Farm Managers

What Do Farm Managers Do?

Whether you run a part-time crop farm with 150 acres of corn and soybeans or a 2,000-acre spread with a large cattle feeding operation grossing more than $1 million each year, your management determines how effectively your land, labor, and capital resources are used. Two farms, side by side with the same physical resources, markets, labor availability, and equity situation, can generate very different profits and losses at the end of the same year. The difference in large measure can be attributed to management.

In many farm businesses, the owner-operator is the manager as well as one of the principal laborers. These two major resources, management and labor, are tied together in one person. While the labor activities are always more imminent, owner-operators must recognize and give priority to management time. Statements such as "I don't have time to analyze my books" or "All markets have about the same prices" indicate that management is not getting the attention it deserves. Management time is of primary importance to the success of any farm.

What Managers Do

When the cows get out and the fence is down, there is not much question about what needs to be done: Find the cows, get help if needed, and fix the fence.

If you are the manager and the principal worker on this farm where the cows got out, some mixture of management and labor is required to get the job done. Yet no time was wasted in deciding which was which. Priority was established to get the job done in a hurry and resources were mobilized to do it.

It is not hard to recognize that making decisions is part of management. Getting the cows back into the pasture and fixing the fence is mostly labor. Deciding how to fix the fence and what to use, mobilizing the labor, and determining why the cows got the fence down to begin with are all management. Recognizing that something may have been amiss, such as not checking the fence recently or not having enough feed for the cows in the pasture, is part of management as well.

Here are some of the things farm managers do:

Set goals and objectives.

Recognize and identify problems.

Respond and act when problems occur.

Seek, compile, and utilize relevant information.

Consider and analyze alternative courses of action.

Make specific decisions.

Carry out decisions or take action.

Accept responsibility for these decisions.

Evaluate the results of these decisions Develop training programs for family members and employees.

Direct and evaluate family members and employees.

Make buy and sell decisions.

Control financial operations Organize the use of resources.

Establish the timing of operations.

Monitor operations and check up on everything.

While there is overlap in this list, it could easily be expanded. The list does indicate, however, that there are a lot of things that managers do. That is why good full-time managers are crucial to most sizable businesses and why time must be set aside for management in any business even if the principal laborer is also the manager.

Management Functions

Textbooks on farm and general business management discuss management functions early and often. Different terms may be used, but the concepts remain the same. At the core of these concepts is a set of goals and objectives for the business, developed and understood with clarity by the owner, by management, and by labor. Expectations about levels of annual earnings and production, maintenance of farm buildings and grounds, tradeoffs between capital appreciation and current earnings, long-term growth, and achievements must be established. While these goals and objectives are not always formalized in writing, they need to be thought out and discussed.

The figure suggests there are five basic management functions or activities used to achieve the goals and objectives of a business.

Planning. While all five of the basic functions are important, planning is crucial because a good plan involves all the other functions. Planning involves:

Setting daily priorities and schedules: What should be included in today's "To Do" list? Who should complete each priority activity?

Recognizing problem areas and looking for alternative solutions: Why did milk production drop last month? Did we have the protein level right in the feed? Was there a change in the quality of the forage we fed? Should I get a consultant to look at my ration balancing program?

Making a financial plan and cash-flow statement for the year, knowing when and how much credit must be obtained and where the cash will come from to meet the regular obligations.

Looking at alternative cropping plans for this year; examining Government programs to see whether a specific program, such as USDA's Conservation Reserve Program, is useful to the operation; working with USDA's Agricultural Stabilization and Conservation Service to know program yields and the current alternatives before signing up for programs or deciding to stay out.

Establishing the overall enterprises for the business: Which fields will be planted in row crops this year? What cropping sequence will be used in the fields with the most erosive soils? Should part of the crop sales be contracted? Should the wheat be sold or stored after harvest?

Developing the business: How fast should the business grow? Is new staff needed? What professional development is needed for each manager?

Planning cannot be done just once a year; it is an ongoing process. Plans get revised when established checks or measures determine that goals are not being attained. While some planning can be done while driving to town in the pickup, most planning deserves undivided attention without interruptions. A well spent hour with a banker, with your computer, or in discussion with a trusted neighbor or your partner may save a lot of money, time, and energy later.