It was beautiful on Dave’s stoep – summer at its best. We were talking about a neighbouring farm that had been sold to a city-based family, and were wondering what they were going to do with it, and how it would affect the water supply in the valley. “These people think this is all we do,” said Dave, staring into his mug. “Sit on the stoep, drink coffee and listen to the birds. They come with airy-fairy ideas of a great lifestyle, but they soon realise farming is a business which blurs and blocks out the beauty.”
We both sat in silence for a few minutes pondering how long it would be before the high expectations of a genteel life in the country would be shattered for Dave’s soon-to-be new neighbours. The thing is, farming is a tough business. That’s why the numbers of farms and farmers around the world is declining so fast. In South Africa, the number of commercial farmers has dropped from about 128 000 in 1980 to just under 40 000 today.
In 2012, the number of farms in the USA dropped to the lowest level since 2006. In one lifetime, the number of Canadians living on farms has dropped from one in three to one in 46.
A unique set of skills
To farm profitably and sustainably, farm owners and managers must have a combination of skills and characteristics unmatched by any other industry. They need the ‘normal’ business skills required to understand and manage marketing, finance and production. They have to handle challenging HR demands unique to farming, such as a 50% increase in the minimum wage and labour tenants with rights to take up full-time residence on the property.
Farmers also need to be capable of extracting profits from the complex resources of variable soils, limited water and different animal and plant types, each with its own requirements and potential. And to do so in a sustainable manner. Farming needs tough-minded people to handle the special security risks of rural living, which take up an enormous amount of time and effort. It needs people with the resilience to cope with the inevitable crime, which no farmer in Africa escapes.
And we have not even begun to consider the mechanical skills required to manage the upkeep of farm machinery and the engineering skills to construct and maintain the irrigation, dams, roads and buildings. When you think about it, it’s surprising anyone ever chooses to enter this profession. But despite the extreme demands made on farm owners and managers, and despite all the risks and difficulties, it’s still a way of life which many cannot resist. I’m one of them!
Getting your priorities right
As you move into the new year and the annual cycle of your farm activities begins all over again, you need to think about the myriad challenges you face, and prepare yourself to deal with them more effectively than last year. Business management is in a constant state of growth and development.
You cannot leave your personal management skill and development to chance and take things as they come. Let 2014 be the year in which you make a special effort to develop your management competence in areas where it’s lacking. It’s unlikely to be in the production area, as most farmers are production machines, spending far too much time on this aspect (in my opinion)!
Questions to ask yourself
What about your basic financial literacy? Do you know what depreciation is, and why you have to add it back to profit to calculate cash flow? If not, you’re in dire need of financial literacy training. Can you name the four Ps of the marketing mix? Do you even know what the ‘marketing mix’ is? If not, get yourself onto a marketing course as soon as possible!
Do you understand the difference between ‘true motivators’ and the ‘hygiene factors’ and how managing these factors can make or break the motivation levels of your employees? If the answer is “no”, the sooner you get yourself onto a HR course, the better. What about the different roles, rights and remuneration of owners (shareholders), directors and managers? Do you fully understand them? If not, make sure you find the time to attend a governance course.
What about the ‘three-circle’ concept applicable to family businesses? Ever heard of this? If you haven’t, it’s a family-business session you need.
This year, switch some of the time you spend in study groups, attending farmer’s days and sitting in production sessions, to building your business management skills. It could be the best decision you make, for farming is, after all, a business!
This article was originally published in the 24 January 2014 issue of Farmers Weekly.