The industry is divided into two categories: crop production
and livestock production. Crop production involves production, harvest, and
sale of human food and/or animal feed. Livestock production involves the
reproduction, growth, and sale of livestock animals for food.
Crop Production
Those involved in crop production face many challenges, but
the most difficult and unpredictable factors are price fluctuations, changes in
international supply and demand, and the
weather. While they cannot control freezes, floods, droughts, and natural
disasters, farmers can have some safeguards, including crop insurance. Just
like any manufacturing facility, farms must operate at maximum efficiency in
order to remain competitive. In fact, farm systems have many similarities to
the manufacturing process. Farmers monitor “yields per acre” and judge the
impact of proper irrigation, herbicide applications, and appropriate seed
selections for the soil, in order to create an efficient process that will lead
to greater profitability.
Farmers rely on their management skills and business
experience, just as all other CEOs do for making the best decisions. Well-run
farms need carefully considered business plans, including sensitivity analysis
of hypothetical changes in market place prices, production, and crop yields, in
order to succeed in an increasingly competitive international environment.
Livestock Production
Cattle are the largest livestock segment, followed by hogs, sheep, lamb and poultry. Each group faces obstacles, such as the ongoing threat of disease, floods, and drought that can devastate entire herds and destroy the profits. Livestock is sold using various methods, but the most common is at auction. Many of the larger operations sell directly to food manufacturing giants, like meat packers or processors.
While most farms and ranches still use manual labor, they are beginning to reflect the same technological evolution as all other businesses. High tech equipment is used to milk cows or feed the animals, and access to the Internet is changing the way supplies are purchased. Previously, all equipment and supplies like feed, fencing, vaccines, hormones, or tractors, were obtained locally. Now, these can be ordered from anywhere in the world, and the price sensitive farmer has far more options available than any other generation has enjoyed.
Like the crop producers, those making a living raising livestock have many factors that impact their profitability. The cost of feed grain, medicines, and other necessary items, combined with erratic consumer food preferences, all play a significant role.
Running the Business
As in every industry, the recruiting and retaining of skilled and talented employees is a top priority for all farmers. The successful farmers view their operations, products, and facilities as a business and they recognize the critical importance of strong management and organization. They, too, worry about competition, consolidation, international influences, human resources, technology, financing, and marketing.
PKF North American Network Resources
A focus on supporting the members with resources addressing family business issues
An annual Fly-In offering an agenda focused on issues of
concern within the agriculture industry
Periodic conference calls on “hot” topics
An e-mail list and threaded discussion forum enabling members to
discuss, share, and ask questions