Why Participate in a Peer Group?

Peer Groups, Producer Groups, Ambassador Groups, Networking, Farmer Co-operatives, Benchmarking, etc. This sounds exhausting all-in-itself. So what is this all about? Why do I need this? Why do I want to add more work to my already crazy busy life? If you identify with these comments…well…you’re not alone, or at least you’re not alone in thinking this way.

What are all the reasons or, unanswered questions that become reasons, why many producers are not participating in a group of their peers?

1. What value will I get out of it?

2. I don’t have time.

3. This is going to add to my already high costs.

4. I’ve never done this before, so why should I do it now?

5. I don’t think I have anything valuable to add.

6. Everyone there is likely a better manager than me.

7. I don’t want anyone to know my strategies.

8. They will all have bigger and/or more successful farms than I do.

Sound familiar?

Farming can be many things; a way of life, a great entrepreneurial opportunity, a place to raise your children, a multi-generational family business, a place to let your dog run free without bothering the neighbours, a place to go for a walk or ride your horse or quad or snow machine for miles without leaving your own property, a place to breathe farm fresh air, a quiet place to hear yourself think… and, it can also be very lonely. In fact, I’ll bet that many of you reading this article have felt very alone at times in your farming career, or have felt alone in supporting someone close to you as they struggled through a difficult situation or decision.

Of course, there are Farm and Rural Support Services available for those times of particularly stressful situations such as debt problems, death, divorce, etc. But who can you talk to about HR issues, financial management benchmarking, expansion planning, shop/office construction ideas, family business issues, production challenges, risk management strategies, etc?

Yes, there are industry professionals who can help you address and manage each of these areas, on an individual basis, when you are ready to really dig in and work on specific challenges in detail. But if you’re in the camp with many other’s that would like to see and hear how other producers have addressed the challenges that you are facing, and would like an opportunity to provide some value to others through your experiences (and yes you have experienced a lot throughout your career/s and do have significant value to add), then a peer group may be a good fit.

What are the identified benefits of participating in a peer group?

1. Benefit from the experience, success and challenges of others

2. Realization that you are all basically in the same boat.

3. Support of an informal team

4. Participants are not your neighbours/competitors

5. Participants are not your friends

6. Unbiased feedback– participants will ask questions or share advice or experience that friends & family may not

7. Safe and non-judgemental environment

8. Confidential

9. Responsible and respectful feed-back

10. Diversity regarding operation type, size, management, etc.

11. Different perspectives

12. Financial and/or non-financial results of other’s Action Plans

13. Goal setting accountability

Peer group participants have found significant value, during the rich discussions that occur during peer group meetings, that they can take away and apply to their individual circumstances. They have formed friendships and a support network that they can contact between meetings. They have created an informal team environment (something that typically only occurs in other industries), and have removed an element of solitude that is very typical of operating a farm business.

Denise Filipchuck, consultant associate at Backswath Management Inc. is a specialist in financial management, a Financial Planning Standards Council FPSC Level 1®

Certificant and a Certified Member of the Canadian Association of Farm Advisors (CAFA). Since earning a Certificate in Agriculture Studies, she has been working with both agriculture and non-agriculture clients. A farmer at heart, Denise was raised on a grain, oilseed and hog farm outside of Swan River, MB.

Mobile: 204.281.3828

Denise.filipchuck@backswath.com

http://www.filipchuckmanagement.com/

Knowing Your Costs

“Being profitable has a lot to do with how much you can hold on to!” A producer’s success is dependent on the ability to manage risk and adapt to change. Knowing your cost of production is key to being able to identify opportunities to make appropriate changes, reduce costs and improve profit margins.

Calculating your cost of production is an exercise that needs to be completed regularly as costs change from year to year. Your cost of production calculation needs to include all costs including land rent, equipment costs, costs of credit, taxes, storage, etc., not just the costs associated with chemical, seed, fertilizer, fuel and labour. It can be difficult to attribute overhead costs to specific crops, therefore it may be appropriate in some cases to divide these costs by the total acres and attribute to each crop accordingly. The more granular you get with calculating your cost of production per crop, the more accurate your cost of production calculation will be.

Managing overhead costs and debt payments have become increasingly difficult due in part to increased land rent and the increased costs of investing in land, storage and equipment. Reviewing the details of your leased land agreements as well as your credit portfolio structure, arrangements and terms will give you the valuable information you need to identify options and opportunities to reduce costs in these areas.

We are in a trend where production costs have gone up and commodity returns have moved downward. Having a firm grasp on your farm’s cost of production is vital to being prepared for the unexpected and creating a marketing strategy that is designed to take advantage of favorable marketing opportunities, increase profitability and meet financial obligations.

With farming comes significant and diverse risks, not all of which are within managements ability to control. Management does however have a significant amount of control over costs and this is an area where efficiencies can be gained. If you know your Cost of Production you can easily figure out what, yield and price combination, you’ll need to achieve your target profit.

Denise Filipchuck, consultant associate at Backswath Management Inc. is a specialist in financial management and a certified member of the Canadian Association of Farm Advisors (CAFA). Since earning a Certificate in Agriculture Studies, she has been working with both agriculture and non-agriculture clients. A farmer at heart, Denise was raised on a grain, oilseed and hog farm outside of Swan River, MB.

Mobile: 204.281.3828

denise.fililpchuck@backswath.com

Annual Assessment and Strategic Planning to Improve Profitability

‘Profit = Revenue – Expenses… it’s that simple.’

“Being profitable is not just about how much you make, it’s also about how much you can hold on to, and having a budget and financial plan in place to monitor the farm’s financial position, trends and options is key to being prepared and ensuring the “ dollars” are there when you need them.

We are in a trend where production costs have gone up and commodity returns have moved downward. Having a firm grasp on your farm’s cost of production, cash flow and working capital is vital to creating a marketing strategy that is designed to take advantage of favorable marketing opportunities, increase profitability and meet financial obligations and should be included in an overall financial assessment.

Managing overhead costs and debt payments have become increasingly difficult due in part to increased land rent and the increased costs of investing in land and equipment. Creating and annually updating a market value net worth statement provides a snapshot of the farm’s current financial situation and a foundation for which planning can proceed. Reviewing the details of your leased land agreements as well as your credit portfolio structure, arrangements and terms is an essential component to an annual financial assessment and will give you the valuable information you need to identify options and opportunities to reduce costs, relieve debt service requirements and increase your farm’s return on assets (ROA) and return on investment (ROI).

With farming comes significant and diverse risks that can and do have a negative impact on farm profits. A financial assessment that is thorough, detailed and based on accurate and timely data provides the information required to identify some of those risks. Many risks can be managed and mitigated with a strategy that is clear, attainable, includes an action plan and is reviewed and updated annually.