NPR - A Balanced Management Approach To Growing Farms (p244-251)

Actual observations show that two neighbouring farms will typically report different financial outcomes. One farm will be better off than the other. Same enterprises. Same size. Same weather. The only variable is the difference in management decisions made for each of the farms. Longer term, the implications pertain to the potential impact on the ability of the farm to support growth objectives and sustainability. An increasing number of farms are facing the issue of not having the capacity to support growth. Why is this happening?
An obvious observation would be that farmers should not try to manage a 6,000 hectare farm the same way they managed a 600 hectare operation. At what point should the management systems change. 2,499 hectares? 2,500 hectares? There is no one specific increase in size that mandates a certain change in management practices. The management changes required to keep pace with growth are subtle. However, the need to align growth and management is very important. Businesses typically outgrow management and this axiom absolutely pertains to farming. This paper will examine challenges in managing growing farms; growth in terms of size and/or complexity and diversity. Given that management challenges exist, there are advanced management skills that are needed to ensure that farm businesses thrive. Increasingly, farmers are recognizing and adapting to change, with an increasing emphasis on advanced business management. No longer can farmers rely solely on good production management skills to see them through challenging times. More attention to planning is required. Planning not only for the next production cycle, but more importantly longer term planning that is strategic in nature. They must integrate the associated production, marketing, human resource and financial management activities. Because of historic, narrow margins and large capital investment, they must also work to align strategic objectives with financial performance and investment. The result is better managed farms, better financial outcomes for farm owners and managers and an enhanced likelihood of longer term sustainability.

Keywords: farm management, balanced management, strategy, finance