1. Mrs. James Agribusiness & Marketing

2. What is Agribusiness Management Farmers & ranchers need to understand the difference between managing a farm & operating a farm Do you know the difference???

3. What is Agribusiness Management Operation – doing the day-to-day things on the farm or ranch to keep it surviving (i.e. – feeding animals, keeping up on machinery, baling hay…) Managing – includes finance, marketing & labor management as well as keeping up on the operations

4. What is Agribusiness Management Which of the items you listed are operation & which are management? Put an “o” by the operational items Put an “a” by the management items

5. What is Agribusiness Management The manager must: Plan, plan, plan! Day-to-day operation (implementation) Evaluation for control of the business

6. What is Agribusiness Management All businesses are unique, but all share similar characteristics: All have goals Management can look at numerous ways to meet goals What options are available to better get my business taken care of? What do you do when you want to get a new/used car?

7. It is the manager’s responsibility to: Use the resources of land, labor, & capital wisely for the business to provide the largest return possible to the factors of production (land, labor & capital). What do you think constitutes as capital on a farm or ranch? Besides $$$, how else may you get returns? ***Managers (aka farmers) have lots of responsibility to make their business successful!

8. Decision Making What are 3 decisions you have already made today? Management is responsible for much of the decision making in a business. Once a decision has been made, it then needs to be carried out or implemented. The following pages will describe 5 types of decisions a agribusiness person may have to make:

9. Decision Making Importance What are the most important things to that farmer at that time If something is of less importance, it may take a back seat for the time being Less time/investment spent on less important ideas for the business

10. Decision Making Frequency Some decisions have to be made again and again Some only need to be made once Repetitive decisions get easier to make the longer you have been making them

11. Decision Making Imminence How soon the decision needs to be made Waiting too long can have severe consequences: Markets can go down Cattle can be over finished Fertilizer may be too late to be applied

12. Decision Making Revocability Can your decision be reversed? If so, what are the costs involved? (i.e. restocking charges on electronics) Can we change our minds if more information becomes available?

13. Decision Making Available Alternatives Which decision is best when you have an alternative i.e. – you have always used the same ration for your hogs, a new ration has become available – do you need to now make a new decision based on availability?

14. Decision Making In order to make decisions: Need to know if the resources needed are available How do you measure achievements if resources are available? Doesn’t this apply to all life situations?!

15. A question to ponder… How do the 5 classifications of decision-making apply to being in high school?

16. More tomorrow… “Even if you are on the right track, you will get run over if you just sit there.” - Will Rogers

18. A good business manager… …is always looking for ways to improve the way he makes decisions. Ways to improve the quality of decision making Ways to reduce time needed to make decisions The next slide will have some ways to do this.

19. Strategies for Decision Making Reducing the number of daily decisions Providing for the collection of data to compare alternatives Establishing priorities from most to least important

20. A systematic approach to decision- making will allow the manager to: Better organize the thought processes Achieve outcomes more closely related to goals Be more timely in decision-making

21. There are 6 Steps in Decision Making: 1. Define the problem Ex. Should you own our own combine or hire a custom harvester? Ex. Should you run your own farrowing barn or buy feeder pigs?

22. 6 Steps in Decision Making: 2. Gather information about alternative solutions: What are all of the costs of ownership compared to hiring out for harvesting?

23. 6 Steps in Decision Making 3. Evaluate alternative solutions Make a list with the positive & negative reasons why you would or wouldn’t go with your choice backed up with: Ex. Time value of $, financial statements, budgeting tools

24. 6 Steps in Decision Making: 4. Make decisions consistent with goals & objectives What are your goals? To maximize after-tax income? Increase returns to land, labor or capital?

25. 6 Steps in Decision Making: 5. Take action and put your decision into effect. Always select what you think is best for your goals. There will be some uncertainty – if there wasn’t, why would it be a decision?

26. 6 Steps in Decision Making? Evaluate & Accept the Consequences. Whether you decision turned out good or bad, accept that you are responsible for it. Evaluate why you chose what you did & look to see if an alternative would be better next time.

27. Let’s walk through this process: Farmer Bob indicated he had sold an average of 12,000 pounds of milk per cow annually. This compared with 14,000 pounds produced by the average dairy farmer on the farms in his area. It should be pointed out that this was one among many critically weak factors in the farm operation. Let’s take a look at the decision- making:

28. Assume this: Farmer Bob’s goal is to make a profit on the farm. We need to apply the problem of low production of dairy cows to the decision-making process:

29. Step 1: What is the problem?

30. Step 2: Our piece of information gathered says what about Bob’s milk production? What does Bob need to do on his dairy farm to increase his profit?

31. Step 3: What are some ways to raise farmer Bob’s profitability on the dairy farm? What are the consequences of each of these suggestions? Which do you think is most likely to raise his profit?

32. Step 4: Will Farmer Bob decide to act on your decision? Will he just choose to stay doing what he is doing and not increase his profit?

33. Step 5: After making his decision, Farmer Bob needs to decide if it was good for his goal (which was what?). He should continue evaluating production & his profit to see if he needs to repeat this cycle.

34. “Few people have any next, they live from hand to mouth without a plan, and are always at the end of their line.” - Ralph Waldo Emerson

35. Part #3

36. Goals Defined as broad statements that show where you want to be after some period of time Examples: To make a profit on the farm every year To increase cash grain sales by 12% per year over 5 years To increase milk production by 400 lbs. per head this year

37. Objectives Defined as the steps that must be taken in order to attain goals Examples are: To increase wheat sales by 30% next year To keep more accurate farm records this year To hire someone to AI our cows this year

38. Advantages of Goal Setting Shows where you are going – provides a “road map” Distinguishes between goals & objectives Makes it easier to get where you are going Prepares you to meet the future

39. Advantages of Goal Setting (cont.) Allows focusing on the big picture & can focus on critical relationships Gives purpose and direction to decisions and actions Frees you from worries and uncertainties about where you are headed

40. Sometimes it’s not so great to set goals…

41. Disadvantages to Setting Goals Takes time to decide on goals Difficult to com to grips with the many and sometimes conflicting goals Lack of confidence in trying to determine priorities Appears to be a waste of time if you don’t see the value in goal setting

42. Guidelines for Setting Goals Making $ is a main goal of farming, but not the only goal that you should have What other goals should you set for yourself?

43. In a study of farmers in MN enrolled in a FBM program, benefits were: 1. Improvement in Management Skills 2.Better knowledge of my own capabilities within the business 3. Increased profit Being in farming just for the $ usually isn’t a good reason to farm

44. Guidelines for Setting Goals Goals should be yours Don’t take them from other farm or ag businesses If it is family run, all family members should have a voice in the goals

45. Guidelines for Setting Goals Goals should be written They provide a record Can be a good reminder when it comes to making a tough decision

46. Guidelines for Setting Goals Goals should be realistic & attainable Should be something you can accomplish in your time frame You should have the resources or $ to accomplish them

47. Guidelines for Setting Goals Goals should have target dates Give yourself a time limit to meet them Short-term Intermediate Long-term

48. Guidelines for Goal Setting Goals should be compatible Look for conflicts within your goals Competition between goals is ok, but can be frustrating

49. Examples of Goals Owning a farm Building a house Having more leisure time Having the highest rate of gain in the county for my beef breed Providing an education for my children

50. Short-Term Goals They can be achieved in less than 1 year Provide immediate satisfaction (i.e. a pay check) Examples Painting a building Running a soil test to determine fertilizer apps Finishing a calf

51. Intermediate-Term Goals Require 1-10 years to reach Used as a basis for long- term goals Examples Being able to build a new machine shed Buying your own farm

52. Long-Term Goals Need more than 10 years to achieve Needed for a sense of direction Examples Early retirement Becoming a community leader Having no debt

53. Determining Priorities of Goals Dollar value of the goal Time – is it worth the time put into it Orderly sequence Do the most important first Avoid putting out fires constantly

54. Goals do compete for time & $ Example: Should you spend time analyzing records or tilling the soil or feeding the livestock Going skiing at the lake or farm chores Adding new machinery or remodeling the kitchen

55. Techniques in Reaching Goals Having regular check-ups Review goals at least annually Organize “to-do’s” on a work list Check for slow or nonmoving goals Modify goals as your resources change or the farm changes

56. All Done!