Farmer’s Weekly – 30 August 2019

back to basics

JohnF Kennedyis supposed
tohavesaidthefarmeris the
onlyoneintheeconomywho
buyseverythingatretail,sells
everythingatwholesaleand
paysthefreightbothways.
Otherthanthat,andthe
factthatfarmsaremore
exposedtotheelements,
farmingis nomoresusceptible
tofinancialproblemsthan
anyothersmallbusiness.
GiventhatevenFortune 500
firmsnowadayshavea lifeof
only 10 to 15 years,it’sremarkable
somanyfamilyfarmsarestill
operating,someevenintothe
fifthorsixthgeneration.
Equallyamazingis that
theyhavesurvivedforso
longdoingbasicallythe
samething,sellingthesame
producttothesamemarket.
Thereare,apparently,
severalreasonswhybig
companiesdon’tlastvery
longanymore.Mainly,the
worldis changingfasterthan
theycanadapttoconsumer
demandandcomeupwith
newproductsandmarkets.
Ofcourse,thesuccessful
companieshavetheresources
tobuythebestbrainpower
andtoinvestinresearchand
development,andtotake
riskswithinnovation.
Thisis whereit becomes
difficultfora familyfarm.
Thebusinessenvironment
forfarmingis alsobecoming
moredemandingasinput
costssoarandpressuregroups
andgovernmentstightenthe
screwsonaspectssuchas

animalandenvironmental

welfare,socialresponsibilities

andgeneralsustainability.

Unavoidably,escalating

productionandmarketing

regulationswillhitthesmaller

farmers,aswellaspoorest

consumers,hardest,becausethese

regulationsincreaseproduction

costsaswellasthepriceoffood.

Thequestion,then,is towhat

degreea farmeris prepared

forandequippedtomeet

thesechallenges,andhow

theoperationcansurvive

foranothergeneration.

Stayinformed

Hardenedbusinesspeoplelike

tosaythat‘ifyoucanseethe

bandwagon,it’salreadytoolate’.

Youhavetokeepyoureartothe

groundandstayinformedabout

trendsandmarketssoyoucan

bereadyforthechangeswhen

theycome.Don’twaituntil

everyoneinthestreetrushes

outtocheertheband.Bythen

themarketcouldalreadybe

floodedormovingelsewhere.

But,ofcourse,doingsomething

aboutit is easiersaidthan

done.Thereareplentyofgood

ideasoutthere,butyouhave

tothinkofa newone.If you

can’t,atleasttrytosella new

product,ora newversionof

theoldproductorservice,or

targetanuntappedmarket.

trUeSitUation

Before you can get to that

stage, though, it’s necessary

to carefully analyse your

current situation. Will doing

ABOVE:

Family farms have

been running for

generations without

missing a beat.

ROELOF BEZUIDENHOUT

Escalatingproduction

and marketing

regulations will hit

smaller farmers the

hardest, warns Roelof

Bezuidenhout. Are you

ready to meet these

challenges?

the same thing be enough to

keep you in business for the

next decade or so? Perhaps it

could. On the other hand, given

all the changes, known and

unknown, your business might

be sliding downhill without

you realising it. You could

be flogging a dead horse.

If that’s the case, and you

think you’re digging yourself

into a hole, you should stop

digging and start thinking

about the possibility of

changing direction using the

‘two-engine’ business model.

It sounds a lot like

diversification, but there are

all sorts of other definitions

for it. It boils down to starting

to focus on alternative sources

of income without letting

go of your main (original)

business, or selling your farm.

Initially, your main business

(Engine One) could finance

the new venture (Engine Two),

or at least keep you going

until it eventually replaces

Engine One. The ideal would

be to have both running

smoothly at the same time.

A common mistake is to

expect Engine Two to fire on

all cylinders right away, while

it would usually need several

years to pick up speed.

The trick is to get started,

but not before some solid

soul-searching, research and

discussion with trusted advisers.

You must have a clear idea

of the risk, not only of trying

something new, but also of not

trying something new. ▪FW

ManageMent

Running two

engines

42 farmer’sweekly 30 August 2019