Dr Kohl: Top 40, Bottom 30
Dr. Dave Kohl
grain falling into a container

Dave Kohl

In this year’s young farmer and rancher circuit, I had the fortune of engaging some of the most inquisitive and passionate individuals interested in agriculture. At a recent session, I sat on a panel similar to the format of ESPN’s Hot Seat answering an arsenal of short questions. One of the questions really calls for a crystal ball, but from my observations I answered, “Are today’s up-and-coming farmers within the top 40 percent or in the bottom 30 percent of managers?”

Generally speaking, I find more beginning producers have the attributes of the top 40 percent when compared with the older generations. As a group, the younger generation is open to doing business planning, and most have been exposed to financial management and marketing classes. Thus, beginning producers exhibit a higher probability of considering a marketing and risk management plan, as well as other business management. Of course, one of the key variables of planning is the commitment to follow through and execute the plan in decision making.

Next, the younger generation is more likely to form an advisory team with peers, lenders and others partly due to their comfort with social networking. And many of today’s most profitable managers maintain strong networks of professionals and friends. An openness to educational and professional growth is another attribute younger farmers often share.

From observation, the young producers who have dropped to the bottom 30 percent of managers are often less focused, perhaps complacent if they inherited assets or are still being managed by a parent or grandparent. In some instances of high equity and values, younger producers, for various reasons, have not yet been forced to meet the bottom line.

Another differentiation is lifestyle. Many young producers were attracted to farming and ranching during the recent economic supercycle. Inflated profits led to high-maintenance lifestyles, which are now difficult to curb. Many agricultural lenders are now watching lifestyle choices closely to determine whether the commitment to one’s budgetary adjustments is a high priority.

One strong headwind for younger producers is the stiff competition from larger operations with ample equity. In addition to competing for assets and expansion, the older farm businesses are often more resilient with working capital in reserve to cover losses or down economic cycles.

Overall, the younger generation has distinct skills in business and financial planning, human relations, and marketing and risk management, all of which will serve them well in agriculture or in most any other field. With persistence and patience, many of the up-and-coming agricultural managers will be among the most profitable.


Originally published December 2017

Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.

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