Managing Adversity

As a business, and agriculture is a big business, adversity can impact your operation at any time. How and when we mentally prepare to manage adversity can keep our operation on track. Here is an illustration of four adversities and a possible way of preparing for them.

1.    The loss of key people in your labor forces: Nothing can turn a farming operation upside down quicker than to be notified a week prior to the busiest of seasons that your key employee will be moving on. Most of the time when you are given this news, he/she has already secured employment elsewhere. At that point it does little to offer more compensation and benefits to retain them. As with all businesses, there are subtle hints that your key people are thinking about other possibilities.  I have advised clients over the years to ask your employees - “where do you see your role in five years” - and listen closely to the response. Recently I read McDonalds has a 100% annual turnover of employees. However, few people would tell you that they want to make a career of flipping hamburgers. We all want to make our business something to be part of, not a stepping stone for key players.

2.    Finance: Consider working with a loan officer at your local bank for many years and now you are told that your loan officer is moving on. Now the approval of your operating loan is being held up because the new loan officer is wanting many additional things. Most of the time we want to have our operating loans completed and approved by March 1st and if you see yourself in this situation, which I might add, many clients have been there, then take it to the top and do it quickly. That simply means talking to the loan committee.

3.    Health and Accidents: Production agriculture lives by the six F’s – Faith, Family, Farm, Finances, Fitness, and Fun. When adversity hits through health or accident, faith is always number one and family is number two. Agriculture is well known for the neighbor’s generosity in taking care of your farm in your absence. Nobody ever wants this adversity but when kept in context, it makes it easier to get through it.

4.     Weather – Marketing: Weather can make the best laid marketing plans go astray. When you thought you had a conservative 50% of your APH sold, you could be looking down the gun barrel due to weather that puts you at 100% sold. Memories linger about crop year 2012 when, in July, corn prices hovered around $4 and then October was on the top side of $8. We can’t undo what weather deals us. However, we can stay positive when the focus shifts to what is done, and next year’s crop value also tagged along to fantastic price levels. On October 1st, 2012 corn was at $7.00 offered and fall of 2013 was at $6.00. That is how we manage adversity in marketing, we look ahead multiple years when prices can secure a good profit margin.

Recognize adversity as part of the landscape of production agriculture. Although you cannot see it coming, being mentally prepared will be a big help.

-John C. Keller, March 20, 2019