Agriculture producers should demonstrate a high business IQ

A few months ago, I listened to a seminar by Dr. David M. Kohl from Virginia Tech University in which he spoke about the upcoming challenges to agriculture – land values, interest rates, commodity pricing, global economics, etc.

A point he made stuck with me, both as a producer and as a lender. To paraphrase, certain agricultural producers will inevitably get a larger piece of the ever-decreasing agricultural pie. These producers demonstrate a higher business IQ, he said, because they’re willing to take the time to plan, form a strategy, execute their plan, and carefully monitor their efforts.

Time – it’s a commodity that very few of us have much of between managing our farms, working in town, kids’ activities, social responsibilities, and so much more.

The first step, however, to success is to have a plan to get there, so making time to create that plan becomes essential to a successful farming operation.

In the long run, taking the time to plan now will be looked back on as a productive use of that limited commodity. Flying by the seat of your pants may very well get you where you want to go, but having a plan, and strategizing, can help you do so much more efficiently and quickly. The how’s, why’s, where’s, who’s and when’s can help ensure you achieve your goals for your farming operation in the time you expect to do so.

Next, execute, execute, execute. Taking time and planning may be all well and good, but if you don’t execute it, a plan is nothing more than a dream. An executed plan takes that dream and makes it a reality. It may be baby steps at first, but those become bigger steps as you move into your plan, and before you know it, you could be living out those things you thought were once just dreams. A cattle producer can be the top seller their local market, but they might not break that ceiling at the regional or national level if they maintain the herd status quo and don’t invest in genetics, preventative care or nutrition. A crop farmer can make ends meet by continuing the same cropping pattern as their grandfather, but they could increase production and grow the farm by investing in and embracing newer technologies.

Lastly, to make sure that dream comes true, you must monitor the plan in addition to executing it. Life can change, and goals can change along with it. The plan needs to be able to adapt to those changes. This is where your financial partners – i.e. banker, lender, CPA – come into play.

It’s a common lending requirement for a producer to provide annual financial statements to their lender – tax returns, balance sheets, etc. This isn’t just so your lender can bother you with questions and requests every year, but because we know your goals and we want to help you achieve them. Our analysis and subsequent questions allow us to help our producers monitor their status and know where they sit in their plan’s timeline.

A good financial partner does not succeed on the back of their producers, but rather alongside those producers. A successful producer, one who is working towards and achieving their goals, is a success for both themselves and their financial partners.

Jessica Allan is an agricultural lender and commercial relationship manager at Guaranty Bank in Neosho, Mo. A resident of Jasper County, she is also involved in raising cattle on her family’s farm in Newton County and is an active alum of the Crowder College Aggie Club.


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