15 Nov The Professional Farmer: Farming Human Capital to Farm the Farm

Withholding the speakers name for fear of misguided reprisal, a prominent agricultural figurehead (and agricultural fund manager) once announced that…

“it was not that long ago that a farming family sent their smart kids to university to advance their professional careers and left the more academically challenged ones at home to run the farm.  Now it is the reverse, they send their challenged kids off to university to get them off the farm and they keep the smart kids at home”.

The message behind the captivating statement is beheld to the sophistication of running a multi-million dollar business with significant assets under management.  I personally support the thesis with heart on sleeve.

Serious professional (and inter-generational) farmers have expanded over the generations to compensate for compressed economic margins and to capture economies of scale.  With the variability of farming still inherent within the industry, this scale has a jawboning effect on decisions made at the managerial level.  An operational decision may deliver a nominal impact on P&L when extrapolated over 1 acre, but when multiplied by 30,000 acres, 100,000 acres, 1.0million square km’s the jawboning consequence manifests itself into either obvious oblivion or status of genius.

A farming business, isolated by large skies and long roads, is far from being removed from the globalisation of commodities and geopolitical conflicts, legislative policy, environmental trends, microbiome and genetic agribusiness technologies, domestic credit markets, currency and financial markets, value chain dynamics and competitive innovations.

Farming is not farming.  It hasn’t been for some time now.  Farming is a professional pursuit of the highest learnings.  Financial modelling of viability and risk sensitivity, margin analysis on competing resources and capital constraints for sustainability, financial control, reporting and operational execution are just some infinite resolutions that need to be accounted for within a farming business model.

The highest performers have gravitated towards extending their management team to capture critical market intelligence.  Agronomic and nutritional consultancy, financial consultancy, capital and credit advisory, marketing and risk management specialists, non-executive directors for corporate governance and accountability are some of the skillsets that are now becoming “must haves” for the industry leaders of tomorrow.

The extended management team is never seen as a cost to their business, but an investment to drive and achieve set wealth creation objectives and safeguard asset protection.

Where do you sit in the spectrum?