What is the business model for your farm
or ranch? Every business has one.
If we ask the average farmer or rancher what business model he uses for his
operation, we might get a blank stare.
That is because most of the world doesn't view farming or ranching as a
"business". Only in some of the developing countries are
agricultural stories in the business section of the news.
Those of us not paying attention to our business model are following one
selected by other people.
The model can be inherited, because that's the way dad always did it. A
model can be suggested by a lender who requires a business plan. Sometimes
it is created by trial and error. Other times it is created by a government
program. Often it is formed by intuition.
Some people believe the government should design a universal business model
for all of our farmers and ranchers. Such people usually crave uniformity
and control.
There are two reasons a government farm model won't work. First, most of us
don't appreciate being told how to run our operations. Second, every
operation and every operator is different.
A model that works well on a farm with heavy loam soil and 24 inches of
annual precipitation will not work on poorer soils with 16 inches of
precipitation.
We all have different abilities. Some people take pride in doing all the
labor themselves, while others cannot do the labor. Some can skillfully
supervise only one employee, while others can supervise a hundred.
A model for a grain commodity operation might work well for someone skilled
and knowledgeable about using the futures market to reduce his risks, and
not work at all for someone who views the commodity market as a place to
gamble.
Whatever your business model may be, it should include three things in my
view: 1) something you enjoy; 2) something that meets your family's
financial needs, and 3) one that does not infringe on the freedom or rights
of others.
Within those parameters, the options are almost unlimited. We can diversify
production, develop specialty products, integrate vertically in the market,
learn to use futures markets, improve production, lower costs, add value,
expand use of renewable energy, develop new markets and sell services, just
to name a few.
When we view our farms and ranches as businesses, we will see business
opportunities we otherwise would miss. Someday, farming and ranching will be
accepted as businesses.
It may not be today, but it is closer.
