bookkeeping; management

Farm management: Strategy – key to reaching your goals

In today’s highly competitive farming environment strategic management of your farm is the key to prosperity.

As farmer you should have a clear picture of what you want to achieve.

To make progress, you should consider and implement the following:
1. Clearly define the mission of your business and your objectives.
2. Evaluate the farming and business environment.
3. Develop strategies to overcome obstacles and to make use of opportunities.
4. Implement your strategy, evaluate the results from time to time and adjust your strategy if necessary.

Your mission can be seen as a summary of how and why farming objectives should be reached. Once you’ve formulated your mission, the direction and purpose of your farming operation will be more understandable. It will also serve as a guide to opportunities.

The objectives you choose will direct the process and enable you to understand where to start and what your goals should be. Objectives need to be realistic and attainable. They should be valid for the short, medium and long term, and you must be able to measure your progress in achieving them.

It is advisable to set objectives that can be adapted to changing circumstances, such as changes in technology, prices or government policies.

The third step in the strategic management process is a scan of the environment in which your farming business operates. This includes a SWOT-analysis of your business, which identifies its Strengths and Weaknesses and reveals the Opportunities and Threats (or challenges as some people see it).

The strengths of your business could include factors such as adequate irrigation water or routes to market, while a weakness may be a lack of capital. An opportunity to the farm business could be the opening of a processing factory close by, whereas a threat may be the reduction of import tariffs, which increases the possibility of competition from foreign producers.

After the first 3 steps, you can use the information to develop a plan that best meets your objectives. At this stage you should match the strengths of your business to the opportunities you have identified, but at the same time you need to counter or overcome the weaknesses in your business, as well as external threats.

In developing strategies the farmer needs to combine physical, economic and financial information, and also establish target dates for when objectives should be reached, or when action should be taken.

A plan to meet the objectives set by the farmer is meaningless unless it is put into action. The implementation of the strategy requires the management of the physical processes, such as ploughing, planting and fertilisation and the financial processes, such as budgeting, to reach the goals of the farm’s business.

Implementation doesn’t only require organisation of farm resources but also the motivation of all concerned to achieve the objectives. It must be remembered that changing circumstances may require existing enterprises to be modified or changed completely.

The final step is the evaluation and control of the strategic plan. In implementing the strategy the process needs to be monitored and adjustments made when required.

The control process requires that the farmer evaluate whether specific goals have been achieved. To do this the farmer needs to set standards for measuring the success of his business as well as that of the plan and to compare the measured results to predetermined standards. Then he can make changes to the plan as is necessary.

As a farmer you should constantly monitor the effect of all processes on the entire system and work towards achieving the picture you have developed in your mind.

Also read: Learn more about planning and money matters

  • This article was written by prof. Gavin Fraser and first appeared in Farming SA.

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