communicating effectively to landowners, team members and stakeholders?
Are opportunities being fairly assessed for economic progress and determination of alignment with our business?
Is my equipment maintenance plan what it should be and am I doing the work in a timely manner?
Am I taking care of my personal health and family obligations, as well as prioritizing the things that really matter to me in life?

Design your own metrics for business success. Honestly, my scores are pretty darn low in a lot of these categories right now, but it is an important metric for me to track and implement changes where I can to steer the ship in the right direction.

Set your expectations appropriately and get them on paper. Prioritize what needs to be done and spend less time doing what you aren’t willing to change. Be honest with yourself and assess how your farm is performing.

As you read this, are you as good as you think you are, better than you think you are, or worse than you think you are?

Heads Up: Corporate Transparency Act Still in Limbo

Fri, 27 Dec 2024 19:49:01 GMT

The ongoing legal battle over the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements has seen significant developments in the past month:

Dec. 3: A nationwide injunction against the CTA was issued by the U.S. District Court for the Eastern District of Texas.
Dec. 23: The Fifth Circuit Court of Appeals stayed the injunction, reinstating the CTA.
Dec. 26: The Fifth Circuit vacated its earlier stay, potentially reinstating the injunction.

What Does This Mean for Farmers?
The if and when regarding BOI reporting is unknown, but should the CTA be upheld, here’s what we know.

Corporations, limited liability companies (LLCs), limited partnerships (LP) or any entities created by filing a document with a secretary of state must file online reports to the Financial Crimes Enforcement Network (FINCen) , disclosing information about the beneficial owners of the entities. The following information is required:

legal name
current street address
the state in charge of its filing requirements
taxpayer identification number

As of Dec. 27, entities in existence before Jan. 1, 2024, now have until Jan. 13, 2025, to make their first BOI report. However, the Jan. 13 deadline might change based on court outcomes. Entities created or registered in 2024 have 90 days from creation to get their first reports filed.

Conflicting rulings make it difficult for entities to determine next steps. A final decision is expected soon, but the timeline remains unpredictable.

In the meantime, monitor legal and regulatory updates closely, and prepare for compliance by drafting BOI reports to ensure readiness if the CTA is upheld.

Tax Turbulence: How Sunsetting Provisions Could Change Your Bottom Line

Thu, 19 Dec 2024 15:47:00 GMT

With 30 tax provisions set to expire at the end of 2025, the tax liabilities for family farms could increase at a time America’s farm families can ill afford any additional hits to the budget. Uncertainty surrounds the 2017 Tax Cuts and Jobs Act (TCJA) and American Rescue Plan Act (ARPA)–especially as a new administration is in route to the White House.

“The cost of the TCJA is significantly higher than was originally estimated in 2017. The newest estimate we’ve seen is that a full extension of the TCJA is going to cost $7.75 trillion through 2035,” says Pinion’s Beth Swanson. “With the budget reconciliation process and the expected cost, we’re worried that Congress is going to have to pick and choose which provisions of the TCJA are going to get extended next.”

According to research from USDA ERS, the impact of these expiring federal income tax provisions would increase tax liabilities for farm households by almost 9 billion. That’s a $2,200, or 12%, average increase per farm.

Increase in tax liabilities resulting from expiring Tax Cuts and Jobs Act (TCJA) provisions that would increase tax rates, decrease deductions, and restore personal exemptions.

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Broken down by farm size, that looks like:

Low sales farms: Tax increase of about $700
Moderate sales farms: Tax increase of about $2,300
Very large farms: Tax increase of nearly $28,000

“Interestingly, in percentage terms, moderate sales farms are expected to have the greatest increase in tax liabilities at about 16%,” says Tia McDonald, USDA ERS. “They’re in an in-between area where they’re not quite getting some of the exemptions that higher income folks can take advantage of like bonus depreciation and even 179.

Farm CPA and Top Producer columnist Paul Neiffer adds, “Another part of it is the percentage increase of going from a 12% tax bracket to a 15% tax bracket. A lot of those moderate-income farmers also have 2, 3 or 4 kids that, under the current rules, qualify for the $2,000 tax credit, which is going to drop down to a $1,000 tax credit.”

As far as which provisions are the most important for farmers and ranchers, McDonald says the biggest impact will come from be provisions providing reduced individual income tax rates, an increased standard deduction, a cap on state and local tax deductions, and the elimination of the personal exemption, which would create an increase in total tax liability of $4.5 billion for all farm households.

“The reason for that is that it touches almost every farm household. So, the reach is quite broad,” she explains.

The Qualified Business Income Deduction
The second most important provision set to expire that McDonald lists is the qualified business income deduction, which provides farm households with positive business income a deduction equal to 20% of their qualified business income.

“Approximately 40% of low sales farms to almost 80% of very large farms receive that qualified business income deduction,” McDonald says.

Estimated Impact of Expiring QBI Deduction

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Referring to the results of a recent survey, Kent Bacus of National Cattlemen’s Beef Association (NCBA) says even though this deduction hasn’t been around long, it’s been valuable to producers.

“As far as the 199A qualified business income deduction, with that being relatively new, we still had over half of the [1,200] respondents who have used it, and they’ve considered a very important tool,” Bacus says. “I think that’s something that we want to see continue in the next package.”

Child Tax Credit and Bonus Depreciation
McDonald says additional provisions, such as the child tax credit, the estate tax exemption, alternative minimum tax provisions and bonus depreciation, will likely have less of an impact on tax liabilities overall.

“Those are really targeted toward higher income farm households, so they don’t have quite the reach,” she explains.

Swanson, however, says the loss of bonus depreciation would still be notable for many.

“For bonus depreciation, sunsetting is a concern – especially because Section 179 isn’t really a one-for-one trade. With commodities that are heavier on equipment, producers tend to use bonus depreciation year after year,” Swanson says. “It’s more than just a timing difference. The loss of bonus depreciation will be a significant annual effect to many of the farmers that we work with [at Pinion].”

This is echoed by the results of NCBA’s survey as well.

“When you look at Section 179 and bonus depreciation, one of the key things we ask is, ‘If these tools weren’t available, how would that impact you?’,” Bacus says. “What we found is without access to these tools, about 25% to 30% of the respondents would have had to pay an additional $20,000 in taxes.”

The Timeline
Once the new administration is in place, Bacus believes we can expect Congress to act quickly.

“We have new leadership in the Senate and new leadership in the administration. They’re going to try to prioritize a couple of key things that will be important to the new administration, and a couple of those are going to be border security and taxes.” Bacus explains. “We’re looking for a lot of movement in those first 100 days.”

But Swanson says it’s possible that movement may not be focused on extending these provisions in the beginning.

“We are worried about President-elect Trump’s varied tax commitments and the distraction those might provide to getting the TCJA extended,” Swanson says. “I think the best thing we can do is wait and see. We will hope that the legislative process goes fairly quickly and Congress is able to avoid all of those distractions that may prevent us from getting TCJA expansion done.

Once these provisions are in focus, Bacus believes there are a few avenues it could take.

“With those tight margins in the House and the Senate, you are going to have to have some kind of bipartisan package that comes together. The big question is, are they going to update the tax code? Are they just going to extend it? Or will we potentially see a default if all these efforts fail,” Bacus says. “I think it’s unlikely that the efforts have failed, but the aggressive timeline that’s been proposed is always subject to the minutia and the swamp nature of Washington. That tends to slow things down.”

Neiffer expects an extension with a few key changes.

“I don’t think we’re going to see a permanent TCJA,” Neiffer says. “We’re going to see another three to five or five to seven years. Some of the provisions may become permanent and some will disappear. And you’re going to see some new ones come into effect.”

Your Next Read: Will the Tax Cuts and Jobs Act Get a Second Life?

Does Your Culture Need A Change? Here Are The Warning Signs

Mon, 25 Nov 2024 20:51:15 GMT

Sometimes we just don’t like the way things are. Truth be told, that doesn’t always mean that things need to change. Sometimes, it’s on us to adapt or accept circumstances beyond our control. However, there are real signs that an operations’ culture is a problem. Here are six to look for when considering the need for culture change:

Frequent employee turn over
Secrecy or hidden information
Back-stabbing among staff and family
Overt jockeying for position or favor
Lack of trust or reluctance to trust
Poor or contradictory communication

Any one of these items can indicate it’s time for a culture shift, but three or more means the culture is in jeopardy, for sure.

Remember from Part I that I mentioned all families and businesses have culture; it’s either intentional or assumed, but we can all sense that it’s there. To consider if your culture is in the healthiest form, take a read of some common culture types and consider where your business fits. You might find that you’re a blend of a few of these.

Types of Culture

Types of culture - Sarah Beth Aubrey - November 2024 Top Producer

(Lori Hays)

Clan: This is a tight-knit operation, usually all family or at least family and trusted advisers. Everyone must pull their weight and all rewards get (generally) shared. Non-members are often disregarded or untrusted.
Risk and Innovate: This culture values being first. Ideas are accepted and encouraged. Risks, including big financial risks, are attempted with success and failure. This operation always is first to try the new tech.
Results-Driven: This culture is all about profit and productivity. It’s a banner of pride to never take a day off. Expenses are kept to a minimum, even when spending money could make things easier or quicker.
Ruler-Peasant: In these operations there is only one alpha. All plans run through the leader. Individual ideas aren’t valued unless expressly approved. Ideas implemented without approval are seen as an affront.

Culture Changes
You can change culture, but as you can imagine, it takes time and steady progress. Remember, culture forms over time, so shifting it won’t happen instantly. A few fast tips to support changing culture include:

Values: These are the deep-seated beliefs that people hold and that rarely shift. Is our current culture reflecting these values?
Mission: This is about the purpose and the way an operation lives out their values. This absolutely can shift overtime, often as people age and mature or as new people take on leadership roles. A common farming mission is to build a business that transfers to the next generation. Does the current culture support the likelihood of that happening?
Goals: Goals are the aims the business intends to achieve that are brought about by their actions. If your operation hasn’t truly set or updated the short- and long-term goals recently, doing so could create an excellent pathway to changing culture.

Advice to Farmers: The Do’s and Don’ts of a Line of Credit

Fri, 27 Sep 2024 14:32:38 GMT

With the ups and downs of the market come an unsteady cash flow. This is something most producers understand all too well, as a volatile market is typical for agriculture.

Phil Young, AgCredit Said It podcast host and account officer, says a line of credit (LOC) is like a credit card.

“By having a line of credit, you can take advantage of opportunities when you see fit, like purchasing inputs for the next crop season when prices are lower or having the flexibility to purchase feed when you need it,” he says.

According to independent dairy financial consultant, Gary Sipiorski, producers need to make sure they understand the terms when it comes to when and how the interest is calculated.

“The interest rate on a LOC normally changes monthly,” he says. “It is a variable rate.”

Sipiorski also says producers should ask their lender the following questions.

Will the LOC have to be paid in full by the end of the year? Does it then have to be renewed?

If the LOC rolls from year to year, when does it mature?
What is the agreement with the lender as to how and what purposes is it to be used for?

Curtis Gerrits with Compeer Financial offers the following do’s and don’ts of a line of credit.

Do’s of a line of credit:

In times of tight cash flows and decreased income, utilize your lines of credit as an extension of cash flow to stay current with your vendors and operating expenses.
Set up automatic and regular payments to be applied to your lines of credit to ensure payment down on the principal balances. This will also allow for the availability of funds in times when they are needed.
For tax planning purposes, use your lines of credit to prepay expenses for your next fiscal year. This can assist with tax liabilities and may also create opportunities for early discounts with some vendors.
Monitor your lines of credit closely, just as you would your checkbook. Have a good understanding of what you have applied to your line of credit, along with when and how much you can pay down. This will better help your planning for future months and keep the accrued interest at a minimum while utilizing your lines of credit.

Don’ts of a line of credit:

Do not use lines of credit when cash is sufficient for operating expenses. Avoid creating additional operating costs from increased interest expense when it is not necessary.

Do not defer to interest-only payments with your lines of credit. Set up regular and automated payments to pay down principal balances. You can always pull funds back from the line of credit if needed.
Do not use your lines of credit for purposes they are not intended for. This will ensure that funds are available when you need to utilize your lines of credit for their intended purposes.

Lines of credit are a great cash flow tool for both starting farmers and well-established producers. Leading financial experts underscore the importance of farmers understanding the do’s and don’ts that will help them during the downside of the rollercoaster markets they have gotten to know.

USDA’s Latest Farm Income Data Looks Brighter Than Early 2024 Numbers

Thu, 12 Sep 2024 15:42:03 GMT

USDA–Economic Research Service (ERS) has released updated projections for 2024 farm income, and though it’s still anticipated to decline, the outlook doesn’t look quite as dim as it did earlier this year.

The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is about 7% down from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year that suggested net farm income would fall 26%.

“There are a lot of factors going on here, but to me, the primary ones are that the revisions reflect expectations that animal and animal product cash receipts will increase while production expenses will fall,” says USDA–ERS economist Carrie Litkowski. “This is largely due to the incorporation of new data.

Litkowski shares the primary cause for the fall in 2024 farm income comes from commodity prices. Cash receipts or sales are expected to decrease by $27.7 billion. When combined with the inventory adjustment for crops, the value of crop production is forecast to decrease $25.6 billion from 2023. The largest decline comes from corn and soybeans, though wheat producers are expected to have a nearly 50% decline in average net cash farm income in 2024.

USDA ERS Row Crop Cash Receipt Projections 9-5-24

(USDA ERS)

But it’s not all bad news for crop farmers. Fertilizer expenses are expected to fall almost 10%.

Better News in Livestock
The outlook for livestock producers is more positive. Total animal and animal product recipes are expected to increase by $17.8 billion, or 7.1%, with the main driver coming from egg prices.

“Receipts for eggs are perhaps the biggest story here, in that they are forecast to see the largest increase in 2024 at 35%, or about $6 billion. Eggs alone account for a little more than half of the total increase in animal and animal product receipts,” Litkowski says. “Back in February, we did not anticipate that egg prices were going to increase as much as they have. That’s due to supply restraints we’re seeing due to the avian flu.”

Dairy farm businesses can expect to see the largest increase in average net farm income at 47.2%. Litkowski attributes this to higher milk receipts and lower expenses in 2024.

Farm businesses specializing in hogs are forecast to have an 11% increase but remain low relative to prior years. Beef farm businesses are projected at a 9.7% increase and poultry will see an 11.7% increase.

USDA ERS Livestock Cash Receipt Projections 9-5-24

(USDA ERS)

These operations should see big savings in feed as well, with an anticipated decline of 12%.

Geographic Breakdown
Looking at the data by region, six of USDA’s nine regions will see lower average net cash farm income. Farmers in the heartland states will be hit the hardest with a 23% decline.

Income increases are forecast for producers in the northern crescent and fruitful rim regions — between 1% and 4%. Litkowski says this is where many dairy farms are located and can be attributed to the expectations for higher dairy receipts and lower expenses.

“Regional performance of farm businesses can vary considerably due to the strong geographic concentration of certain production specialties or average farm size,” she explains. “Across all farm businesses, average net cash farm income is forecast to decrease 9% from 2023 to 2024 in nominal dollars.”

USDA ERS Farm Income By Region 9-5-24

(USDA ERS)

Household Income Remains Unchanged
Total farm household income is projected to increase 1.7% in 2024 to $99,683. However, when inflation is taken into consideration, Litkowski says she categorizes it as “relatively unchanged”.

“1.7% is less than the expected rate of inflation in 2024, so it’s really more like a decline of 0.7% in real dollars,” she explains.

The Big Picture
While this year’s income projections may have producers concerned about their bottom line, USDA–ERS stresses the importance of looking at the numbers with the past 20 years in mind.

“The farm sector balance sheet is projected to remain strong,” Litkowski says. “Net farm income fell 22% from 2022 to 2023, and in 2024 net farm income is forecast to fall nearly 7%. Even with these expected declines, both sectors in 2024 are forecast to remain above their 20-year-average.”

USDA ERS Farm Income 20-year Average 9-5-24

(USDA ERS)

Click here for the full report.

Your Next Read: How Do You Know When Agriculture Is In A Recession?

Harnessing Technology to Elevate How We Care for Youngstock

Thu, 05 Sep 2024 14:03:41 GMT

In an industry where external factors like Mother Nature, milk markets, and regulations dominate, farmers have found solace in the few controllable elements of their operations. James Vander Waal, an Iowa dairy producer in Hull, is a prime example of how technology can be leveraged to enhance efficiency in dairy farming.

Vander Waal manages a dairy operation, milking just shy of 1,600 cows located one hour outside of Sioux Falls. Despite not considering himself a tech enthusiast, he humorously admits, “I guess I kinda am.”

Technological Transformation
About seven years ago, Vander Waal initiated a technological transformation on his farm by installing SenseHub Dairy collars (previously known as SCR Dairy) to track his cows’ heats. Alongside these collars, he utilizes sort gates and milk meters to further streamline his operations.

Earlier this spring, Vander Waal took another leap forward by installing SenseHub Dairy Youngstock after his calf feeder quit. Initially, he undertook calf care himself and recalls urging his calf feeder to catch sick calves more quickly.

“Then, I tried doing it and it’s not easy going through 350-plus calves and assessing each of them in a timely manner,” Vander Waal shares. While he is still learning about the system and its benefits, overall he is happy with the purchase.

James Vander Waal has 350-plus calves on his farm near Sioux Falls.

(Vander Waal Dairy)

Implementation and Benefits
Each calf on Vander Waal’s farm, including their beef-on-dairy calves that are retained until they reach 500 lbs., is tagged with this monitoring system at birth. The system went live in April, and Vander Waal’s oldest calves were moved to group housing a month ago. The youngstock technology has provided numerous benefits, most notably saved labor and the ability to detect signs of illnesses like pneumonia earlier.

“The tags are able to catch calves about two days earlier than I would through visual observation,” Vander Waal notes. He also points to two other advantages of the system:

Gained Efficiency: Calves not on the ‘watch list’ don’t need as much attention, making the assessment process quicker.

Gained Time: The technology allows for focused attention on calves that need it most, freeing up time for other tasks.

Every morning after feeding the calves, Vander Waal prints a health report and systematically walks the pens, starting with the youngest calves. This process ensures that only the calves needing attention are closely monitored.

Today, Vander Waal uses technology to streamline his labor needs. By leveraging the SenseHub Dairy Youngstock system, he can assign less experienced employees to treat the calves, armed with a standardized treatment plan. This approach removes emotional bias, ensuring consistent care regardless of employee performance.

“I’m able to give an employee a list and treatment plan,” he explains. “This takes any emotion out of the process. If an employee is having an off day, it doesn’t impact the decision if a calf should get treated or not.”

The Importance of Calf Care
Whether or not Vander Waal considers himself a tech enthusiast, his commitment to technology-driven efficiency is undeniable.

“Calves are worth more today than they have been in a long time, so calf care is extremely important,” Vander Waal emphasizes. “Those black calves are worth $500-plus at day one, and dairy calves are also worth a lot more than they once were. It is important to ensure all the calves stay healthy.”

Brandt Kreuscher, Dairy Business Development Manager for North America for Merck Animal Health, says SenseHub Dairy Youngstock is the first technology of its kind that can monitor calves from birth onward. This application is designed specifically for individually housed and group housed calves that are suckling. The tag uses different software applications based on the animal’s age and location.

“If we think about the task of raising calves, it is an amazing skillset,” Kreuscher says. He notes that the SenseHub Dairy Youngstock tags highlight calves that need attention utilizing an LED light, assisting employees in quickly scanning and detecting calves that might be sick and need extra attention.

While at times a lot can seem out of control for a producer, technology provides a sense of control—allowing for gained efficiencies and improved health outcomes. Vander Waal is certainly satisfied with the SenseHub Dairy Youngstock system so far.

How Do You Know When Agriculture Is In A Recession?

Wed, 04 Sep 2024 20:51:10 GMT

Agriculture can sometimes act as a buffer during broader economic recessions, as demand for essential food items tends to remain relatively stable. However, when multiple indicators align, it can signal a recession in the agricultural sector.

According to analysts and economists, pay particular attention to the following:

Declining farm income. A significant drop in net farm income is a major sign. For example, USDA forecasts another major decline in farm income for 2024, on top of the big decline in 2023. That would be the largest ever two-year decline.
Sharply declining commodity prices. Weak prices for major crops and livestock products can indicate economic trouble for farmers. Crop prices have seen sharply declining prices, with the meat sector showing continued strength.
Elevated input prices costs. When input costs such as fertilizer, fuel and labor remain elevated while commodity prices fall, it squeezes farm profitability.
Reduced agricultural exports. Slowing exports and a growing trade deficit in agriculture can signal economic challenges. USDA forecasts the third straight year of a U.S. ag trade deficit , with the fiscal year 2025 at $42.5 billion.
Debt vs. cash flow. Increasing farm debt relative to cash flow combined with higher borrowing costs due to interest rate increases can strain farm finances.
Weakening credit conditions. Lower repayment rates on farm loans and increased loan renewals/extensions can indicate financial stress.
Declining demand for agricultural products. Reduced consumer spending on discretionary food items during broader economic recessions can impact certain agricultural sectors.
Falling farmland values. Higher interest rates and lower farm profitability can lead to downward pressure on land prices .
Increased inventory levels. Growing stockpiles of crops and livestock products can spur further price declines.
Widespread financial stress. When a large number of farmers across different regions and commodity sectors experience financial difficulties simultaneously it can point to an industry-wide recession.

Your Next Read: More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

Four Experts You Need On Your Succession Planning Team

Wed, 31 Jul 2024 18:14:24 GMT

When it comes time to get serious about succession planning, many operations turn to their lawyer to kick off the process. And while that’s a good place to start, Matt Gunderson, vice president of Farmers National Company, wants to make sure your journey doesn’t end there.

“A lot of times when folks think about estate planning, they think, ‘Well, I just need to go see an attorney, right?’ And to some degree, that answer is correct. But what we try to talk about is how to set up a good team,” he says.

Gunderson recently joined an episode of the Top Producer Podcast to share the four professionals he recommends for any succession plan, likening the process to building as sturdy of a stool as you can.

“What’s the best, most sturdy type of stool out there? Well, it’s a four-legged stool,” he says. “Think about that farm or ranch land asset as the seat. Then we start looking at the four legs.”

The Four Legs
1. Attorney
Gunderson stresses the importance of choosing the right lawyer for this process.

“There are different types of attorneys out there. So one, finding an attorney who does estate planning is important. But two, it really comes down to finding an attorney who understands estate planning and agricultural assets,” he says.

Be sure to also consider the state your land is in, and not just where you reside.

“We’ve seen where attorneys in one state drafted something according to that state’s laws, but where the land is at as a completely different example in terms of what that looks like from an estate standpoint,” Gunderson says.

2. CPA
He shares the second leg of the stool should be a CPA. This expert will help you understand the plan’s current tax implications and will also stay up to date on how that could change.

3. Financial Planner
The third leg is a financial planner. Financial planners can help you in some ways a CPA can’t. According to Gunderson, this role looks at future considerations for the plan, such as what it looks like for the upcoming generations.

Just as with attorneys, however, there are different types of financial planners, and it’s important to find one familiar with agriculture and the various accounts you will have.

4. Professional Manager
The fourth leg of Gunderson’s estate planning stool is a professional manager for the property.

“A professional manager can help take care of that land asset for the next generation if they’re not actively engaged in farming or they’re not actively near the property,” he says.

Gunderson adds that after this team is formed and your plan developed, you shouldn’t set it and forget it.

“Don’t throw it on the shelf or put it in a drawer. You better get that team back together every three years to look at that plan because things change, laws change and family dynamics change,” he says. “Was there a birth? Was there a death? Was there a marriage or divorce? Get that team back together to make sure that it’s up to date or it can still come back and bite you in a negative way.”

Catch up on episodes of the Top Producer Podcast

Helpful Tips to Teach the Next Generation About Money Management

Thu, 11 Jul 2024 14:49:42 GMT

From rising input costs to labor issues to ongoing regulations, young farmers are faced with many challenges to successfully take over the family operation. To truly navigate all these roadblocks, the next generation must understand the financial and business aspects of farming.

Independent financial consultant, Gary Sipiorski, offers several tips on getting the next generation involved in money management.

1. Learn Financials. All children need to be taught to have respect for what money does and how to handle it. Those interested in continuing the farm need to start with a savings account at an early age in grade school. They need to realize they have to work and do some type of meaningful chores, get paid, and see a bank account grow.

When they get into high school, they need to have a checking account to purchase small items of clothes, tools, and sporting equipment. Understanding how to reconcile their checking accounts monthly needs to be taught by parents. Having a debit card tied to the checking account should come a short time later.

How these financial tools work together needs to be learned. Not everyone will agree, however, a credit card during senior high school should come next. Learning the importance of its proper use and paying the balance off when the statement comes will be a key future skill.

2. Financial Literacy for the Farm. As children grow into their early teens and when they have reached a level of a desire to understand what kind of dollars run the farm, further financial discussion needs to occur. Parents will have to be the judge when the time is right. Seeing the amount of money coming in from milk checks, livestock sales, grain or other sales will be eye-opening. Then the ongoing expenses will bring some reality to the discussion.

Take time to explain the whys. Year end income statements should be part of the monthly meetings. As further discussions arise the importance of accrual year-end adjustments should be explained. The upcoming generation may have suggestions for projected cash flow for the next year when those are done. As time goes on the balance sheet will need to be shared. Seeing the huge dollars of the farm financials comes with a reminder that all the information needs to be kept confidential.

3. Others Can Also Teach. Hopefully, some general personal and farm financial information can be picked up at school. There are proposals now to have every high school required to have classes in personal finances by 2027. When there are meetings with accountants and lenders, the next generation should be allowed to sit in once again at an appropriate age. Many farms have quarterly farm meetings with accountants, lenders, veterinarians, and other farm advisors. Let the next generation sit in. Even if it is a day to be dismissed from school.

4. Now in Their twenties. As interest in the farm continues at this age, allow the next generation to be involved in making financial decisions. Have them help work out a plan and projections based on a new purchase for the farm. It could be a new tractor, a milking parlor update, robots, or a land purchase.

5. Is it Too late? After reading the above, one might say, “I am too late. The next generation is too old now.” It is never too late to learn. Start where you are and start teaching, sharing, and giving responsibility.

6. Professional Teaching is Available. Professional Dairy Producers (PDP) can help. The financial literacy curriculum was developed by Dr. David Kohl along with a few other knowledgeable people. The attendees are taught the basics at each session and then go home after each session to apply what was learned to their farm financials. This program has been highly successful.

According to Curtis Gerrits, senior animal ag lending specialist for dairy with Compeer Financial, dairy operations often delay involving the next generation in the financial and management decisions. He offers the following four “E’s” to assist in navigating the integration of the next generation into the succession plan for your dairy operation.

Engagement
It is never too early to involve the next generation in your dairy operation, especially if they are showing interest in becoming part of the business. Include them in team meetings with your lender and/or consultant, have them shadow the financial aspects of the business and solicit their input on decision-making processes. Learning by doing provides valuable insights into finance and management for future managers.

Education
Business and financial management skills are not acquired overnight. While on-farm experiences and engagement are beneficial, a more formal approach can elevate financial knowledge for the next generation. Accounting and financial programs offered through community colleges, local agricultural programs or dairy organizations, like PDP’s Financial Literacy for Dairy program can provide comprehensive education for future dairy business owners and managers.

Empower
Empower the next generation of your dairy operation to make decisions and handle regular tasks like bill payments and balancing checkbooks. Demonstrating confidence in their abilities will foster assurance and proficiency in their financial awareness and business management decisions. This empowerment encourages them to elevate their involvement to more engaging levels.

Experience
Julius Caesar said, “Experience is the teacher of all things.” While experience accrues over time, especially within family enterprises, investing this time is crucial for the next generation’s development in running a dairy business, particularly one that is uniquely yours.

Money management is demonstrated from one generation to the next. Open and ongoing communication about the farm’s financial blueprint can help the younger generation to develop a better understanding.

How To Translate Generational Misunderstandings

Tue, 18 Jun 2024 16:24:36 GMT

The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.

Communication between one generation to another can seem like talking a different language.

“I suggest you approach looking at another generation with curiosity rather than judgment,” says Kim Lear of Inlay Insights.

In her work, Lear shares generational theory insights and highlights how these are trends, not traits, but can inform better teamwork.

Why It Matters Now

Taking a refreshed approach to understanding on-farm team members from other generations is top of mind as today there are four generations actively employed across our economy.

When bringing more than one generation into leadership roles on the farm, it’s helpful to understand how to communicate.

“Dates given for generations are just a starting point. Generational theory is taking formative events from our growing years and seeing how they shape the people who lived through it,” she explains

A typical generation spans 15 to 18 years, and while general trends can be highlighted, Lear also notes there are exceptions.

“There are individuals who sit between two generations, and those people can serve important roles communicating between the generations. They are generationally bilingual,” Lear says.

3 Steps for Generations To Work Together
“We are in a unique time where we have four generations in the workforce,” says Kim Lear. She suggests three steps to bring together a productive team. 1. Prioritize clarity over brevity in communication. 2. Instill respect as the foundation. 3. Deliver feedback in a way that motivates to improve rather than paralyze with fear. Give a clear path for the road to improvement with the tools to get where they need to be.

3 Steps for Generations To Work Together

“We are in a unique time where we have four generations in the workforce,” says Kim Lear. She suggests three steps to bring together a productive team.

1. Prioritize clarity over brevity in communication.

2. Instill respect as the foundation.

3. Deliver feedback in a way that motivates to improve rather than paralyze with fear. Give a clear path for the road to improvement with the tools to get where they
need to be.

We Are Getting Older

The scales are tilting toward an older society, and there are fewer members of the younger generations.

“The story of aging is changing in America,” she says. “We have cliff diving birth rates and low immigration. Also, we are an ageist society.”

Today 62 million adults ages 65 and older are living in the U.S., which is 18% of the population, according to the U.S. Census. In 30 years, 84 million adults ages 65 and older will make up an estimated 23% of the population.

With the recognition of how our population is structured, and how your on-farm team members reflect their generational trends, you can evaluate your communication.

Next Gen Insights

Lear shares trends about Generation X (birth years: 1965 to 1979), millennials (birth years: 1980 to 1994), and Generation Z (birth years: 1995 to 2012).

Members of Generation X can exhibit fierce independence. For example, they can have an aversion to traditional sales tactics.

“If a brand crosses them, they are hard to earn back as a customer,” she says. “It’s telling — the divorce rate doubled during the Gen X birth years.”

As another data point, 55% of startup founders are Gen X.

As for millennials, the rise of double income households really took off as millennials grew up.

“Millennials are collaborative, empowered, networked, risk averse and in search of meaning,” she says. “But America has more single parent households than anywhere else in the world. It’s one way to understand why work-life balance is at the forefront of recruitment and retention.”

For Generation Z, our present serves as the backdrop of their formative years. Already, Lear has seen how Gen X parents and Gen Z children have relationships rooted in friendship.

“They are highly influential over each other’s decision-making. For example, Gen Z will bring job offers to their parents to vet,” she says.

Lear continues with an example of how Generation Z makes decisions.

“They are showing how they can abandon any obsession of convenience with an obsession of optimization,” she says. “For example, a regular stationary bike is convenient versus a Peloton is synched with stats and analytics. It’s the expectation of personalization and customization.”

Lear gives an exercise to test your transgenerational communication.

“Look at processes, procedures and norms. What are you holding on that is a sacred cow? And then ask your team to think about where can we focus on that’s more useful and more productive for us?” Lear outlines. “You’ll identify priorities and open up how our team talks to one another.”

Time To Transition: How to Get Out of The Way, Without Going Away

Wed, 12 Jun 2024 17:49:54 GMT

Today’s farm CEO transition is different than the last generation.

Dick Wittman, who has been consulting in family business management, finance, and process improvement areas for decades, says one of the top challenges facing on-farm leaders today is how to get out of the way, without totally going away.

“Forty years ago, the business was the farm operator’s primary asset. When business owners reached retirement age, they sold the business to a successor and that often became their retirement security. Successors often took on the business investment risk and took over the management decisions and debt service at the same time,” he says.

Today, the size and scale of farm operations have changed the dynamic.

“Our farms are multimillion-dollar businesses that are larger and more complex because of the significant capital required to have a viable business. It’s rarely practical to sell a 100% interest in the farm business on credit or even give the business away as an integral part of the retirement process.” Instead, , transition of ownership and transition of management are occurring over different time cycles.

“Owners have an opportunity , as they approach retirement age to move from CEO to board chair and mentor,” Wittman says. “I see many farm CEOs with a lot left to offer the business. They have a healthy love of the business and want to find substance in what they can do. The board chair/mentor role gives them a new way to think about how to extend their career with the farm.”

Recommended Reading: To explore this idea of how to expand your career on the on-farm, Dick Wittman recommends “The Second Mountain” by David Brooks.

The role of farm board chairman could include:

Policy review and refinement
Investment analysis
Strategic planning
Hiring, coaching, mentoring successors
Performance review and feedback
Assisting and advising successors in day-to-day operations (but not telling them what to do)

Wittman has walked this journey on his family’s diversified Idaho farm since 2017. At that time, he daughter Cori Wittman Stitt took on the role of CEO, and Wittman became the board chair and transition mentor.

Here are lessons the incoming and outgoing leaders have learned in the process:

Be patient. You can’t develop successful future leaders unless you give them latitude to make their own plans on their own timetable.
Avoid micromanaging. Going from being the leader for years to now being a helper is challenging, but it’s required to step back and truly just be a helper.
Clear and Enforced Policies are still important . But the new leaders need freedom to revise policies that fit their value systems and work/life balance goals – so policies in the next generation may not look the same as the previous generation followed.
Transition can be done in degrees. The chairman can retain responsibility for some operational duties that successors are not ready to put on their plate. But the outgoing leader needs to divest the core management responsibilities. Technical areas can be an exception.

“It’s rewarding to be able to be in business with your family,” Wittman says. “We are a family in business together. And if we are committed to running this business professionally, we can make transitions for the CEO to board chair work and still enjoy family relations.”

Wittman shares his overriding rule: for transitions to be successful, there must be alignment of expectations – that can extend to values, decision roles, clear structure and policies, and commitment to open record sharing and professional communication.

“If handled improperly, transition events can be the death of your business. Or it can strengthen your business and clearly outline who you are and where you want to go,” he says. “I believe that good process will ultimately reflect in good long-term results.”

Now Is A Great Time to Make Sure Your Farm Can Survive

Wed, 12 Jun 2024 00:40:01 GMT

Identifying goals and assigning priorities builds a bridge from one generation to the next, says Rena Striegel with Transition Point Business Advisors, a farm succession planning consultant with 20 years of experience.

Especially with the current farm economic conditions and outlook, Striegel advises farmers to keep at it when it comes to planning, strategy, banker relationships and evaluating capital expenditures.

“It’s time to double down on what you can to pivot quickly when you have to,” she says. “Now is a great time to make sure the farm can survive. The farm business has to be made sturdy and stable before it can be shared with anyone else.”

Striegel expects the next downturn in agriculture to test the resiliency of farm businesses and the people in them.

“These times don’t care if you are personally worried,” she says. “It does reveal the need for a heavy dose of open and honest communication.”

Striegel encourages the next generation of on-farm leaders to do some self-reflection. How are you showing up on the farm? Do your actions meet up with your goals?

“If your father expects you to be on the farm, on time, demonstrating skills with a certain attitude, that’s how you need to show up,” she says. “How do you show up and does it align with what you want? You must be truthful about your priorities.”

From her consulting, she’s seen how the generation raised with social media is lacking previously engrained people skills.

“Emerging leaders need to be encouraged to evolve and have the right tools. For example, we aren’t teaching negotiation like we used to,” she says.

She highlights that expectations of work-life balance need to be assessed with the needs of the business and the priorities of its stakeholders.

“If you want to run the farm, but in the next breath say you want time off to go to all of the baseball games, it’s not that those two things can’t happen, but it’s about how you meet expectations and talk about what is important to you,” she says.

Patience might be the key component in your succession planning journey.

“It’s not easy for the next generation farmer to slow down and be patient,” she says. “But we are facing a downturn in the ag economy, and the older generations have lived through real trauma. If you dismiss the lessons they are sharing, it makes them even more anxious about turning over the reigns. If you aren’t willing to listen, you are showing you aren’t willing to learn from them.”

Want more insights to plan for the future and be a leader in your field? Sign up to receive Farm Journal newsletters.

5 Next Gen Farmers Share Perspective On What's To Come For Agriculture

Mon, 10 Jun 2024 16:05:02 GMT

The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.

(Farm Journal)

Cody Goodknight
Chattanooga, Okla.

“My dad taught me to be above average — never be complacent. Now is the time to figure out what you are passionate about, whether it be in crops and/or livestock, and what you can do to stand out. The time of being an average farmer is a recipe to go broke. You need do everything you can do to be above average and do what you can to set yourself apart. Otherwise you are going to be a middle of the road farmer, and that’s a recipe to go broke.”

(Farm Journal)

Chase Dewitz
Steele, N.D.

“A lot of farmers are wrapped up in the farm; everything is about the farm. They don’t have any other outside investments, and they don’t have any lifestyle outside farm. I have been involved in a number of other things financially outside of the farm, and that helps drive you to get your mind on something else you’re involved in that you’re not seeing or working with every single day. I think that’s where the emotion gets so wrapped up in farming. Most farmers are farming 24 hours a day. Everything in their head is about that farm and farming. Then, that ties up all the emotion in and about the farm. You’ve got to be able to let go of that and take emotion out of the business of farming.”

You can apply for The Top Producer Next Gen Award

(Farm Journal)

Maggie Holub
Scribner, Neb.

“One goal I have in the year ahead is diversification and to keep my small town main street vibrant. I’ve purchased our local fitness center in Scribner, Neb., and plan to renovate, add group fitness classes, and make it a wellness community attraction.”

(Farm Journal)

Matt Splitter
Sterling, Kan.

“As a young business owner, we are a modern family living in a dying culture. Agriculture as an industry isn’t dying, but I’ve been a pallbearer more times than I’ve been a groomsman. I’ve been to probably three times more funerals than I’ve been to weddings in my life. The average age of my landowners is in their 70s. We are around more aging folks than growing families. It affects how we manage our business relationships. It has also shaped a reality of death. So as a young family ourselves, and as young business owners, we have to think about how we can be the type of family we want to be when their aren’t a lot of people just like us or in the same stage of life as we are. And we are trying to reinvest in our community and, when we can, recruit new team members to move in.”

(Farm Journal)

Janna Splitter
Sterling, Kan.

“We’ve shifted how we speak about our operation. It’s about framing our farm in a way that doesn’t put us in a box. When you say you farm, people automatically have an impression of what that means in their perspective. So now when we’re having conversations, we introduce ourselves as: We operate a small business. Then they’ll almost always ask what is our business, and we can share a bit more. It’s not to bury the lead, but it is a small shift in the way we can change public perception of what we do. In reality, running a farm is a small business that faces many of the same challenges like all businesses do. This is one way we can highlight that.”

Do you qualify for the Top Producer Next Gen Award?

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Think Inside The Box To Solve Problems On The Farm

Mon, 01 Apr 2024 17:41:31 GMT

In a year predicted to bring tighter margins on the farm, many operations will need to get creative when it comes to balancing inputs and income.

But Kyle Scheele, a motivational author, speaker and artist, says this doesn’t necessarily mean thinking outside the box, but instead thinking within the constraints you’re given.

“Stop saying ‘If only I had this or that,” he says. “Constraints are beneficial.”

During a keynote presentation at the 2024 Top Producer Summit, Scheele shared constraints can actually be a good thing on the farm because they:

1. Facilitate focus
A lack of resources can help you focus on what’s most important to the operation’s success and what actually needs done instead of trying to accomplish everything.

2. Require resourcefulness
If you don’t have the resources someone else does, Scheele says to ask yourself what else you could be doing to help solve the issue.

3. Inspire innovation
Farmers are known for being innovative. Think about what you can do with what you already have. Do you have equipment that may not be intended to complete a certain task, but could be adjusted to do it?

4. Create connection
Scheele shares trying to make something relatable to everyone ends up making it relatable to no one. How do your constraints make your operation unique?

5. Foster collaboration
We often turn to collaboration when there’s no more money or time to put toward a problem. Farmers are working toward a common goal through different methods. Share the challenges you’re facing with your friends, neighbors and others in the industry. Odds are they’ve experienced something similar – or know someone who has – and can offer new perspectives toward solving it.

6. Build resiliency and strength
Tough times build tough people. Learning how to make the most of the years with limited resources will help you do more when favorable margins return.

Scheele says the first step to making the most of the constraints you are given is to figure out the boundaries and tools you are working with. Additionally, he advises to change your perspective to think of any limitations as constructive rather than constrictive.

“Identify the boundaries and look for the gaps,” he says. “Pushing against the constraints helps you find the gaps and the hidden solutions.”

Thinking inside the box, and therefore breaking the myth of looking outside the box, can yield hidden solutions for your farm and business.

“Creativity isn’t limited to artists, sculptors and musicians,” he says. “Thinking inside the box is true creativity.”

Kyle Scheele was a keynote speaker at the 2024 Top Producer Summit and has been known as the “patron saint of crazy ideas”. Scheele shared a few of those ideas with the audience, including how his high school t-shirt business wound up with designs in Urban Outfitters, the story behind hosting a fake marathon with nearly 35,000 participants, and the photoshopped family photo that earned him over 1 million TikTok followers in a day.

As an author, speaker and artist, he shares his story with audiences across the country in hopes to inspire others to chase their own crazy ideas and become the people they were meant to be.

How To Outline Clear Direction For Each Role On Your Team

Mon, 18 Mar 2024 14:00:00 GMT

It’s a commonly held goal to hire good employees and keep those great team members on board. If recruitment feels like a revolving door and retention efforts operate like a sieve, then re-evaluate your process and your foundation.

What if you could focus on one tool to achieve the best recruitment and retention?

Dave Mitchell thinks there is one—the job description.

“The single most important tool to predict peak performance is a very well-developed job description,” he says.

Mitchell founded The Leadership Difference after spending two decades in corporate HR management. While working with companies of all industries across the country, he developed metrics to measure peak performance.

“Go blow the dust off your job description book, or maybe first make sure you have job descriptions,” he says. “The next step is to update those job descriptions with necessary legal considerations. And third, make sure those job descriptions are good for the roles.”

Mitchell says he defines “good” job descriptions as those that don’t just outline what the job does, but they explain the degree to which the employee is expected to do certain tasks.

“If you provide that level of detail, you’ve got a recruiting tool, a training tool, a performance appraisal tool and an alignment tool. It makes one document serve multiple purposes and makes sure you have everything covered,” he says.

For almost two decades, this magazine and its predecessors put out an annual salary survey to illuminate trends in compensation. In the past six years, base salaries for the two key roles tracked in the study—applicators/machine operators and sales agronomists—increased more than 30%.

Having clear direction for every role in your organization can shore up the investment you make in your team.

Bringing Bankrupt Dairy Farms Back in the Black

Fri, 12 Jan 2024 22:09:34 GMT

Imagine this: Being escorted to a dairy by the police, only to find full pits, empty feed pads, disgruntled employees … and to top it off, a tuberculosis quarantine.

Most people would run the other way. But as a dairy consultant who has handled my share of receiverships, I believe that even in the worst situations, there is always a way to turn things around.

When I arrived at the dairy and assessed the situation, three main objectives were clear:

Increase cash flow
Reduce expenses
Rebuild relationships

The cash flow lever our team pulled first was in the milking parlor. The parlor was not running around the clock, so we minimized downtime by running a few pens through the parlor once more. This fourth milking kept the parlor humming and kicked up the milk produced, thus adding extra dollars to the milk check.

As we looked for ways to reduce expenses, an easy one was to make the dairy’s sand separation lane functional again. That allowed us to save money on purchasing additional bedding while also making the cows more comfortable and encouraging milk production.

Streamlining the milking process and cow flow made it easier for employees to do their jobs and resulted in greater labor efficiencies, which helped to simultaneously increase income and reduce expenses.

Feed and feeding was another key area where we made swift adjustments. Starting with the ration, we took out unnecessary ingredients to reduce costs without lowering milk production. We also discovered the dairy’s feeder was not consistently following the ration or delivering feed in a timely manner. Replacing this position with a different employee was an overnight difference as well.

During this challenging time, we understood the importance of clear communication and building trust. That meant engaging in conversations with employees, vendors, neighbors, and other stakeholders to reassure them of our commitment to turning the dairy around. Being boots-on-the-ground with the day-to-day operations, helped to show dedication and gain the respect and trust of the employees. We also needed to open up communication with the milk plant and the feed mill.

So what ever happened to that dairy that everyone else would have given up on? In one year’s time, we had it turned around, making money and positioned as a profitable, turn-key investment for an excited new buyer.

As we approach the year 2024, the dairy industry continues to face major challenges, however, I believe that dairies can minimize losses and achieve profitability by looking for ways to increase cash flow and operational efficiency, reduce their expenses and practice effective and open communication with their key stakeholders including the banker, veterinarian and nutritionist.

For more on business, read:

Pauly Paul and his team at Complete Management Consulting have proven time and again that struggling dairies can be transformed into profitable and viable businesses. By focusing on areas such as cash flow management, labor optimization, and process improvement, they have brought hope and financial stability to many dairies. With their expertise and dedication, they empower dairy farmers to navigate the challenges of the industry and thrive in the face of adversity.

From the Pipeline: Q&A with AMPI's President and CEO, Sheryl Meshke

Tue, 14 Nov 2023 15:00:00 GMT

Name, Title, Organization: Sheryl Meshke, President and CEO, Associated Milk Producers Inc. (AMPI)

Education: Bachelor’s degree in agriculture from South Dakota State University and a master’s degree in business from the University of St. Thomas.

Favorite Quote: “God gives every bird its food, but he doesn’t throw it in the nest,” author unknown, from a plaque on my family’s kitchen table while growing up.

Describe your career path? More than 30 years ago I was hired as AMPI’s communications director. Through the years my responsibilities grew to include positions responsible for strategic planning, human resources and public affairs. In 2015 I was named co-president and CEO, appointed to the solo position in 2023.

What are your key responsibilities? My team and I listen intently to what the dairy farmer-owners of AMPI want. It’s their business. We are simply stewards of the nation’s largest farmer-owned cheese cooperative.

As CEO, my role is to identify priorities and allocate resources for the dairy farmer-owners and employee team to succeed. And in all things, prioritize communication.

What is your connection to farming? Raised on a diversified crop and livestock farm in south central Minnesota, I’m a fifth-generation farmer. My husband Blake and I — along with son Brent, wife Leslie and their family — operate a hog, sheep and crop farm near Lake Crystal, Minn. Another son Derek, wife Tori and their family lives in Brookings, S.D.

What business lessons have you learned that could be applied to farmers? I approach my professional and personal life with a long view. In business terms, that’s a long-term investment with solid returns. The long view eliminates risk emerging from short-term, unfavorable market conditions. Long-term investments aren’t the easiest option. Keeping your eye on the prize, while traversing an ever-changing marketplace, demands discipline and vision.

What is a leadership lesson that you’ve learned in your career? Continue asking questions until you fully understand. At AMPI we continually ask our employee team and member leaders three questions to guide decision making:

What should we continue doing? In other words, what do we do well and what do our customers want?
What should we stop doing?
What trophy do we want on our mantle?

What is your leadership philosophy? A flat-line leadership style, emphasizing participation, capitalizes on individual talents and strengths. Couple that with open-book management, sharing financial information and performance metrics so individuals know how their contributions fit into the business. That approach is a constant reminder that leadership isn’t about one person. It demands a team willing to get their hands dirty while pulling and pushing to get the job done.

What is your biggest challenge as a leader? Each move the AMPI team makes impacts dairy farmers’ livelihoods. Our responsibility is managing their manufacturing assets and selling the resulting products.

I operate with a personal mantra: It’s all dairy farmer dollars. This mantra grows stronger with each year I work for the dairy farmer-owners of AMPI. Though we’re not owners, I often tell my employee team to “run it like you own it.”

Effective Ways to Make Employee Training More Engaging

Thu, 17 Aug 2023 13:13:04 GMT

Brett Barlass, the dairy manager for Yosemite Jerseys works hard to set a positive culture on his Hilmar, Calif. dairy. The long-term manager finds unique and fun ways to engage with his employees, making meetings more fun and effective.

“We started doing [employee] meetings in the mornings at 5 a.m., so we’d play music in the backgrounds to get people jazzed up,” he says, explaining that was the best time to conduct meetings for their dairy, during shift changes.

Yosemite’s dairy team includes 26 employees and Barlass says at one point in time his eight milkers have been employed with them for 11.5 years and the average outside guy for 10.5 years.

“One thing that I’m super proud of is over nine years, I never had a guy not call or not show,” he says.

Yosemite Jerseys exchanged ownership in December of 2021. This is causing Barlass to try once again to replicate the same culture that was originally in place - now across six dairy sites with 19,000 cows and 200 employees.

“The family that I work for now has grown real fast,” he explains. “It’s tough to fill all the right people in the right places so quick.”

Barlass shares multiple things that helped contribute to the success Yosemite Jerseys saw with their dairy’s employee retention. He contributes the following to help with employee retention.

Feedback and annual reviews
Being honest, fair and sincere to help build trust and respect.
Collaborate and follow through with employees.
Show appreciation and highlight accomplishments.
Informative monthly meetings

Jorge Delgado, the training and talent development for dairy workers at Alltech offers the following ways to make employee training presentations more fun and engaging.

Gather door prizes to motivate interaction among employees.
Bring snacks to the meeting.
Hire an external trainer with engagement abilities and fun personality.
Use toys to explain procedures and protocols. Be very visual.
Use a Power Point presentation with animations.
Don’t overload your Power Presentations with information.
Use videos to train your employees. Example: use video footage from the milking routine to address milking procedures
Tell your employees that they are important and that their job is relevant.
Come prepared to the training. Know your information.
Ask questions and promote participation.
Be a good listener.
Use body language. Walk around the room and maintain eye contact.
Make sure the training environment is clean. Clean rooms, table, chairs, etc.
Follow up after the training.
Give certificates of achievement after the trainings
Use simple words to explain technical procedures.
Change topics for next meetings. Employees love to learn.
Once in a while use different topics not related to Dairy: finances, health, communication, leadership, etc.
Provide notepads and pens for the employees to take notes.
Be funny and not too serious.
Explain your “why” and have them explain their “whys.”

“The best way to train new employees is by explaining the why’s and how’s behind any procedure,” Delgado states. “Employees value information.”

The Power of You: Telling Someone What They Want to Hear, What They Need to Hear or Just Listen

Wed, 02 Aug 2023 16:00:00 GMT

While many of us appreciate solid communication, understanding that is how relationships are built, sometimes we tell people only what they want to hear. Hank Wagner, a fourth-generation dairy farmer, president of Wagner Farms, Inc., and a certified leadership training coach, encourages us to lift everyone up around us by telling them not only what they want to hear, but also what they need to hear or just be a good listener.

Wagner recently spoke on a PDPW podcast about the importance of you, where he underscored the importance of good communication skills.

“People are important and valuable, and therefore our communication with each other is extremely important and very powerful,” he says, posing the question that when communicating, do we tell people what they want to hear or what they need to hear? He replies that it generally depends.

“There are also times where the correct position to be in is silence or to be quiet,” he says, adding that regardless of what you tell people, you must remain honest.

“People will see through what you’re telling them if you’re not being truthful,” he says, sharing that there is a difference between fact and opinion. “We must realize that our opinion is not necessarily fact.”

If something is asking you for advice or expecting advice from you, Wanger shares that puts you in the position of being a coach or a mentor.

“I’ve got friends that I’ve made it clear to them that I want them to tell me what I need to hear,” he shares. “Our relationship is based on that I respect their opinion. I respect their knowledge, their wisdom, their experience, and I want them to tell me what I need to hear.”

However, Wanger throws caution flags saying just because you have a position of authority doesn’t mean we should always be looking to correct or to judge.

“There’s a time to exercise silence and then not say anything,” he says. “We must realize that there is always more than one solution to every single problem. Our opinion, our experience, our advice is not necessarily the only option to help that person. So sometimes it’s important to either just be quiet until we gather all the information and all of the options to help that person, or, we need to point out that this is our opinion.”

With all this being said, Wanger reminds the audience that you cannot help someone who doesn’t want to be helped. He shares that we must keep this in mind when communicating with others.

“Save your breath,” he says. “If they don’t want help, you’re not going to be able to help them.”

The next time you are talking to someone, think about whether you are going to tell them what they want to hear, what they need to hear, or just listen.

To listen to Wagner’s entire personal development podcast on the, ‘The Importance of You,’ click: Podcast | PDPW

Allflex Reports Ear Tags Are Back in Full Production Mode

Mon, 19 Jun 2023 13:00:00 GMT

Bottlenecks and hurdles have been a constant challenge producers have had to work around since the pandemic. Supply shortages, including the struggle of locating ear tags, might seem like a small problem, but the need for identification is essential and the backlog of ear tags has been an issue producers from coast to coast have had to try to work around.

California dairy producer Darlene Lopes felt this frustration. Lopes and her husband, Paul, along with their son, Tony, manage 4,000 Holstein cows, 2,500 head of Angus-Crossbred cattle and farm 2,100 acres in the Central Valley.

With hundreds of calves on milk, identification is a must for Lopes. Regardless of the size of the operation, identification is vital in tracking cattle performance and is used to make management decisions for all dairy farmers.

As Lopes waited on her Allflex tag order, her employees had to scour to find whatever they could to identify animals.

“We gave calves a temporary blank, different color tag, really whatever we could find,” she notes. “And of course, there’s some employee error when they’re writing the numbers down instead of the pre-printed ones.”

Lopes also ran out of RFID tags, which became a problem considering all their crossbred calves are custom raised at an offsite ranch that requires an RFID tag.

“The state veterinarian gave us 1,000 tags,” Lopes shares. “If he hadn’t done that, we would not have been able to comply with state rules.”

Once Lopes’s tag order arrived, her staff had to go back and re-tag all the cattle.

“We purchase the sets that come with RFID that are already set to that particular [tag] number, so we had to delete all of those and assign them a new RFID number,” Lopes says.

Allflex’s Commitment

The cause of the initial delay in orders stems from the movement of the Allflex Identification business to the Merck ERP (SAP) in 2021. The Omicron variant surge earlier that year impacted both workforce availability and supply of raw materials, making this situation significantly worse.

“Merck Animal Health has invested in expanded manufacturing capacity to ensure a continued reliable supply of Allflex ear tags,” Paul Koffman, executive director of Livestock Technology Solutions, North America for Merck Animal Health, shares.

Koffman shares that they are pleased to report Allflex ear tags from Merck Animal Health are in full production and back up to pre-COVID production levels.

“That means dairy producers can expect much shorter lead times to receive online ear tag orders. Retail locations in most areas now have Allflex ear tags readily available,” Koffman says.

Dairy producers can contact their ear tag supplier or visit AllflexUSA.com for more information.

What Makes a Good Farm Manager?

Thu, 01 Jun 2023 20:57:42 GMT

Managing a farming operation is a balancing act on all levels. The role of farm manager can become more complex when working with family, especially in the busy seasons.

To make the job easier, researchers at Purdue University find farm managers who prioritize growth in knowledge, experience and collaboration are best positioned to buffer relationships and increase output.

Here is a rundown of how each of the three skills interact with one another for success on the farm.

1. Knowledge

Managing farm risk is a time-consuming job, but it needs to be done. Purdue researchers say the best way to stay up to date in managing risk is through courses, reading and discussion. They suggest putting a focus on learnable risk.

“Learnable risks possess uncertainty because we haven’t learned all there is to know about the subject,” the researchers wrote. “It’s in the best interest of a farm to mitigate learnable risks through accumulation of knowledge as rapidly as possible.”

An understanding of production strategies, technology advancements and ways to reduce inputs are important and often prioritized, but researchers suggest producers focus instead on these specific upstream and downstream ideas:

• Sourcing inputs
• Input price factors
• Potential supply limitations/market disruptions
• Diversifying buyer pool

According to Purdue, knowledge in these areas is a major contributor to holding a key position in the ag industry, and incorporating the knowledge will offer a definite advantage over competitors.

2. Experience

Established producers have advantages over producers who are new to the industry; they have an idea of the time of year to plant, fertilizer, treat and market products. They also have the benefit of lower costs, according to Michael Porter, professor at the Harvard Business School.

Porter says new operations, with no experience, will have inherently higher costs than established farms. New farms will bear heavy startup losses from below- or near-cost pricing to gain the experience and profits that established farms already possess.

For new producers to find success, Purdue says they need to gain experience rapidly and effectively. Researchers suggest new producers gain farm work experience and participate in internships and mentor programs.

3. Collaboration

According to Purdue, there are two types of collaboration that producers need to consider: Peer and competitor. They say this is the only way for progress.

“There’s a false premise that in order to maintain a competitive advantage in the market, strategies and innovations should not be shared,” Purdue says. “Secrecy is likely not what’s best for your operation, nor the ag industry as a whole.”

To maintain collaboration, researchers suggest producers listen to constructive criticism, such as:
• Critiques from an outside perspective
• Alternative innovation ideas
• Improved strategies

Collaboration and constructive criticism are especially important in ag’s technology arena. Studies indicate technology adoption is dependent on collaboration.

“Farmers with more risk averse tendencies often begin using technologies long after others have switched,” Purdue’s researchers say. “As new technologies continue to emerge, collaboration will increase in importance.”

Researchers find encouraging frequent networking and collaboration can help prevent producers from lagging behind the industry’s set standards and fuel more efficient ag production.

Want to Grow Your Farm? Ask These 10 Questions First

Wed, 17 May 2023 19:57:51 GMT

More than 50% of farmers intend to grow their operation, based on responses in Purdue’s February 2023 Ag Economy Barometer.

(Farm Journal)

If you’re thinking about scaling your farm, Michael Langemeier, Purdue ag economist, says it’s important to first ask these questions.

1. Why should I grow my operation?

Before an operation expands, consider the vision and direction you want your farm to take.

“Are you interested in a commodity-based approach or a differentiated product strategy? Commodities will focus on cost control while products will be centered around value-added production and above-average prices for your crops,” Langemeiers says. “Start here and consider how growth impacts your direction.”

Once an approach is chosen, it’s time to decide which dominoes you want to play in the expansion game.

2. What ways I can grow my farm?

There are many ways to expand an operation: acquire land, new equipment and technology, upgrade facilities, etc. However, Langemeier says some producers need to think outside the box.

“Don’t just think about what you currently do or have always done. This step is a good time to do some soul searching to consider where you want to be in five to 10 years. Do you want to be the same enterprise, or do you want to make changes?”

Langemeier says this soul-searching step is especially important when someone is coming back to the farm.

“We’re seeing that a lot of students who come from farms want to go back, and we have to look into whether there are opportunities there or not,” Langemeier says. “There’s always new interest and ideas that come with the transition back to the farm.”

After establishing how you want to grow, consider your growth approach.

3. What should my growth approach look like?

A strengths, weaknesses, opportunities and threats (SWOT) analysis is a common growth approach in business. Langemeier says another way to think about SWOT is in terms of internal and external analysis.

“Internal analysis means looking at key resources and capabilities of a team or operation,” Langemeier says. “Does someone possess a unique skill you can maximize? Take advantage of those unique skillsets.”

Internal analysis mainly centers around strengths, but weaknesses play a role here, too. Are there areas in your operation that need professional development? Langemeier says this is the time to work on both.

External analysis, on the other hand, examines economic and market trends.

“The easiest example is in livestock; raising pasture pork, poultry or beef, or offering direct meat from a producer rather than a grocery store, are all growing trends,” Langemeier says. “If you have those opportunities, think about how they might fit into your operation.”

While there’s more risk in external factors, Langemeier says “the risk can be worth the reward” for producers who understand what trends they can support.

4. How do I evaluate my farm’s growth ventures?

Now that the growth options are laid out, how does a producer choose which option to pursue?
These eight criteria can help:
• Strategic fit
• Expected returns
• Risk
• Capital required
• Cost and ease of entry and exit
• Value creation
• Managerial requirements
• Portfolio fit

Strategic fit is one of the biggest points to consider, according to Langemeier.

“A few years ago, many growers were interested in hemp production. I would ask them if hemp would require new machinery and if they were used to dealing with contracts,” he says. “If the answer was yes and no, then it probably wasn’t going to be a good fit.”

He says ease of entry and exit is the second criteria he points farmers to.

“If your farm were to pursue a new venture and it fails, would it mean you could lose the whole farm? Because there will be things that fail,” Langemeier says.

If a specific venture requires a lot of capital, he says it is pivotal to explore how the investment could affect balance sheets in the long run.

5. What skills are needed to grow, especially in people returning to the farm?

Taking stock of employees’ skillsets, this is the part where growers consider the strengths and weaknesses of human capital currently on the farm and those soon returning to it.

“When someone’s thinking about coming back to the farm, that’s the time to assess the skills that are currently needed, and then try to encourage the younger person to garner some of those skills,” Langemeier says. “We might have the skills to expand our operation, but do we have the skills to start a new venture in a different enterprise? Think about it from all angles.”

6. How do I finance?

Are you willing to take on debt to expand? If so, how much debt are you willing to take on? Langemeier suggests looking at debt as enabling you to take advantage of an opportunity, not as a negative.

“If you have 2,000 acres and are thinking about adding 1,000 acres, even if that’s leased ground, you’re still going to need more machinery and people. You probably don’t have that retained earnings, so you’re going to take on debt,” he says. “As long as you’re making a profit on those additional acres, and you can make the debt payment, it’s not a problem.”

Langemeier warns that a small profit margin can quickly turn into an issue when a venture flops. He advises producers keep a somewhat equal balance of debt and projected venture profits.

7. What business models do I use to grow?

Expanding internal growth with retained earnings and debt is a typical business model for most operations, according to Langemeier. He says there’s a new trend in this arena.

“I’ve seen a lot of production ag cases recently where a farm acquires assets from a retiring farm,” he says. “Not only do they farm the land, but they also buy the machinery, the bins and the whole farm. This really works for some operations.”

Another model that’s becoming somewhat common is a joint venture. Agribusinesses use this model frequently, but Langemeier says more mid-sized operations are leaning toward this option.

“One of the advantages of joint-venture contract turkey, laying or finishing operations, especially in the Corn Belt, is that there’s a partner with you,” Langemeier says. “It allows us to grow effectively.”

Finding a partner to go-in on the venture isn’t always easy. However, Langemeier says producers often look in the wrong places.

“Some farmers say they don’t have any outside investors, so I tell them to think about family or non-farm heirs. Pitch it as a way of investing in your business so that you don’t have to make them partners or an operating entity,” he says. “Land, for instance, could be an outstanding source of outside equity with non-farm heirs.”

8. How would an expansion impact my current operation?

When considering growth options, it’s vital to your growth success to consider how each option will impact the farm’s balance sheet and income statement. Langemeier suggests running three projected scenarios — worst, most likely and best case — through a spreadsheet or a software, like the University of Minnesota’s FINPACK system .

If you choose to run the projections by hand, this is the process Langemeier suggests:

a. Impacts on cash flow and balance sheet

“A growth change will impact both — don’t just look at cash flow,” he says.

b. Debt versus equity

“Maybe the change will reduce your liquidity and increase your solvency too much,” he says. “If that’s the case, you can’t pursue that particular venture.”

c. Time management

“There are only so many hours in the day, and some of us sometimes work too much,” Langemeier says. “Say you’re going from conventional to organic, it’s going to be management intensive. Be realistic about what you and your team can handle.”

9. What challenges would an expansion create?

Construction delays, cash flow shortages, depleted working capital, short-term inefficiencies and management bottlenecks are often at play when starting a new venture, according to Langemeier. He advises producers to be proactive.

“If a venture creates massive cash flow shortages and eats into your working capital, you need to have a plan to deal with those issues. If you don’t, it will lead you into other challenges, like inefficiencies, and you’ll end up with a failed venture,” he says. “Make sure you have a contingency plan.”

10. What is my sustainable growth rate?

Calculating a sustainable growth rate means saying what a growth rate would be if retained earnings is the only money used, and then compare that to what a growth rate would be if only debt was used. Langemeier says this equation has other variables that often go unchecked.

In the debt scenario, he says you have to think about the downside of debt — the chance of going bankrupt and variability.

“Even if your operating cash flow is low, the lender still wants his payments,” Langmeier says. “You have to think about the coping strategies to make those debt payments even when corn is at $5, compared to $6.50. Make sure you run all the numbers imaginable.”

The Main First Step When Considering Expansion

With all 10 points in mind, Langemeier says the first stage of growth shouldn’t include producers running to formulate a 50-page business plan. He says step one starts with a conversation.

“You should be having regular farm and family meetings, at least once a year, to brainstorm with your employees and family members about the things you could do differently on-farm, and allot time to consider continued improvement, opportunities and threats,” he says.

According to Langemeier, these meetings will offer more than exploring growth; they will ensure farm, family and employee survival.