The Key Strengths Inherent In Most Farm Businesses...

Strength 1: The Farmer

A well run farm is a wonderful template for a good business, primarily because farmers care
deeply about what they do and are unrelentingly long term with their perspective.

If it were possible (or desirable) to use gene selection techniques to create a series of ideal business owners, people who would run good businesses in a responsible way that made the world a better place, you could do a lot worse than choosing many of the characteristics inherent to most farmers.

  • You would want your ideal business owner to be a long-term thinker, to invest time, effort and money in a way that improved the prospects for the next generation rather than with a view to cashing out in the next few years.
  • You would want them to care deeply about their businesses and about the people who worked in them.
  • You would want them to be able to deal with failure and adversity and to not be disheartened or ready to give up when things went wrong. You would want them to be consistent, reliable and trustworthy.

Many of these characteristics are second nature to all farmers.

Maximise this strength by stating a 25 year horizon

A business owner who has a long-term view of themselves is a huge strength in its own right. Even if this is not overtly articulated, the implicit knowledge that the owner wants the business to be around in 25 years’ time and beyond, has an enormously positive social impact and breathes confidence into employees, customers and suppliers.

Farmers and those associated with them, often take this for granted but they should be aware of how different this makes them to many other businesses operating today. The leadership teams of many public companies, for example, would struggle to confidently say that they will still be steering the direction of the company a quarter of a century down the line. This makes them more short term in their thinking, the pressure to produce tangible results more quickly is always present and, in my view, makes them less effective as business operators.

If you are running a farm business, it is important to actually tell your team and those that interact with you in your business life that you want your business to not only exist in 25 years’ time, but to be growing and going from strength to strength.

The 25 year horizon is significant for two main reasons; firstly, it gives you a huge amount of time to achieve your goals, and secondly it allows you to think MUCH bigger.

Typically, a farmer thinks in detail about the next twelve months and then they may have some loosely articulated three year or five year goals. The problem with this is that there is a limit to what you can achieve within these time frames, so the natural inclination is to think in small, incremental steps. You think about growing your business by 10%, rather than thinking about growing it by x10 and if you think in terms of 10% you are going to miss out on the really big opportunities when they come your way.

Growth of x10 is rarely achievable within three years. But ask yourself, could you conceivably improve your business by x10 in the next 25 years? Over that time frame, could you grow your revenues or your profits by x10? Could you do both? Could you increase the amount of data you gather, understand and action by x10? Could you even increase the amount of free time you have by x10? An awful lot can happen in 25 years.

Farmers already subconsciously have this time frame in their heads but by consciously thinking about what they want their businesses and their lives to look like within that time frame, they have a huge unfair advantage over almost everyone else.

Strength 2: Strong Balance Sheets

The second strength that farmers need to embrace, and I accept that this has particular relevance to those UK farmers who have the luxury of owning their land, is that they are sitting on a valuable asset.

Over the past 10 years, Knight Frank’s index of farmland values has risen by 145%, and the average value of UK farmland is over x50 higher than it was in the mid 1960s.

In an era of reducing returns from conventional farming activity and increasing pressure on farm cashflows,  farmers need to firstly recognise this and  then consider how best to play to this  strength. Exactly which strategy farmers pursue will depend on their reading of the future of the land market and their attitude towards risk.

Maximise this strength by thinking of your farm as an
Investment Platform.

For my own part, the strength of the balance sheet of our family farm has formed a core building block for the diversification of our business. Interest rates are historically low and have remained so for the best part of a decade and we have maximised this opportunity by increasing our level of borrowing to invest in enterprises and joint ventures not linked to farming and more recently, to purchase a long standing manufacturing business in the West Midlands. This has given us access to a revenue stream which is reliably growing every year (something that cannot be said for our grain sales, for example) and it has given us a revenue stream which is unrelated to the volatility of agricultural commodities. I am not saying that this is a strategy which could or should be followed by others, I merely include it as an illustration of the way that the farm could, if you as the farmer so choose it, be used as an Investment Platform which enables you to grow the business in almost anyway you want to.

Strength 3: Being a food producer

Most, but not all, farms produce food in some way.

They are therefore producing something that has always been of vital importance and something that will always remain so. The world needs food and therefore the world needs food producers. There is an improving understanding and awareness amongst consumers of food provenance and this is a strength that farm businesses have the potential to maximise in different ways depending on their circumstances.

In its current state, the role of the farmer as food producer is a strength. It does not mean that the world will always need its food producers to produce the same food that it is producing today or that a food production facility (a farm as it is today) will always look the same as it does today.

Whilst it seems likely that the world will always need land and soil to produce at least some of the food that it consumes, farmers should not complacently rely on it always being the case. They should instead closely consider their role as food producer; are they a producer for their local communities, for their countries or globally? How can they maximise this strength?

Farmers should also ask themselves the following question: What does the digitisation of the food production industry look like?

Maximise this strength by being clear about your individual purpose...

The strengths that you have as a business will be as varied as the strengths that you have as an individual. The variability in geography, land type, land quality and access to markets that your farms have will be as varied as the interests, experiences and skills that you have as individuals. The beauty of that is that there is a high likelihood that the strengths you identify as applying to the combination of you as an individual and you as a farm business will be unique and extremely difficult for anyone else to replicate. This puts you in the position of being able to create a product or service that has no comparison, which enables you to move away from commodity production and to fully differentiate yourself from the competition.

Also, be very careful about linking your Purpose or your identity too closely to a particular product. If your Purpose is that you are a producer of wheat, you could be in a tricky position if the demand for wheat disappears, or is replaced by a different product. Neither should you complacently tell yourself that “it will never happen”.

If you are not clear about the Purpose of your farming business and you have not clearly articulated what makes you different, there is a high likelihood that you are producing commodity products at a relatively tiny scale in one of the most expensive countries in the world. This is a game you CANNOT win.

Clarifying the Purpose of your business is a particularly exciting strength of the business when thinking about diversification projects, where agri-tourism projects and experiences can be made into truly unique products or services but it is also applicable to food production. Even if the food you produce looks, feels, smells and tastes like food produced elsewhere, you can differentiate your produce through the marketing and the stories that you tell about its provenance, which are unique to you, or through the relationships that you have with your customers. The world is full of opportunities, and the world of food production is no different. 

If you want to gain a clearer understanding of the Strengths of your farming business, join us today!

Small Robot Company is recruiting a Farmer Advisory Group who will help us to design a farming system which uses the latest robotics and Artificial Intelligence driven software to create a different experience of farming. We will work to automate aspects of your field work, leaving you free to maximise the Strengths that are unique to you and your farm.

If you would like to learn more, please get in touch with me personally, today on