Top 10 Concerns Of Young Farmer, At any roundtable of young and beginning farmers, a few common themes seem to bubble to the surface as folks share stories and concerns. Here are 10 of the biggest top-of-mind challenges, along with some ideas on how to deal with them.
An important lesson for beginning farmers is this: “Sometimes you’re trying to solve the wrong challenge,” says Carl Horne, vice president of customer solutions for Farm Credit Services of America/Frontier Farm Credit. “The land issue is outside of your control, let alone facing the obstacles of starting an operation.” Feel like you can’t compete on price? Fortunately, there are many more factors for landowners to consider, says Horne. “Determine what you can bring to the market. What makes you competitive?” Do you maintain clean, cared-for equipment? Are you a professional presence in the community and well respected? Are you fair and trustworthy? Point out that you will care for the land, maintain the property, make improvements, and keep clean, healthy fields. “Outline the real value proposition you bring to a business deal,” says Horne. “At some point, price comes in to factor, but if you’ve done your homework, you are bringing much more than dollars to the table.”
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Establish a viable business plan first, says Horne. “This is the first thing within your control. Simple business planning, combined with careful financial forecasting of how that business plan plays out, will open up options for financing.”
You must be transparent about the financial performance of the business deal and willing to be fair in negotiations, says Horne. “It is equally important to learn about what is important to the potential business partner. This doesn’t have to be a stealthy research operation. Just ask, ‘What is important to you?’ Or say, ‘Tell me how you envision our communication will work.’ ” Be consistent in your style and frequency of communication and how you keep the landowner up to date and informed.
With budget cutbacks and staff shortages at government offices, this probably won’t get better. Many beginning farmers are growing alternative crops and producing food for direct sale to consumers, grocery stores, or restaurants. Look for expertise from other farmers, Extension, and private consultants. Attend meetings to learn about direct marketing from farmers who are making a living at it. Use social media to reach out to the ag community with questions.
Align your financial management with your farm strategy. “This comes back to business planning and strategy development,” says Horne. “Do that first, every time. Everything should be aligned off of that. Your financials are the result of every decision you make.”
Whether the change was in your control or not (e.g., commodity market movement), the choices you’ve made and the risks/rewards you have exposed your operation to are reflected in your balance sheet and income statement, he says. If you have goals, dreams, and hopes, those require capital or cash flow, says Horne. “Make sure your daily decisions are aligned with those goals.” If a future goal in your strategy (like buying ground) depends on having a certain amount of financial strength to be able to execute, then you need to manage for that.
The ability to make good decisions, consistently and over time, is a skill that separates successful farmers from the rest of the pack, says Horne. “The challenge for young farmers is to use their network to help offset their lack of experience.” Leverage that expertise to help you make better decisions. Speak up and be aggressive in making connections. “Your voice matters in local, regional, and even national issues,” says Horne.
Everyone needs vacations and time off – and more than just a weekend, counsels the Beginning Farmer Center at Iowa State University (extension.iastate.edu/bfc). Families should decide each year how much time off is to be provided. Try to keep personal lifestyles out of the farm operation and separate business from social life. Participate in off-farm activities that don’t involve other family members.
All parties involved must share a common vision. “It is important to start the transition plans early and not wait until the last minute,” says Charles Brown, farm management specialist, Iowa State University Extension & Outreach. It can take two to four years and maybe longer to develop and implement a successful transition plan, he says. “Too many times the plans are rushed into and then fail because of improper planning. The main key is communication.” For example, the younger generation wants to expand the farm, but the parents’ goal is to eliminate all farm debt. Set a time each month to discuss business affairs, goals, and objectives.
The University of Minnesota Center for Farm Financial Management (cffm.umn.edu) has two web-based programs, Ag Plan and Ag Transitions, that can help beginning farmers and retiring farmers develop business and transition plans.
9. WHEN DAD WON’T GET OUT OF THE WAY
If Dad’s goal is to take things easier, this may mean you do the physical labor while Dad continues to make the decisions, and friction develops. The key is to develop your management ability while protecting your parents’ interests. One approach is to make Dad the general manager. That way, you are involved in major decisions, but final authority rests with the general manager. Another approach is to give each party an equal voice with disagreements settled by outside counsel.
Everyone has individual interests and skills. Determine your strengths, such as marketing, finance, or production. You might love record keeping and financial management, but not marketing. Hire a marketing consultant.