Farming In Nz – The Key Is Now The Top 10%
The key to farming in New Zealand is using the top 10 centimetres. By that I mean it is better to employ your mind to running a good business than blindly relying on good luck and physical effort without thought.
A farmer's ability to think, make good decisions, manage people, cope with lack of money and to know when to walk away will pay off many times over.
There's no denying that brain power is a farmer's best friend with farm dogs coming a close second. Top advice is one thing but advice from a community cannot always be helpful. When Henry Ford first went into business he asked a big group of people what they really wanted and their reply was a faster horse.
More pearls of wisdom from famous people have come from Richard Branson who once said: "You don't learn to walk from following rules, you learn by doing and falling over". Bill Gates said "Your most unhappy clients are your greatest source of learning". Warren Buffett said "Risk comes from not knowing what you are doing".
Abraham Lincoln has been quoted as saying: "When you do not like someone who is key to your business, maybe you need to get to know that person better". The last word should go to Colonel Sanders of Kentucky Fried Chicken who believed: "There is no reason to be the richest man in the cemetery – you can't do any business there".
Sometimes you need to train yourself to let go of the things you fear to lose. Being average in agriculture is now not a sustainable business – farmers need to hire people who are better than themselves and let them get on with it. Growth and comfort in agriculture struggle to co-exist. Agriculture is not profitable enough for you to compromise for the sake of massaging somebody's ego – maybe yours.
Many men in farming have two reasons for doing something – one that sounds good and the other the real one. It is easy to forget that the greatest asset of a good company is often its people.
Here's a few more thoughts:
- Sometimes a mistake is simply another way of doing things. For maximum attention nothing beats a big mistake – burn that mistake into your non-repeatable memory banks. If you are only going to make two big mistakes in your farming life then make sure they are 30 years apart.
- If many NZ farmers were purely motivated by money they would have sold out long ago and be at the beach.
- We may well start to see advertising that says 'buy less, choose well and make it last'.
- There is a fairly good chance that your first five years in farming will shape the last five years – farmers in the top quartile tend to stay in the top quartile and the reverse applies.
- Sometimes it doesn't matter how slowly you go so long as you do not stop.
- The bottom quartile in any business does not always fail – what they have discovered is a whole raft of things that do not actually work. Winning in business needs to be a habit, unfortunately for many, losing in business is also a habit.
- Don't drink downstream of the herd – if you see a herd bandwagon it is too late.
- Remember people rarely buy what they need – they tend to buy what they want.
- You cannot do all the work required on the farm so hire character and train skill. A top farm advisor is worth his or her weight in gold – beware though of an advisor who takes your watch off your wrist and proceeds to tell you the time.
- A calm sea does not make a skilled sailor – in farming you need to build up your financial reserves in these calm seas.
- Keep your farm committee small as big committees tend to help minimise losses but can never agree long enough to make long term profits.
- Some people are depressing to deal with and are against everything – just move on from them as the other 80 per cent will keep you facing north.
- Farming really is an apprenticeship programme where operators learn more from mentoring by the industry's 'wise men' than from most formal education.
- Identify the most damaging threats to a business and not just the most obvious ones.
- A lack of health and life insurance may wreck you more quickly than crop or stock losses or damage to other parts of a farming enterprise. A farmer can't afford to insure against every agricultural risk, but use the top 10cm on this one.
- Unspoken disagreements in agricultural families tend to boil over sooner or later. Do not pretend there is no problem if you feel strongly that there is one – conflict is inevitable and invariably difficult but it can bear fruit.
- Some people can be smart without being smart about people, but you cannot be wise without being wise about people.
- In farming expect the unexpected because stuff happens.
- Farmers are best convinced by things they themselves discover.
Lastly, long range planning often works best in the short term for farming, if only because if it is your plan. Farmers will tend to move heaven and earth to bring their own plan to fruition as much as possible. Once someone owns a plan it never ceases to amaze me how far they will go to make it happen. That's the power of the mind at work.
Pita Alexander is an accountancy and agribusiness director at Alexanders.
20 September 2016