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TAKING CARE OF BUSINESS
Farm management planning can help build a solid future
By Jeanine Moyer
KEVIN FORBES DESCRIBES HIS FARM MANAGEMENT STYLE AS A LAID-BACK APPROACH that focuses on creating the right environment for his cows, employees and family to succeed.
The Sarnia, Ont., dairy producer and former banker says it all comes down to planning and making the right decisions for the future of the farm.
“I look at the big picture, assessing what our farm needs to succeed today and for future growth,” explains Forbes who owns Forbesvue Farms, a third-generation dairy farm where he milks more than 200 cows in a double 16 parallel parlour and crops 1,300 acres. The details of his farm management plan can be found in his laser-focused approach to managing cash flow, strategies to minimize the impact of rising interest rates and employment retention.
Ken McEwan, research professor at the University of Guelph Ridgetown Campus and financial literacy module instructor for the school’s Foundations in Agricultural Management online course, says while farm management may look different for everyone, a written plan is essential for making critical decisions. “Every aspect of a farm is held tight by a solid plan that defines a farm’s vision, strategy and ultimately the future and prosperity of the farm,” explains McEwan, noting a robust plan also helps farms establish roles and responsibilities, support benchmarking, and minimize the impact of stressors outside of their control.
NUMBER-CRUNCHING
The basics of farm management consist of finances and economic principles. McEwan believes understanding the financial health of a farm can help dairy producers confidently make decisions. Basic financial tools, such as balance sheets, cash flow statements, cost of production and budgets are necessary, but so is taking the time to analyze the information and comprehend what it means for the farm. Forbes says cash flow is the most important financial tool he uses, factoring it into every situation facing his business. “Keeping a strong cash flow has helped us manage through everything, from evaluating expansion opportunities to navigating increasingly tougher economic situations as interest rates continue to rise,” he says.
Financial planning and detailed record keeping can assist in understanding the implications of managing and taking on debt, the impact of asset purchases, and identifying economies of scale, inefficiencies and direct tax planning strategies.
Mark Sterk says cost of production drives his farm financial planning and he makes it a daily practice to keep tabs on the economics. Sterk is an Embro, Ont., dairy producer, owner of Sterkview Dairy Ltd. and manager of the original family dairy farm, Sterkholm Farms. “You need to stay on top of cost of production to know how everything impacts your business – from labour to feed costs, to pregnancy rates and milk production,” explains Sterk.
Knowing the farm’s financial position can also help build a strong relationship with lenders and secure credit for future opportunities. McEwan says keeping on top of finances can also help set benchmarks to record and compare progress and evaluate new opportunities, such as whether to buy extra land, build an extra feed bunk or upgrade milking equipment. “Today’s farm business is impacted by every aspect of a farm business management plan,” he says.
Prioritize People
Sterk’s approach to farm management starts in the barn. “The most important factor in the success of a dairy farm is making sure cows get pregnant,” he explains. “I’m no expert, but I have employees and I milk cows, and without pregnant cows, you won’t have milk. That’s why cows guide every farm management decision, including labour, cow comfort and quality feed.”
Managing a unique farm business structure, Sterk owns two separate dairy farms within 10 kilometres of each other. He calls his approach, “common calving,” where he milks cows at both farms, while managing heifers and calving at one location. This arrangement has resulted in labour efficiencies and faster growth opportunities. His approach to hiring and retaining staff is opportunity oriented. “Everyone has an equal opportunity to learn, try a job they are interested in and enhance their skills,” explains Sterk, who says there’s always a spot on his farm for someone eager to learn. “If someone is interested in working, I’ll hire them, because we’re always looking for people who are passionate and willing to learn.”
Miking 650 cows between both farms, Sterk employs seven full-time staff, comprising a mix of local and foreign labour. He’s built a reputation for hiring and training young employees who have applied what they learned and then built thriving farms of their own. Despite success with local employees, Sterk has come to rely on foreign labour over the past four years to provide consistency. He has outsourced the paperwork required to hire foreign labour to a licensed immigration consultant and is pleased with the results. He currently employs three staff members from Guatemala and one from the Philippines. Sterk provides accommodations for his foreign staff and says their upbeat morale adds to the positive work environment.
