Supporting the success of young and beginning farmers and ranchers is an important part of our mission as a financial cooperative. In fact, we have entire teams whose sole job is to serve young and beginning customers.
When some of our teammates met with producers at our annual Side by Side conference for young and beginning customers served by Frontier Farm Credit and Farm Credit Services of America (FCSAmerica), they focused on three areas that are vital to long-term success.
Below are excerpts from the conversation between Parry Briggs, a regional vice president of lending in eastern Kansas; Robbie Alexander, a young and beginning relationship officer in Wyoming; and Rachel Rehder, vice president of credit underwriting.
Know and Share Goals
Parry: As young producers, one of your biggest focuses needs to be understanding your priorities and goals. Otherwise, we get reactive: “Oh, that farm came up for sale. We’ve got to figure out how to buy it.”
If you haven't positioned yourself for that or you don’t understand your most important decision today, you start to make some poor decisions and put yourself in a tough spot. This is probably where we see people get in trouble the most.
Instead of thinking about the crop that is in the field this year or what you are doing in the next few months, step back and say my priorities are X, Y and Z for my operation, my family and for me. What do the next two, three, five years look like to me?
That's one of the most important skills in agriculture because there will be tons of opportunities to chase. You need to make sure you are chasing the right ones. Especially for young producers, it’s important to think through your strategy.
Also, don’t get caught up in the coffee shop talk about what everyone else is doing. Learn from your parents and mentors. But how they got started to where they are today is likely to be different from what makes sense for you today, so make sure you know your goals.
Robbie: Take that next step and be sure your spouse or any business partner you have are on the same page. Also, share your goals with your lender, with your feed person and others in your network. A lot of times, people make assumptions if they don’t know your plan.
Maybe your goal is to be debt free. If it is, as a lender, I’ll be the first person to shake your hand and say congratulations. But your goal may also be to grow and that comes with a lot of debt. Me understanding that helps you when you’re making decisions. Your feed person knowing that helps them.
If you don’t know your goals, that emotional reaction will happen when Grandpa’s farm comes up for sale. You can change your goals; they’re not written in stone. But be sure you have a long-term plan with everybody around you so you’re not reacting from emotion.
Parry: Don’t think of this just as goal setting. Do an analysis of your operation, and ask, ‘What are we good at?’
You have to almost do a SWOT analysis (strengths, weaknesses, opportunities and threats). Sometimes it helps to have a third-party perspective as well. Otherwise, you could invest in a lot of things that you’re just so-so at.
Rachel: Be open to opportunities. Opportunity is one of the biggest things that we have coming in the next few years. We see it time and time again. When there is a downturn, there is opportunity. So be ready and keep your mind open because there might be opportunities you haven’t even thought about.
We have talked about having a plan and knowing what your goals are. This will be important any time an opportunity comes up. Does this opportunity help me, send me backwards from what I said I wanted to accomplish or is my goal not as important as I thought? This is your decision point, and it will lead to more consistent and better decisions.
Parry: Things are different today, so you need to be open to change and trying some new things. If you look back to 2014, ‘15 and ‘16, when we started seeing that downturn, the operations that stuck their head in the sand and didn’t want to make tough decisions, the ones that were negative about everything, they got stuck and fell behind very quickly.
You need to be realistic. Things are going to be tougher and there will be tough decisions to make. But those who are proactive and have a positive attitude are going to be in a lot better situation.
Financial Acumen is Hallmark of Successful Farmers
Parry: Understanding what your commodity or product costs to produce is the anchor for everything else. Starting with your cost of production allows you to do so much.
Don't worry about having everything perfect with your financials. The first breakeven I ran on cattle had three or four numbers in it. We left a lot out. But it was a starting place for learning. Work with your financial officers. That’s what we’re here for.
Robbie: I despise the paperwork. I am in lending, and if it comes down to doing my own paperwork or pulling a calf, I’ll pull a calf.
But I know how important paperwork is and see where it makes a difference. So, if you're sitting there saying, ‘I couldn't be good at paperwork. I don't like that,’ know there are people in my job who feel the same.
Rachel: Be sharp with your pencil. Going line item by line item, using last year’s transactions, can be eye opening – and uncomfortable. But a lot of times that is when we start seeing some surprises financially. And family living is usually one of the first places that we find those surprises.
Parry: I'd add risk management and marketing. How far are you looking ahead and how much are you planning so you can look for those opportunities to market? That’s what we see with financially strong producers; they are always looking down the road instead of being reactive.
Rachel: Our producers are awesome on the production side of their operations, and let’s be honest, it is probably the most fun part of what we do. But we need to pair that with the financial side and bring up that skill as well. Think of your business as a three-legged stool – your production, finances and management of your risk exposure.
Make Your Advisors Earn Their Money
Robbie: Make your lender and your vendors earn every dollar you pay them. And be sure that you're asking the right questions. I see people assume they know something, and they can have big misses when all they have is a 15-minute conversation.
Rachel: Sometimes, our analysts join financial officers for visits with customers. We’re experts, so utilize that access and pick our brains. It is free knowledge.
Share those goals Robbie asked for and ask lots of questions: Does this makes sense? If this is my goal, am I on track to achieve that? What do you see as a hurdle for me? What are the things I can start doing today to reach my goals?
That truly is what we love to do. It is part of the Farm Credit value proposition to share our knowledge.
