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Strategic Planning in the Ag Industry

Kent Bang
Educational Opportunities: 
Swine, Young, Beginning Farmers
Home > Education & Events > December 2018 > Strategic Planning in the Ag Industry

About this time of year many of us take some time to reflect on results for the past 12 months and think about what we need to accomplish in the coming year.  I’m not sure how we all learned that process, but for most it has become second nature.  When it comes to business planning, strategies range widely from farm operation to farm operation.

For some clients this may all reside with the owner and is a quick and simple analysis of things that need to be improved.  Others have very detailed strategy planning sessions involving many team members — and perhaps even external advisors — to get input (and buy-in) from a wide range of people that have a vested interest in the operation's success.  My goal is to provide a methodical approach that generally works and hopefully provides an item or two that helps you use the planning process to implement improvements in your business in the Ag industry.

Start with the basics 
The process should start with an analysis of where we are now.  Review the results from 2018 in terms of production performance, profit and loss, expense trends, risk-management results, workforce analysis, and other aspects of how the farm performed in the past year.  It’s important to develop a company summary and document the following:
  • Strengths and weaknesses, 
  • Opportunities and threats, and
  • The competitive advantages. 
Establish goals and objectives
The next step in the process is to determine where we want to be and how we plan on getting there.  This is the mission and vision or the goals and objectives for the coming year.  The challenge is ensuring that goals are attainable, affordable and practical. 
Involving a wide audience of stakeholders in your business is critical to this step in the process.  For instance, it may be counter-productive to have an objective of 12 pigs weaned per litter average if the farm has never averaged over 10.5.  Setting goals we don’t think we can meet becomes frustrating and discouraging. 
Next, work to keep the list of goals and objectives to a manageable number that the team can focus on.  It’s common to start with a large list, but work to cut it to five or so key objectives per area.  Categories to consider could be:
  • Production,
  • Revenue
  • Feed milling,
  • Input cost
  • Risk-management goals
  • Grain production, and others.
Keep in mind that it’s fine for the business overall to have a lot of goals but key individuals within the business should be responsible for managing no more than five apiece.
Develop tactics
The third step is to determine how we are going accomplish our goals and objectives. This could take some thought and several discussions. What resources are available — or needed — in order to accomplish each goal? How long will it take? Are certain goals contingent on other goals?  Really understanding how the system works together to accomplish a goal takes a lot of teamwork and cross fostering of ideas. 
Using the example of pigs per litter (if that were the reproductive team’s goal) resources from other teams may be required to get it done.  In order to accomplish the goal, some changes may be needed in the gilt developer, the genetic source, nutrition, or it may be something as basic as needing more people and help from HR to increase the staff.  Reviewing each goal and determining what resources are needed to accomplish it is a critical step in the overall process.

Track your progress
The final step is a simple one — or at least it seems that way to me.  Tracking progress and measuring effectiveness or results on a routine basis is often over-looked until year end, but should be ongoing with regular monthly or quarterly discussions. 
Additionally, make it easy to assess at a glance with a simple dashboard highlighting key items on one page. Keeping tabs on how you’re doing relative to the goals you established and objectives you are working to improve enables you to switch gears, try new tactics or stay the course in order to achieve the results you’re looking for.
Adopting a planning process is important for any successful business. Starting a team discussion with simple questions such as “where are we now?” and “where are we going?” makes the process very logical and promotes input from everyone involved.  Finally, developing a good progress tracking template engage the team members to work together and give you documentation for year to year comparisons.
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