Ag Tech, Education November 01, 2023
Farmers compare notes to solve problems.
Would you get naked (symbolically) to become a better farmer? Could you expose your farm's deepest secrets, your financials, and business plans to a small group of trusted peers? Are you willing to learn from people who've walked a mile in your shoes? If you answered yes, then you might be the type of producer who would shine in a peer management group.
Peer management groups are composed of a small number of people, typically no more than 10, who all share enough in common to consider each other to be equals. They get together in regularly scheduled meetings two to four times a year to share their insights on experiences and their farm's performance data. They're nothing new; business executives have used them for years. But their popularity has soared with farmers in the past decade.
The meetings are run by a facilitator much like a graduate school seminar. They'll lead discussions and make sure everyone participates; no one is allowed to sit back and be a freeloader. They'll take deep dives into topics as diverse as gross margins, labor, machinery, land building, finance, and managing family dynamics.
Lonely at the top. Peer groups address one of the perennial issues top managers cope with. As the old saying goes, 'It's lonely at the top.' It's hard to find an equal you feel comfortable discussing major business decisions with. You might trust the farmer next door with your life, for example, but that doesn't mean you'd ask for their advice on a land deal you have in the works. Maybe they're content with the status quo and can't understand your drive to expand. Some would rush out and try to steal the deal out from under you.
"Most of the farmers in our PowerFARM peer groups don't go to the coffee shop, they're talked about in the coffee shop," says Rob Saik, PowerFARM founder and CEO of AGvisorPRO in Alberta. "That's an extremely lonely place to be. So, walking into a room where you're not judged because you have ambition and want to move your business forward is extremely liberating. Sharing your ideas in a confidential and safe environment that provides support and guidance from people who understand you, increases your confidence in your decisions. This helps you weather financial stress and allows you to move your operation forward faster," says Saik.
Source of fuel. Chris Allam with Ardrossan, Alberta based Allam Farm Partnerships has been a member of an Illinois-based Uncommon Farms peer group since 2013. Attending their summer and winter in-person meetings has become a source of fuel for him.
They'll talk about fuel and fertilizer prices; who's doing pre-harvest spraying; how to attract and retain good workers, and share a wealth of good management tips and practices. They delve into benchmarks, production protocols and spreadsheets to find where they are capturing their full profit potential and where they are leaving money on the table.
"I can pull up 2017 in the AgMpower data set for example and see how we compared to other farmers' benchmarks," Allam says. "We were 24/412 for gross revenue; 150/412 for direct expenses and had the 37th best contribution margin. But we were high for overhead, that's something we're always trying to reduce."
Not all his partners share his enthusiasm for peer groups.
"My brother Cameron likes the group chat. Like, 'what are you seeing for fuel quotes?'" Allam says. "We're buying fuel all the time so it's really great to get a pulse on what everybody else is paying for fuel. My dad, isn't into it as much and my mom's not into it at all."
Peer group members don't fit into any specific farm demographics, but all are interested in rapidly advancing their farm operations, Saik says. They're both takers and givers; coachable and willing to share what they know. Participants are geographically dispersed so they're not competing for land or resources and can feel free to talk about land purchases.
"You don't want to be in one where everyone thinks the same," Allam says. "You need people from different areas, and different experiences, sharing their ways of doing things. It's far too easy to get stuck in a rut and fall back to the, 'that's the way that Dad did it, so that's the way I'm going do it forever.'"
Peer groups aren't for everyone. They're best for those open to processing new information, Allam says. If they're not the type who will look at things outside the box or to play the devil's advocate, they're not a good fit.
"You must be willing to talk about finances in a peer group," Saik says. "If you're not prepared to talk about money, family, structure, and risk, and how to deal with them, then don't join a peer group." ‡
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