Time for annual re-evaluation on farm (The Secretary’s Desk)
This is the time of year when the projections (guesses) come out to inform you of what is coming down the pike for the upcoming growing season, often the result of “winter meetings” where, in addition, all sorts of production techniques, tools, and other issues are discussed.
These big decisions made on the farm, or in any business, affect how things are going to pan out for you and your family going forward.
Guaranteed to be gut-wrenching, this can take a big toll if you make bad determinations. Of course, the opposite is also true, and you can reap great rewards when your predilections and analysis line up to produce a positive outcome.
Should I get bigger? Smaller? Is the time right to take on more debt? Is this where I decide to hang it up and cash out?
Every sector of agriculture has different circumstances and factors that affect the markets for any commodity. So, when people ask me, “How is ag doing?” there really is no one-size-fits-all answer.
Last year, I would say in a most general way, that in New Jersey, the nursery sector was having another banner year. Dairy was still plagued by low prices and sagging demand. Fruit and vegetable prices were tapering, Livestock prices were OK but not flowing to producers based on so much increased demand occurring. Grain prices were good, and so on down the line.
That was last year, and in 2022, there will be trends that will continue for another spell and others that will abruptly change for any number of reasons. Some can be more or less foretold, while others like the weather are naturally impossible to predict.
So, projections are always coming your way and the reliance on “big data” has never been more center stage than today. Big data takes the approach of “analytics” — the gathering of every possible piece of information about what works and what doesn’t on a farm — and builds it out to produce a plan of action that, based on all that data, should improve the operation and output of that farm. In short, it’s taking precise, up-to-date applications of science to exacting conclusions.
Over time, “big data” should create a more sustainable farm model and an evidence-based tool for a farm that will open up more economic opportunity for the farmer to target on many levels.
Then there is the arc of decision-making that only you can apply.
Ultimately, though, with all the scads of information flowing across your desk, and advisors telling you the latest, you must decide, on both a micro and macro level, just where you think you should be headed.
Farmers often say they are “price takers and not price makers.”
That is so true for much of agriculture, and with a global economy it is not going to change, as long as supply is long and unbalanced and demands are ever-shifting.
Yes, some farmers in certain commodities have been able to play the market and do quite well. For instance, grain farmers can invest in capital projects like bins and drying facilities, which afford them better timing in when to be ready for demand spikes.
On the other hand, most fruit and vegetable growers cannot adjust the price and can only accept the offers at a particular time.
These farm products can only be pushed out dictated by when they are ready for market.
More aggressive farm owners have branched out, building distribution businesses as part of their overall operations. You know the players and have seen many of these companies grow even bigger than the farms they ply.
Additionally, you can find farmers doing really high-level custom packing and packaging. Diversification became their salvation.
I believe you really need to drill painstakingly deep into your thinking about what it is you do.
Just deciding to roll the dice each year with two or three crops, and hoping for the best prices those limited crops may bring, is just getting far too risky as a way of doing business.
Generally, it only works really well when some other growing region burns up or gets drowned out. But that is basically weather roulette.
As you make this year’s decisions on what you are growing or producing, add some more considerations to your list.
• “Can I add a service?;”
• “Could I learn more about a crop no one seems to be growing but which has demand potential?;”
• “What about e-commerce? Is there a “side hustle” here?;”
• “Should I market on my own?;”
• “Am I really marketing my farm?;”
• “Am I making all the connections or just making one call? What about a farm market or CSA?;”
• “Am I using public relations in the most effective way?;” and
• “Have I taken advantage and joined Jersey Fresh?;”
• “Have I thought about some organic offerings?”
Take the time for a really deep farm analysis and examine what you do and why you do it.
Making decisions is hard, but changing your ways can be even harder.