The 10 Habits of Highly Successful Producers

It Doesn’t Change Much From Continent to Continent

The fundamentals of good farm management would appear to be the same, whether you’re growing crops near Fargo, ND or Wagga Wagga, Australia.

As proof of that, following is an excerpt from a publication for Australian producers, “How To Run A High Profit Farm,” published by Holmes, Sackett & Associates (www.hs-a.com.au), a farm business management consulting firm in Wagga Wagga, New South Wales, Australia. Reprinted with the company’s permission, we’ve changed the headline, but everything else in the piece is word for word from the original, right down to the use of the word hectare instead of acre. One hectare, by the way, is equivalent to 2.47 acres.

Successful producers run very profitable farms and their success is strongly influenced by the type of people they are. In the interest of providing you with a checklist to help improve your own performance, we have provided the following profile of successful producers. This profile is based on correlating the results of farm performance benchmarking with the features of the owners of those farms.  If you try to emulate the features described in this profile, the profitability of your farm will almost certainly increase.

One – They are production driven and always produce more product per hectare than the average.  Thinking in per hectare terms and striving to optimize production per hectare are two of the most fundamental keys to success. Typically, the most successful producers achieve a gross income per hectare 30-50% above the district average and achieve most of this through greater production.

Two – They have good expense control and a very low unit cost of production.  In absolute terms the most successful producers spend more per hectare than the average to achieve their result.  However in doing this, their overall cost of production is lower, because they produce so much more per hectare.  Costs must always be viewed in relation to production and you cannot consistently achieve high levels of production without spending money.  The least profitable farms are often run on a shoestring, because their owners are focused on costs rather than cost of production.

Three – They sell their product for a premium. The most attractive aspect of premiums is that they cost very little extra to achieve.  Presentation, attention to detail the imposition of quality standards may take a little time, but are often cost effective.  The most successful producers always strive to achieve premiums through these means.

Four – They are exceptionally well informed. Information and how it is used is another fundamental key to success. The majority of producers do not spend enough time gathering information, developing contact networks and making the small sacrifices needed to be well informed.  This is particularly true in the technical and marketing areas. The most successful producers spend at least thirty minutes a day reading and keeping up to date and have a minimal reliance on the popular rural press for the more important information.

Five – They run a simple management system, keep the number of enterprises to a minimum, and are always ready on time.  The more complex a management system is, the less likely it is to be profitable.  In addition, the more a management system moves away from conforming to the natural patterns of rainfall and pasture growth the less likely it is to be profitable.  The most successful producers realize that there is more potential to profit from yield increases than there is profit from peak out of season prices and design their management system accordingly.  In addition, they realize that the more enterprises that they become involved in, the less likely they are to do any of them particularly well.

Six – They do not overcapitalize, especially on machinery.  Overcapitalization is an insidious cause of poor profitability on farms. This is because depreciation is a real cost but does not result in a direct cash outlay every year.  For this reason it often goes unnoticed at least until replacement is necessary.  The best producers restrict capital spending to those areas that produce income in the longer term and in the case of machinery, own the absolute minimum, keep it working fairly new and in good working order.

Seven – They set goals, plan, and achieve well thought out objectives.  The most successful producers will often be found to have a yearly planner on the office wall and there may also be a whiteboard, if not a notebook, with the management plan and the short and long-term objectives written out.

Eight – They have a good grasp of their financial affairs.  “Shoebox” managers rarely achieve great results. These are the managers who take their financial affairs to the accountant in a shoebox each July and have him work out the annual result.  The best managers are either computerized or run a well designed manual cash book and have the capacity to know their exact financial position at any time.  Cash flow forecasts for the financial year ahead are invariably done before the current financial year is over and they strive to keep their bank manager well informed at all times.

Nine – They are prepared to take risks and can cope with debt. The most successful managers accept that risk is a part of life and in primary production “one must speculate to accumulate.” They take steps to minimize risk but are still comfortable in accepting the risk of a well thought out plan.  They are able to sleep well at night with levels of debt that would worry the average producer, particularly as they tend to run “counter cyclical” operations – i.e., they are selling when everyone else is buying and vice versa.

Ten – They thoroughly enjoy what they do. There is a considerable amount of hardship and sometimes suffering for those involved in Australian agriculture but the rewards for those who do it well are substantial.  The most successful producers really enjoy what they do and rarely if ever consider an alternative vocation.  If you do not enjoy your work it is very difficult to become very good at it.