Collaboration and Innovation Help Farmers Prosper
Insight When profits are down it becomes extremely important for farmers to optimize costs and collaborate with a range of service providers.
High yields and production rates combined with high market prices gave western Canadian grain farmers a couple of profitable years. Now, falling global commodity prices and rising equipment costs, land prices, and interest rates are putting a squeeze on that profitability.
“In these changing times, we need to be aware of the impact and react accordingly,” says Mark Lepp, CEO of FarmLink Marketing Solutions and Farm At Hand.
Take a collective approach
One innovative approach is to look at farm management through a holistic lens. Rather than coming from a “grow more” perspective, this involves looking at the entire operation to optimize costs and operations, manage risk, and sell better. However, few farmers have the time and specialized knowledge to handle all these components by themselves. That’s where collaborating with diverse service providers — accountants, marketing consultants, agronomists, and hedging brokers — can help.
“If you’re just trying to sell at the market highs, you’re missing components such as cash flow requirements on a farm and profitability targets,” says Lepp. “Marrying all these components together through that collaboration helps the farmer make better decisions.”
For example, an accountant understands the financial dynamics of the farm, while an agronomist can offer insight into the yield outlook and its impact on the markets. This helps a marketing advisor determine which crops of the entire portfolio have the greatest potential for success so a hedging broker can offer strategies to offset production risk should the yield be lower than expected.
Taking a collective approach to farm management — rather than just focusing on growing grain — will ensure that Canadian agriculture survives and thrives in changing market conditions.