Bigger isn’t Better

[charliep]

Your biggest challenge moving forward will be human resourses and the fact you run a seasonal business. I agree this is where the mega farms blew up with the caveat the two businesses that started this conversation had different approaches to this issue. Not answering farmaholic questions but that is biggest question for any business - do you want to organize and limit yourself to a business you/your family handle or do you want to grow bigger to something that involves employees. A very personal question based on your business plan and your family goals.

[rook]

On the one hand I feel kinda smug when these big corporate mega-farms fail.
On the other hand, the corporate models that work in all other industries apparently cannot work in primary ag. This tells me that we family farmers apparently work for peanuts, and that all other industries are flush with capital, highly paid management and employees, and still make a return on investment. Sometimes I wonder why I keep doing it?...

[mbdog]

Charlie...I've nearly given up growth/diversification ideas on a account of labor and government.
Governments, in large part caused the problem, and its almost laughable that they are realizing and going to try solve the problem.
Even if that treadmill spits out a few worthy candidates, employer liability risk is getting scarier by the day.
And then there's the immigration issue, getting in the way of people who really want to work and potential employers/investors.
Its getting to the point its just not worth it to hire someone.

[charliep]

I'm going to get beat on but I am going to suggest there are some pretty successfull farm businesses out there. They are of many sizes and types. Even those of my age have done a lot to build a legacy of wealth to the point where they can help establish a second or third generation in the business.

To the original question, size doesn't matter. It is what you do with what you have that counts at the end of the day.

[vvalk]

Rook makes a great point. If you listen to free wheat you work on avg 55-60 hrs a week throughout the year for 3 or 4 grand some $1000. Free wheat I don't understand what you are saying and you paint a real pathetic look at farming.

[wmoebis]

Charlie how do you measure successful farming?

[charliep]

Strange question for an economist. I would start with profitability/return on investment. My longer term would be increasing wealth/net worth. It is likely a family so it also should contribute to non financial and life style goals of the family.

I'll turn the question around. What are your goals as farm manager?

[charliep]

Just curious how many of you calculate your return on investment? Which is more important - your balance sheet equity (growth from re-invested profits) or your net worth (increased land values)/

[bgmb]

Bigger is better! as long as you do as good of a job on the last acre as you do on the first one.

[charliep]

I am always curious about the decision to expand as farmers make better use/utilization of their equipment, next step pushing to bigger equipment and finally adding more equipment. Everyone focuses on variable costs but a couple of studies I have seen indicate equipment decisions are a bigger determination of success - particularly in a growth phase. That and management including agronomic/financial.