I hit the jackpot the other day when I was in Des Moines, Iowa to speak to the New Century Farmer group. A chance meeting with an Australian farmer at 6:00 AM in the workout room started off the day with a bang. Richard Heath, a fourth-generation farmer from Down Under was visiting the United States and Canada, and had a stopover golf outing in Nebraska, that was circumvented by my request that he come join me to speak to the New Century Farmer group.
Toward the end of the four-hour morning event, Richard and I shared with the enthusiastic young group our top ten best management practices of producers wanting to improve their management abilities. Richard shared one that was common sense, but very critical to those who desire to profit in today’s agriculture industry.
Richard shared with the group that they should strive to be in the top 20% of peers in business and financial performance, which is a management practice that I strongly endorse. Richard stated that his family farm shares financial and business management benchmarks with peer producers as a means of confirmation of what they are doing well and identifying areas for improvement. He further indicated that by being in the top 20% of your industry, you have a much better chance of weathering economic cycle downturns and you can better position for opportunities.
What about confidentiality issues concerning sharing financial and business information with peers who may be competitors? Some peer teams hire a third-party person to tabulate and summarize key data so producers can compare their operation to others. Key benchmarks are established that are not location or size dependent.
How often do the peer groups meet? Usually a quarterly meeting takes place either at one of the producers’ farms or in a neutral location.
Next time we will discuss some more of the key benchmarks being used in both hemispheres. This will be part of a series to increase your expertise on this important subject.