DOLLARS & CENTS
Habits of Successful Young Farmers
Dr. David Kohl energizes agricultural
lenders,
producers
and
business
professionals with his keen insight
into the agricultural industry through
extensive
travel,
research, and
networking around the globe. He
is a Professor Emeritus of Agricultural
Finance
and
Small
Business
Management and Entrepreneurship
at Virginia Tech, Blacksburg, VA.
Dr. Kohl has traveled over 8 million
miles in his career and conducted over
6,000 workshops and seminars for a
variety of agricultural audiences.
Additionally, Dr. Kohl’s personal
involvement
with
agriculture
provides a unique perspective into
the future trends of the agricultural
industry and economy.
12 HEARTBEAT | WINTER 2017
Recently, during a seminar for
young farmers and ranchers, a
tough question was posed by one
of the engaged participants. He
asked, “How can a young and
beginning farmer be competitive
with a larger, pro-growth farmer
with plenty of equity?” Well, this
is not a new issue for American
agriculture and is a legitimate
concern. In many cases, the more
experienced and larger producers
benefited from the recent
commodity super cycle, have more
access to updated technology in
new equipment, and can retain
management that is well trained.
Nevertheless, there are several
habits and practices accessible to
young producers that while they
do not guarantee success, they
certainly increase the chances
significantly. Let’s examine some
of the top practices of today’s
young and successful farmers and
ranchers.
First, when asked, successful
young producers know their cost
of production by enterprise, if
multiple operations exist. Of
course, this is foundational to a
profitable marketing and risk
management plan; and to
allocating land, labor, and capital
in the most productive ways.
Next, these young producers
are investing only in productive
assets. This includes livestock,
machinery, equipment, land, and
even human assets. Further, they
do not buy into the one-size-fits-all
approach. Depending on skill
sets, some businesses opt for the
high-tech route, while others may
use less technology but focus on a
market niche based on specific
production for consumer
preferences.
As many are entering the
industry with a higher-education
degree, these young producers
understand the business principle
that sacrifice will be required to
build equity. In addition, because
of the technological presence in
their lives, many utilize online
financial programs like
Quickbooks or Quicken to track
their expenses. These advantages
naturally predispose them to the
idea of budgeting, and more
specifically, modest family living
withdrawals. Often, young
producers can outline their living
costs as measured per pound of
meat or bushel of grain produced.
One significant practice of
successful producers at any age is
the ability to manage those things
that can be controlled, and
manage around the factors outside
of their control. In today’s world of
social media and extreme world
events, it is easy to be distracted or
lose focus from one’s main goals.
The ability to zero-in on practices
such as marketing and risk
management will undoubtedly
strengthen one’s financial
flexibility.
A new emerging trend among
young producers is the “asset-lite”
approach of collaboration. For
instance, three young producers
currently share one CFO, who is
responsible for most of the