In a room filled with progressive producers managing diverse operations of all sizes from across the United States, Canada and even Australia, we took time last week for a reality check.
Different geographies. Different production systems. One survey that revealed remarkably similar challenges. And led well-respected farm management specialist Dick Wittman to ask one question:
Would you loan money to - or invest in - an industry that gets a flunking grade in core management practices?
Here are the eye-opening survey results – from a group that represents some of agriculture’s most engaged leaders – that led to Wittman’s question.
- Only 29% have written goals
- Only 28% have a written strategic plan
- 1 out of 3 use written job descriptions
- 1 out of 4 conduct performance reviews
- 1 out of 4 have written policies for earnings distribution and capital withdrawals
On the financial side, 50% have budgets but only:
- 1 out of 4 track key financial ratios, and
- 2 out of 5 market a crop without knowing the cost of producing it
Why management gaps matter
These gaps help explain why many farms struggle with:
- Succession planning and transitions
- Scaling sustainably
- Retaining and developing people
- Reducing family and partner conflict
- Making confident long-term decisions
Most farms are excellent at production. Many are good at finance. Far fewer invest the same energy into management systems, governance and people clarity - the very areas that become most critical as operations grow and generations overlap.
As farm businesses increase in size and complexity, informal management stops working. The cost of ambiguity rises. And people, not acres or equipment, become the limiting factor.
A shared challenge across operations
What struck me most was not the scale of the farms, but the consistency of the challenges.
The conversations centered on:
- How decisions get made
- How people are developed and held accountable
- How ownership and leadership transitions occur
- How to preserve relationships while growing a business
These challenges are not unique - and they are solvable.
7 practical action items for farm businesses
For farmers reading this and wondering where to start, here are practical steps tied directly to the survey results:
- Write down goals, even if they’re imperfect. Written goals create alignment. Start with a one-page document outlining financial, family, and business priorities for the next 3-5 years.
- Create a simple strategic plan. A strategic plan doesn’t need to be complicated. Clarify where the farm is headed, what it will say no to, and what success looks like.
- Define roles with job descriptions. Written job descriptions reduce conflict, especially in family operations. Clarity is kindness.
- Implement basic performance reviews. Annual check-ins help develop people and surface issues early – before they become personal.
- Establish policies for earnings and capital. Clear rules around distributions and capital withdrawals protect both relationships and the business.
- Move beyond budgets to key ratios. Budgets matter, but ratios reveal performance. Start tracking return on equity, working capital and debt structure.
- Know your cost of production. Marketing without cost clarity is speculation. Cost of production is foundational to profitable decision-making.
Looking ahead
This article begins a series that goes beyond production and focuses on building durable farm businesses that can transition across generations.
If agriculture expects outside investors, lenders, and successors to believe in its future, it must first demonstrate strength in its management fundamentals. The opportunity is there. The tools are available. The question is whether farms are willing to adopt them.
Downey has been consulting with farmers, landowners and their advisors for nearly 25 years. He is a farm business coach and manager of succession planning at UnCommon Farms. Reach Mike at mdowney@uncommonfarms.com.