What are the traits of the top and bottom 20% of financially successful farmers?

I recently came across a presentation where Dr. David Kohl shared two lists of these traits. These slides came from Dave Brock of the Brock Report. They were taken at the company’s Ag Economic Symposium.

I definitely agree with his thoughts but see later in this email for a couple things I’d add to his lists.

Top 20% of Farmers

  • Know cost of production
  • Realistic revenue targets
  • Keep in touch with lender
  • Keep up with finances before December
  • Take responsibility for outcomes
  • Have a fall back plan
  • Training family members to take over
  • Better before bigger (check out this post we wrote on how small improvements can lead to BIG increases in farm profitability)

Top 20 Percent of Farmers.jpg

Bottom 20% of Farmers

  • Wishful thinking for revenues
  • Not aware of costs
  • Don’t know cost of living
  • Won the cash rent lottery
  • Never updates the balance sheet
  • Emotional vs. objective
  • No fall back plan
  • No active responsibility / not at fault
  • Wants easy out in adversity

Bottom 20 Percent of Farmers.jpg

Here are a few things that I’d like to add to Dr. Kohl’s list.

Top 20% of Farmers

  • Approaches farm investments with an ROI-focused approach
  • Is comfortable selling commodities and ending ownership
  • Never (or very rarely) pays commercial storage
  • Separates futures and basis sides of a commodity sale

Bottom 20% of Farmers

  • Approaches farm investments with a primary focus on minimizing taxes
  • Default position is to hang onto commodities for as long as possible (and sometimes pays many months of commercial storage)
  • “Basis is simply elevators stealing from us!”

In addition, there’s one point that Dr. Kohl misses and my emails often miss……..sometimes Mother Nature throws a nasty curveball which hurts everyone in her path.

You can do everything “textbook perfect” and still get punished due to factors out of your control.

Don’t let that stop you from implementing these best practices into your farming operation. Control what you can control.

Dr. Kohl’s approach fits very well with the numbers-based, unemotional approach to farm management that led to us building our software package.

Making confident farm business decisions is hard!

We think it’s easier with an objective eye on your numbers. Our software makes this easy, intuitive, and (I think) pretty damn fun!

If you haven’t already, click the button below for a 14-day free trial.

Nick Horob
Passionate about farm finances, software, and assets that produce cash flow (oil wells/farmland/rentals). U of MN grad.
Fargo, ND
http://www.harvestprofit.com