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despair

Critical State – Disability or Loss of Life

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Frequently over the next several weeks, we will delve further into the many factors that can lead your business to a “Critical State.” To refresh your memory, one reaches critical state when at the point of significant change. The significant change can lead to a state that will have a profound effect on you, your family, or your business. Thus the term “critical.”

Disability or Loss of Life: whether it be one of the major stakeholders in your business, a member of your family, or one of your employees, this is often the most catastrophic change.

Although disability is not guaranteed to happen, the end of one’s life is certain. Arguments have been made as to which is more difficult to manage through. I have experienced both in my family.

What is your strategy, your back-up plan, if someone in your family or your business suddenly became disabled or was killed? How would you continue? Who else knows what that person knows so that the only hardship you must deal with is the emotional one?

  1. Financial: if control rests with only one person, everything financial is instantly in limbo if that person passed away. Secondary signors can be established. Power of attorney should be in place (applies during disability.) Something as simple as writing down account numbers and passwords in a notebook stored in a locked safe can be incredibly beneficial to those who are left behind, struggling to carry on while dealing with their grief.
  2. Operational: “Were those peas on the west half sprayed? When? With what?” A crop could be lost, and subsequently a farm could be lost, if important operational information is not recorded and readily available if/when the person with that knowledge in his/her head is hurt or worse. The importance of managing your business information has been raised here on many occasions.
    What about grain deliveries? Who authorized those holidays for the staff? Etc…
  3. Personal: too often, major crises such as death or disability can lead to a personal “critical state.” Relationships break down under the stress, families fighting on the way to the funeral home, etc. Conversations with family, a current and well prepared will, and preparations for crisis are all required to bring everything back down from “critical state.”

Direct Questions

Do you have a will, and is it current?

Health care directives (also known as living wills), financial power of attorney, and final wishes should all be laid out so that the decisions are not left to those left behind. These are your decisions and the appropriate legal documents allow you to have some control while you’re not able to take control. Have you put these in place, and if not, why not?

 

Early on in most new business engagements, I ask about wills, powers of attorney, life and disability insurances, etc. The answers are as varied as the people I work with. Most have these fundamental pieces in place, and many more have already begun some very intriguing and creative ways to facilitate business succession. From Joint Ventures, to funded buy-sell agreements, to estate freezes, and share purchase plans, there is no right or wrong way to plan, only a series of possibilities that can be “more right” than some others.

I celebrate the plans that are already enacted, and push hard on those who have none.

From the Home Quarter

Not taking action to plan for the inevitable does not delay the inevitable, it only creates extra hardship for those left behind.

 

Shaking Hands

The Farmer-Banker Dating Game

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When I went back to college in my mid-20’s, a mature student by definition, it was because I found a course and career path that would allow me to bridge my passion for agriculture & farming with my finance minded brain. My goal, as my friends and family will attest, was to be the kind of ag-banker that was a partner, not a foe, of the farmer.  My view at that time, which was a time that we were in the depths of a very real farm crisis at the end of the 1990’s, was that farmers “generally” had a poor view of bankers. I aimed to change that perception.

Now as a management advisor, I still aim to bridge that gap. I invest myself into building good relationships with bankers so as to have a list of qualified partners whom I can refer in to my clients for financing requirements. Here are the top 3 points to remember when considering a new bank relationship.

 1. Perfection is Not Required on the First Date

The initial meeting is a first date. Think about it: you’ve met someone you’re interested, you’ve had an interesting conversation that identifies some common interests, and you eagerly and excitedly agree to go on a date. On that first date, it’s a lot of “what do you do for fun?” and “what kind of music do you like?” If you’re really getting into it, you might discuss your date’s political views! You aren’t deciding on the first date if you will or will not marry this person; you’re just hoping to learn enough about him/her to decide if you want a second date.
The initial meeting with a new prospective banker is a first date. You’re getting to know each other. The banker wants to know how your farm is doing financially, how you manage & make decisions, and what you vision is of the future. You want to know how the banker manages his/her client relationships, how the bank would deal with a farm like yours, and how everyone would expect to work together should you take your relationship “to the next level.” On a first date, no one expects perfection. Each person on a first date easily overlooks the little nuances that may, or may not, become an issue later on. No one needs to be perfect on a first date with a banker.

 2. Be Aware of Where You Are At, Where You Have Been, and Where You Are Going

The greatest risk to derailing any chance of a second date is for you, as the borrower, to not have an adequate grasp on the effects to your business from past issues & business decisions. Bankers appreciate accountability when it comes to “what happened” in the past. Own your choices, both the good one and bad ones. Describe what you are doing to rectify your poor decisions from the past and what you are doing to ensure those same choices aren’t repeated. Have an idea (at least) of a vision for what you want your business to look like in 5 years, recognize what it will take to get there, and understand what you need to do in the near term to take positive steps towards that vision.

 3. A “Partnership” Mindset

While taking your relationship with your banker to the next level has been described by some as a “marriage, I agree in figurative terms only. Your relationship with your lender is a partnership, however, and proactive & productive efforts must be initiated by both parties.
While I believe that your banker relationship is akin to marriage figuratively, I do believe that it is a partnership literally. In almost every presentation I’ve made through the winter and spring, I have described the partnership as follows:

“If you have a Debt to Net Worth figure of 1:1, that means your debts are level with your net worth. At that point your creditors have equal skin in the game as yo do; your lender’s ‘investment’ in your business is par with yours. You have a 50/50 partner.”

There are many farms with Debt to Net Worth figures that are 1:1 or higher. Where do you stack up? Do you have a “partner” by the definition of equal investment in your farm? It is only decent and respectful for both parties to behave in the relationship like a partnership.

Direct Questions

What is your mindset with it comes to your relationship with your lender? Is it friend or foe? Necessary evil or business partner?

How prepared are you, as the CEO of your company, to discuss your current situation and share your vision of your farm?

Are you excited for a dance or two on a first date, or are you expecting your date to be on bended knee by the end of the interaction?

From The Home Quarter

This is penned in large from the message that my old boss from my banking days used to lean on: early interactions between bankers and borrowers are like courtships; everyone spends time getting to know the other(s) and jostling for position to make the best impression. It takes time to build a trusting relationship, and like any first date, if either party pushes too hard too soon for too much, a second date is unlikely.

AITC

Shock and Awe During Ag In The Classroom

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It’s something I should have done long ago, but finally took the step and volunteered for Ag in the Classroom. Considering the rapid disconnect that non-farming people have from their farming roots, which is typically as many as 2 or 3 generations now past, we as passionate AGvocates must do our share (and more) to help bridge the gap, both the knowledge and culture gap, so that we all can achieve a greater understanding of each other.

My experience took me to 2 classrooms: Mrs Ewart-Molesky’s grade3/4 class at Grant Road School in Regina, and Mrs McMurtry’s grade 3 class at Jack Mackenzie School also in Regina. I was not surprised to learn that none of these children lived on a farm; the closest any of them came was one child in each class whose grandparents still farm.  What did surprise me was how many of these youngsters had never been to a farm. That reinforced my perception of just how far removed these young people are from agriculture.

Part of the program was for me to read the children an ag based story. The book that was provided to me by the Ag in the Classroom program was titled What’s Growing Around Us. The story journeyed through the experience of a school aged girl whose mother took her to several different locations to learn about where food really comes from as part of her own school homework. The children listening to me read this story were fascinated by how many products from their daily lives, products beyond food, are derived or partly derived from agriculture.

I took the liberty to give these children some perspective on just how much Canadian farmers can produce. I used real life examples of how big a field can be, how big an acre is, and just how much can be produced on that acre in terms that these children could understand. The “shock and awe” from these students at the number of loaves of bread that can be produced from one acre of wheat was quite entertaining.

I closed my presentation to these students by taking some more liberty. I found some pictures online that I used to clearly illustrate what a farm is today versus what is a stereotypical view of a farm. The faded red barn, open tractor,  handful of cattle, and a farmer in overalls is what the stereotype is, and as I expected, it is what the children gravitated to. The pictures I shared with these students of modern grain farms and equipment brought more “shock and awe.” Some of what I shared with them that day included an aerial view of a modern farm yard, complete with a grain leg, several large shops, and a large modern home; the inside of a tractor cab with all the monitors and controllers needed during seeding; and a drone (which was the REAL wow factor.) I explained that while they see the drone as a super-cool toy, farmers use the drone as a highly efficient tool for checking crops, livestock, etc.

I left no doubt in their minds that farming is very technologically advanced, probably more so than their homes, entertainment systems, and video game consoles combined. I felt it was incredibly important to stress that the perceptions of what is a farm have changed, and will continue to change.

Direct Questions

With farming practices and food production garnering more attention and press than ever before, what are you doing to share the positive message about agriculture?

How are you managing your operational practices against the message that we deliver to non-farming people to ensure that what we say and what we do are consistent?

What are you doing to be an agriculture advocate (or as we prefer to say, “agvocate?”)

From the Home Quarter

While I thoroughly enjoyed my time volunteering for Ag In The Classroom, it came and went very quickly. I will certainly make myself available to visit more schools and educate more children in the future. It was a very rewarding experience.

What I would like to do at some point is speak to a class of high-schoolers, young minds that are forming their own opinions on issues of the day whether influence comes from the media, at home, or their teachers, in an effort to challenge them on any misconceptions about agriculture. The Grade 3’s were hanging on every word I said, and soaked up the message like a sponge. The older kids will hopefully want to “get into it” a little bit where we could ideally have an open and respectful dialogue.

Can you tell I enjoy a good argument?

ic_leap

Experience: LEAP – – Leadership, Engagement, Authenticity, Passion

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Leap year only comes around every 4 years, so to some people, it’s kind of a big deal; to others, not so much. I will have spent the 2016 leap day by taking part in a unique event, Experience: LEAP.

Experience: LEAP is an initiative of the wonderful people behind Project: SHINE Inc. Their passion is for everyone to live the fullest life possible, to be their true self, and to experience life with passion and purpose. The key message is for everyone to learn that where you are is not where you have to stay. The message applies to us personally, but also has business implications.

In the case of this event, LEAP is an acronym as follows:

Leadership

Leaders are made, they are not born. While some people are born with the characteristics that are often found in great leaders, the fact is leadership skills are learned, and therefore, leaders are made. This has 2 different aspects that apply to your farm:

  1. You are the current leader of your operation.
  2. You need to identify and develop a leader to take your place for when you’re no longer leading the business.

We often learn from experience, or learn from others’ examples, but rarely do farm business owners ever get sat down and taught how to be an effective leader. Everyone in your business will perform in direct correlation to their response to the leadership of the organization. It is like the old saying, “Would you rather be in an army of lions led into battle by a sheep, or be in an army of sheep led into battle by a lion?” If you find yourself questioning the effectiveness of your employee(s), first gauge your effectiveness as a leader.

As a leader, you need clarity in the results you expect in your business, the strategy for achieving those results, and the tactics in execution of the plan. Naturally, sharing this information with your team is critically important in effective leadership.

Engagement

One cannot expect to build a profitable business or an effective team without being engaged. A person who is disconnected and unattached will achieve sub-par results, and find the same in their team. How does one become more engaged? What can be done to increase the engagement of a team? By and large, it begins with purpose. Clarifying the “why,” which means “why are we here; why do we do what we do; why are we the best people for the job?” Clarifying purpose by answering the “why” helps teams, and individuals, recognize that they are a part of something bigger and that they have a key role to play in the organization. By turning a basic employee, a laborer per se, into an engaged and contributing member of a highly functioning team will pay dividends to your business that may astound you.

Authenticity

To be authentic is to be real or genuine. This involves interactions with your staff, your business partners, your family, your vendors, but most importantly with yourself.
I find it curious that authenticity is required for true engagement, which is required for effective leadership. Passion affects everything.

Passion

Passion can be difficult to describe because it is a feeling like few others. Passion can consume you, drive you to heights never imagined, and lead to immeasurable levels of joy or even anxiety. Passion can often create infallible commitment, which, if not balanced with sound rationale in decision making has potential to lead to undesirable outcomes. Unbridled passion sounds poetic and profound, but it can be dangerous if not balanced with reason and objectivity.
Yet, life (or business) with no passion becomes an insufferable task to endure. Most farmers I meet are passionate about their farm, about the land, about growing things, about the family legacy they are living and plan to leave behind. “Life becomes work” if there is no passion. But don’t forget balance, because “work can become life” on the opposite end of that spectrum; neither is desirable.

Direct Questions

How are you gauging the effectiveness of your leadership? (HINT: this isn’t a “self-assessment.”)

What are you doing to match your engagement to that of which you expect from your team?

How would you describe your passion?

From the Home Quarter

Recently, I listened to a presentation where the crowd was polled: If you could sell all your land for 25% above market value today, and rent it back for life at half of current rental rates, how many would take that deal? No one raised their hand. The presenter then acknowledged that no one in the crowd was a farmer, but actually a land owner. Everyone laughed in subtle agreement.
The point is to define your passion, your “Why.” Clarity in what you do, why you do it, and how you do it is no longer something that only applies to large corporations who need that “feel-good mumbo-jumbo” as part of their strategy. Make no mistake, farms of the future will require processes that were once foreign, or only found in corporate cultures. The need for social license becomes greater each day. The need for strong and committed teams becomes greater each year. The need for passionate, authentic, engaged leadership becomes greater with each new generation in the family business.

Daddy Selfie

Additional Family Members

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It is amazing how a family is changed when you add another member to the fold. Whether it be the addition of my new daughter last week (Feb 16 if you want to keep track) and the changes she brings to this household, or the addition of another generation into the family’s farm business, the change is not only imminent, but it can also be drastic, unpredictable, and challenging.

Both situations above involve adding a child, or another child, to what used to be “normal” and “routine.” The similarities don’t end there.

Where Does Everyone Fit?

Bringing another person into the mix creates upheaval. What used to be a shared role could now fall to one person solely. New roles that didn’t exist before now have to be addressed to determine who should fill these roles. This can be stressful, cause tension, and can lead to feelings of inadequacy or inequity.

Can I Understand How This Affects Others, Not Just Me?

We humans, despite being the most intellectually and emotionally intelligent animals on the planet, often struggle with empathy and being able to put ourselves in “someone else’s shoes.” We see ourselves as “up earlier, up later, working harder, taking fewer breaks, taking less personal time, doing more than just the fun jobs, etc.” than our cohorts do. We feel our own plight, get grumpy at our circumstance, and then usually either withdraw or lash out (depending on the individual.) If we were to acknowledge that everyone else in the unit probably felt the same way, we would likely find more patience and understanding for each other and for each other’s quandary.

What Do I Have To Do To Do My Part?

Communicate. Of course, it is much more than just that, but it is critical to communicate with your partners about what you want and what you feel. Most issues in business and personal relationships stem from one or more parties feeling like they haven’t been heard. Being reciprocal is key: if we want to be heard, we must also hear our partners.
Clarifying everyone’s “part” is also important. Assuming that Dad should just keeping doing <insert task here> because he’s just always done it is a recipe for conflict. Does Dad even enjoy that task? Is he actually the best person for that task? Same rationale applies to everyone in the family unit.

Direct Questions

To use an analogy, every person is “rowing their own boat.” What are you doing to ensure that everyone in your family (business or household) is rowing in the same direction?

Change is inevitable, even without adding a new person to your business or family unit. How are you ensuring that you aren’t blaming the arrival of a new person for your stress in the face of change?

There is always positive and negative in every situation. The upheaval and change from adding a new person also brings about great opportunity. What are you doing to identify and leverage all of the opportunities that a new person brings to the fold?

From the Home Quarter

The degree of change that comes with the addition of a new person into your realm is monumental, especially if that person is a little baby who is dependent on you for everything. But as we adjust to our “new normal” and a child becomes less dependent, we are no longer suffering under the weight of anxiety of “how to adjust” and actually have to stop and look back once in a while to truly see how far we’ve all come. By working together with a strategy on how to adjust to the new normal, we can accomplish so much more with far less stress and anxiety.
The same holds true in your family farm business. Whether it be a new employee, or a family member who is joining the farm with ownership aspirations, the same tactic applies. Work together with a strategy in mind on how to adjust to this new normal. You’ll find that this new person is more independent than a new baby. Plus, you’ll actually get some sleep from not having to be up every 3 hours.

On a side note, can anyone tell me how adding one tiny person to a household can more than double the volume of garbage produced by 2 adults and a toddler a week earlier? I can’t rationalize this at all.

trees

Knowing Your Costs – Part 3: “The Present vs The Future”

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As a proud member of the Rider Nation, and loyal fan of the entire CFL (despite the goofy new rules for
2015,) I witnessed something happen on the weekend that blew up social media and has fans of the
Green & White frothing.

The struggling winless Riders have been devastated by injury and lack-luster performances on field,
especially defensively. The order of the game plan each week seems to be “who can we plug where?”
One of the criticisms from fans is that there has been inadequate planning on behalf of management to
bring in the right new talent to provide appropriate solutions at time of crisis (like injury.)

While the business of football is a mystery to me, the business of business is not. Like a football team,
your business will face crises and you’ll need to adjust quickly. It doesn’t have to be personnel related
(like a football team;) it could be asset related (like equipment catastrophe) or market related (like a
major price decline) or anything. The knee-jerk reactions that are commonplace during times of crisis
rarely bode well for outcomes.

In the case of my favorite football team, the knee jerk reactions have been to sign different players to
the roster regularly. This is meant to fill the gaps left by injury, unsatisfactory performance, etc. This
knee-jerk reaction creates an air of constant uncertainty among the remaining players, and rarely brings
instant results because new players need time to learn the system, and gel with their teammates so as
to function as a unit when on the field. Wouldn’t it be better to have developed some younger players
and keep them on a practice roster? Players who would have learned the system since training camp,
and who are just itching to get on the field and show their stuff?

Similar to your business when you face crises, you could follow the lead of this football team and simply
run to the marketplace to buy another combine, rent more land, hire more people, apply more spray,
etc. The knee-jerk reaction would feel good in the short term because of the band-aid effect, but what
about the future? How has the knee-jerk decision affected your future profitability? Will the lease or
finance cost of that combine be affordable for the next 2-5 years? Will the extra land grow anything, or
will it be flooded out or ravaged with disease? Will your new hire fit in with your existing team and
culture? Will that extra spray increase or decrease your profit? Wouldn’t it be better to have given these
potential crises some consideration before the season started with some planning? With planning, you
would be prepared and then make a timely and informed decision. No more knee-jerk reactions.

The biggest issue with my favorite football team came to light during the last game this past Sunday. The
head coach pulled a young quarterback from the game after he threw an interception. The young QB,
who is 23 years old and fresh out of college, started the season as 3rd in line yet found himself in the #1
slot for the last number of games because of injury. By all accounts, this young man has the skills to be
the future leader of this team…in several years, not now. He needs time to learn, to enhance his skills
and his knowledge. The best way to enhance those skills is with real life experience. On Sunday, the
head coach regressed that young man’s growth by killing his confidence when he got benched for one
mistake. The coach made a knee-jerk decision that can, and likely will, have a detrimental effect on the
future of the team.

While the future of this football team weighs heavy on the fans enthusiasm right now, your business
doesn’t have to be this way. Whether it be a crisis in personnel, equipment, weather, or markets, the
preparation and planning you put in ahead of time will save you time, anxiety, and money.
How does this relate to knowing your costs? It comes from planning. Knowing your critical crisis cost
points from investing time and effort in your management will clearly indicate where you have
sensitivities and where you have breathing room. The sensitive areas, where your return on investment
is tight, require more strategy analysis to better prepare for crisis.

Critical Crisis Cost Points

Personnel

o Key person quits mid-season (do you have a successor on the team today?)
o Injury, serious or minor (do you have a documented safety plan, insurance coverage?)

Equipment

o Does your current equipment cost per acre have room for an increase should there be
an equipment crisis?
o Is your current equipment line deficient or excessive based on your productivity,
efficiency, and cost expectations?

Weather

o Are you prepared for hail or frost, drought or flood? (i.e. do you have sufficient working
capital to handle the loss of gross margin?)

Markets

o Do you know your Unit Cost of Production so you can hedge for a profit?

Direct Questions

What have you done to prepare for crisis on your farm? Will you be making a prepared and informed
decision or a knee-jerk reaction?

What are you doing to understand your costs on your critical cost points to accelerate your ability to
make informed decisions during times of crisis?

From the Home Quarter

The planning that goes into putting together a successful football season resembles the planning it takes
to put together a successful growing season on your farm. You put together the best game plan you can
based on the assets at your disposal, tangible or intangible. You prepare for quandary by building depth
into your game plan for your critical crisis cost points. Sometimes you best plans aren’t enough;
sometimes the dilemma is greater than you could predict or the results are more damaging than you
could imagine. No matter how you slice it, your best bet is planning and being prepared by drawing the
distinction between risking your future on a quick decision in the present, or taking the charted path
keeping the long term success of your business always in mind.

The head coach of the Riders got fired before I could finish writing this article. I expect it was partly
because he refused to take any accountability for the team’s struggles. He routinely made decisions in
the present with a lack of regard for his, or his team’s, future. He arrogantly stated in interviews that
he’s a great coach and will find work if he’s let go. His unwillingness to look within himself as the leader
ultimately cost him his job. As the leader of your farm, please don’t get caught in that same syndrome.
Your future depends on it.

horizon

Work-Life Balance is a Work-In-Progress

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Greetings from Katepwa Lake Saskatchewan!

For the first time in 5 years, I am taking a summer vacation. And while it is cloudy and dreary here today,
we have a nice place to stay, a boat for when the sun does shine, a beach and a golf course that are each
walking distance away…even with this one day of rain, today will be a good day.

Clearly I have not done a good job of work-life balance. Ever since I embarked into the world of
entrepreneurship as my main occupation combined with my farming activities, vacation time in the
summer has been non-existent. I have never been big on vacations because as a kid we never really
went anywhere…no matter where we went dad had to get home every night! As an adult, I have found
an appreciation for vacations despite how one must work twice as hard the week before leaving so as to
be ready to go, and twice as hard again the week after returning to catch up on the work left behind
while away. It can be easy to think “Why bother?”

Sure, why bother? You begin your vacation beat-dog-tired because you’ve probably just completed a
busy season (likely fungicide) and then work like crazy to get everything in place so you can be away.
Then it’s time to pack; in some families, this can lead to divorce! Finally, you’re ready to leave…relief!
Except you now have __ hours of travel ahead of you. Oh the joy!

Between the traffic, the heat, the screaming kids, and your exhaustion, you’re having the time of your
life!

The thoughts that we can allow ourselves to have as described above can be a great reason for those of
us who just love to work to simply not take a vacation. And whether or not you feel you need a vacation
yourself, you must to remember that it’s called “work-life balance” and that your work & your life are
about more than only you!

Direct Questions

When is the last time you took a vacation? Were you really able to get away, or were you constantly
distracted by the goings on at home?

Do you recognize that you taking a vacation is as much, or more, about family time and reconnecting
with your spouse and kids than it is about time off work for you?

Is your work-life balance out of balance? As much as you think you can answer that question, get
feedback from your family to understand the true picture.

From the Home Quarter

Today is my daughter’s 3rd Birthday, and even though it’s raining today, we’re at the lake with family
joining us and it’s going to be a great day! The sun will shine tomorrow, and if it doesn’t, we’ll be ok. The
kids don’t care where we are (at least not at their current age) and my wife is happy to be away from
“home” and all reminders of regular life. I think about work now and then, but I’ve done a good job at
keeping the phone in my pocket. I could learn to enjoy this “vacation” thing. I think I might try it again
someday.

If you’d like help planning your farm for business and personal success, then call me or send an email

wheat

I Can Do It Alone…

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As entrepreneurs, we generally put our shoulder to the plough and find a way to power through the
work that lay ahead of us. Staunchly independent, we rarely ask for help. I believed that for quite some
time myself…I mean, it’s a pride thing right?

Then my mentor gave me 5 simple words, so impactful and so true, yet these are words we’d never
recognize until someone throws them in our face; “You can’t consult to yourself.”

I can’t build my business alone. I can’t be an expert at everything. There is no way I have enough days in
this lifetime to gather all the knowledge, experience, feedback, networking, and intellectual property to
“do it all myself.” I need help in areas where “I don’t know what I don’t know” and so I seek it out from
others who have proficiencies that I do not. I’ve hired a consultant, and I take part in some excellent
networking associations.

I belong to two ag focused advocacy groups: Saskatchewan Young Ag Entrepreneurs (SYA)
www.saskyoungag.ca and the Canadian Association of Farm Advisors (CAFA). www.cafanet.com These
are not lobby groups, or policy groups; they are not groups focused on any one commodity or sector.
They are channels for farmers and farm advisors to share successes and struggles, discuss challenges
overcome and opportunities lost. These are the places to learn what your peers are doing right, and to
learn from their mistakes. Neither increases my workload with committee obligations and the like. Both
groups are completely focused on improving the industry we are all so passionate about.

SYA is a young dynamic cross section of what the future of farming looks like in Saskatchewan. I describe
this group as “the movers and shakers; the future of our industry.” Typically under age 40, these
entrepreneurs vary from small acre grain and mixed farms, to large scale grain operations; from organic
farms to farm advisors/suppliers/retailers. Each member brings something unique to the table.

CAFA is a national organization that is meant to bring together the advisors that help farmers with the
complexities of operating such a diverse entity. This group includes everyone from bankers to lawyers,
agronomists to accountants, grain marketers to tax and financial advisors, management consultants to
farmers (yes, we have a few farmers involved and they all speak very highly of being a part of CAFA.)
This group helps me, as a management consultant, understand more about other opportunities to help
my clients in areas that I am not an expert. We all have the same goal: find new ways to make our
clients better off. I regularly engage my CAFA colleagues when I have a client with an issue that needs
more expertise than I have (like HR strategies, estate planning, etc.)

These 2 groups provide me with a terrific combination: one group helps me stay on top of what is
keeping farmers up at night by listening directly to a diverse collection of farmers face to face and not
hearsay or coffeeshop chatter; the other group helps me strengthen my skills and my network of
qualified peers who can help me help my clients. I value each of these groups equally, and work hard to
never miss a gathering.

CAFA has regional chapters that meet monthly. Always with a topical presentation from an industry
expert, it’s 1-2 hours once per month (usually over breakfast or lunch.) The annual provincial conference
(yes, each province has one) is scheduled in the winter.

SYA meets a handful of times each year, mostly because the membership is busy farming!
But their PreSeeding Social, their Provincial Farmer’s Golf Tournament, Field of Dreams Tour, and Winter Convention
are always informative but most importantly, FUN!

So if you’re still reading, you may be wondering why I have dedicated an entire article to these two
associations. It’s simple: both are agnostic in their focus (as long as it’s AG,) both are tremendously
beneficial to me and my business, and both have found themselves generally flying under the
radar…meaning neither gets much press in print or on TV/radio. Neither operates with a big budget to
afford more advertising, yet both need to have more attention paid to them because of what they bring
to the table.

Direct Questions

Who do you turn to for feedback, when you need a sounding board, or if you want to learn about
firsthand experience on a new topic, idea, or strategy?

Do you ever find yourself wishing you had a mentor, or someone who has been down the same road
you’re travelling?

Have you found yourself facing a situation or dilemma where you didn’t know what to do or who you
could call for help?

From The Home Quarter

It is funny how easily we can become an island, feeling alone in our own world with little opportunity to
change the situation. Social media is great, but it cannot ever replace human interaction. It doesn’t have
to be that way. There is always someone who has faced the same battle you are facing today. There is
always someone who has expertise in an area in which you feel overwhelmed. There is always someone
who knows someone who knows what you need to know (referrals go both ways!) Membership in
either of these associations is an investment in yourself and your business.

If you’d like help planning your farm for business and personal success, then call me or send an email.

GFP FI 2

The Drought Dilemma

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The smoky haze we started inhaling yesterday drives home more than ever just how dry it really is.
#Drought15 is the Twitter hashtag to learn about how bad it is beyond our respective back doors. By all
accounts, crops are suffering and market prices are starting to reflect it. Those who are in an area that
has been, and/or remains, too wet just might be coyly denying that they ever complained about the
rain.

While it is too early to get a handle on any semblance of accurate yield estimates, people I’ve been
talking with have tossed around phrases such as “July harvest” on lentils, and described wheat crops
that are ready to push heads despite only being approximately 2 feet tall. What might be in those heads
if another hot dry windy week prevails?

As a farmer, you are an optimist. Even the most pessimistic ornery old codger you can imagine is still an
optimist if he’s a farmer. If he wasn’t, he’d never put a crop in the ground each spring. But as optimistic
as “Well, if we get one good rain in the next 4-5 days” sounds, it’s not going to make it rain. Despite the
drizzle we’re seeing today, one rain does not make a crop. If you’ve got payments to make, payables to
cover, even payroll to meet, you might want to start thinking about how that will all get done if
#Drought15 persists.

  1. Speak with your creditors.
    They’re not clueless; they hear the weather forecasts and read the crop reports. But they also
    won’t assume; they won’t assume that you’ll have trouble making payments because your crop
    is not going to meet expectations. As far as they’re concerned, you’ll be fully capable of
    satisfying the obligations you promised to make when you signed the loan or lease
    documents…unless they hear otherwise.
    And remember, your lenders are not problem fixers, so coming to them after the trouble gets
    real makes it far more difficult. They have more opportunity to help when they can be proactive.
  2. Consider your options.
    Do you remember Growing Farm Profits Weekly Issue #9? “Life and business can often be like
    snowmobiling: when trouble is ahead sometimes you need to pull back and sometimes you
    need to stay on the throttle.” What is your best option considering your crop’s development to
    date? I recently read an article discussing the possibility of reseeding barley on fields that have
    been froze out or droughted out. Considering the dire need for feed this year, cattlemen will be
    interested in green feed or silage barley. Is it time to consider how that might pencil out?
  3. Change your plans.
    The decisions you made last year and the year before were based on the best information you
    had at the time. The current situation differs greatly and probably requires a new decision.
    Swallowing pride and allowing yourself to change/reverse/discard old decisions could be exactly
    what your business needs. Nay, it IS what your business needs because your business is
    constantly changing and so should your decisions. Knowing when to do so is just as important.

Direct Questions

How would you rate yourself as far as being agile to your financial obligations in light of poor crop
conditions?

How would your stress level decrease if you took 10% of the time and effort you spend on worrying
about the existing crop conditions and used it to contact your strategic partners and advisors to amend
2015 expectations?

Are you staunchly sticking to your past decisions or are you being flexible and responsive to the needs of
your business?

From the Home Quarter

About 17 or 18 months ago, I blogged about how we need to reset what our expectation of success
really is. After the record 2013 crop, the 2014 crop year was poised to be a real disappointment in
comparison. Considering so far this year we generally went from adequate or excessive moisture in
March to a drought by mid-May, I’d suggest we look at 2015 for what it is and be realistic about what
we can call success. To give you a glimpse of what I mean, in 2014 I was working with a farm that
projected an operating loss due to the excessive moisture, crop quality issues, dropping grain prices, and
high fixed costs. The comment during planning was “OK, so we’re expecting to lose only about $300,000
in 2014; that’s decent considering what it could be.” They reset their expectation of success based on
what they saw.

Take a good hard look at your current year, be realistic with expectations, and make changes as
required. We can help make sense of it, take the emotion out of it, and assist with establishing new
plans.

If you’d like help planning your farm for business and personal success, then call me or send an email.

assets

Avoiding Assumptions About Assets

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“If you’ve inherited an asset, you should act more like the custodian, not the consumer, of that asset.”
I was having coffee with Bill Allen, a Sun Life advisor and friend of mine that I met through CAFA
(Canadian Association of Farm Advisors; great organization, check them out www.cafanet.com) and as
we were discussing business, he used that statement above to illustrate his personal values as they
relate to estate planning. I asked Bill if I could write my next article around this statement, and he
consented.

The farm land that is expected to change hands over the next decade is projected to be somewhere
north of $50 billion (that’s >$50,000,000,000.) Much of the land will be sold (enter the farm land
ownership fray) but much of it will be handed down to the next generation. To the chagrin of farming
children, some of that land might get passed down to their non-farming siblings (enter the farm
succession fray.)

To those who inherit land, think about Bill’s statement above.

If You’re a Farmer…

There is blood in that land; the blood of your ancestors who risked it all to come west for a chance at a
new life. To think that it’s yours to do with as you please is…well, I’ll let you fill in the blank. Now land
that you acquired on your own with your own business savvy, hard work, and some good luck…you can
have at ‘er! It’s mighty short sighted to mortgage your “heritage” land for “personal wants.” What about
your legacy? What about your kids?

If You’re Not a Farmer…

The expectation of a financial windfall from the passing of your parents is simply unacceptable,
especially if you’ve been bequeathed the land that was passed down for generations. It is not yours to
sell to the highest bidder; it is an heirloom that must be cherished and made available for the next
generation again.

When my grandmother immigrated to Canada as a child, some of her older siblings stayed back in the
old country. Their descendants are distant cousins who we had kept in touch with many years ago. I
recall that the “flat” in which they lived was not owned, but was still passed down through generations.
Ownership of their own home, something which we take for granted in Canada, was not realistic for
them at that time in history. And yet what they had, despite unowned, was bequeathed.

When I began farming I promised my dad, who was a recent widower at the time, that I would never
allow the original land to be jeopardized for expansion or otherwise. Now that I’m no longer actively
farming, I can only hope that my siblings who are carrying on will stick to that.

There is a way to minimize the risk of inherited land being sold off: complete a succession plan.
Call it whatever you like: transition plan, continuity plan, longevity plan, whatever! No matter what you
call it, just get started. Getting started is the hardest part, and there is help available to get you started.
You will eventually secede from the farm, and the activity of planning for it will force you to talk to your
family about what they want.

Direct Questions

Does your entire family know what happens to the farm if you were to pass away tomorrow? Ask them.
If their answer doesn’t match yours, then you haven’t done a good job of this.

Do your non-farming children even want to own land? If they don’t, why burden them with it? If your
assumption is “Why wouldn’t they want land,” then talk to them…now.

Can you afford to hand down the land without needing the food bank in retirement?

From the Home Quarter

When I was a kid, the standing joke was “I can’t give my kids the farm; I’ll get charged with child abuse!”
Today, land is a hot and sensitive topic. Over a century of blood, sweat, and tears is awash in homestead
land and to trade it for a fat cheque seems an indescribable tragedy when something as simple as a
conversation with family could circumvent such heartbreak.

Succession isn’t easy. It forces us to consider a future that we may not be ready to face. But ready or
not, the future is near, so it’s best to be prepared.

Whoever said it, this rightly applies: “We do not inherit the earth from our ancestors; we borrow it from
our children.” Sounds like they were having coffee with Bill too.

If you’d like help planning your farm for business and personal success, then call me or send an email.