AgriSuccess
Ask an expert - Good management improves farm efficiency.
Dr. Joerg Zimmermann
Originally from a German family farm, agricultural economist Dr. Joerg Zimmermann has worked extensively in the agribusiness sector in Russia, Ukraine, Kazakhstan and other eastern European nations.
How do Canadian farms stack up to other countries in efficiency?
A good indicator of efficiency is that Canadian technology and genetics are in demand around the world. Purebred Holstein cattle and many breeds of beef cattle are exported from Canada to many other nations. Canadian production technology often accompanies the cattle, semen and embryos.
Western Canada is a longstanding leader in exporting dryland farming technology, particularly air-seeding technology. Large, one-pass air drills for direct seeding were developed due to the need for efficiency. That equipment is in demand in countries like Kazakhstan, Russia and Ukraine, where the dryland farming needs are very similar to Western Canada.
In your experience, what operational efficiencies do larger farms have compared to moderately sized operations?
Economic theory describes the benefits that come from economies of scale. However, there is a lot of good management and good people required to run large farms. Usually, the scarcest factor is good people. Capital and equipment can be acquired in a relatively short period of time, but it takes years to train people and to build up a good team.
Whereas industrial production takes place in specific locations such as the sites of factories, agriculture tends to be spread over a large area. Therefore, it is much more difficult to manage and control some of these big super farms (100,000 hectares) we see in Ukraine, Russia and Kazakhstan. The disadvantages of these really big farms are often greater than their advantages through the economies of scale.
How can large operations avoid these inefficiencies?
Without that attention, a lot of money can be lost in a very short amount of time.
Large operations need good management on-site. You might call these people middle management. There also needs to be the right organizational structure so everyone knows their role. That’s sometimes lacking in an entity that has grown quickly. And you can’t forget the people doing the actual work and executing the top management’s strategy. Every operation needs a skilled workforce, and finding those people can be difficult.
Too often, the owner and CEO of a large farming operation still wants to run a tractor or harvester. In moderately sized operations, that may be all right. In fact, it may be necessary. At some point though, an operation becomes so big that doing the day-to-day work is a poor use of the CEO’s time.
And remember that even large farms need outside expertise so they can keep up with the latest methods and technology.
What should smaller operations do to gain efficiencies?
It may be more difficult for smaller operations to be as technologically efficient. In other words, they may not be able to as easily justify the expense of new technology.
However, smaller operations can actually have an advantage in management efficiency. They may have the ability to make the right decisions and to make those decisions quickly. If large operations have the proper business and decision-making structure, they can narrow this gap.
In any size of operation, efficiency is a matter of management capabilities. The best investment is in your own management by attending courses, talking to other producers and visiting other farms at home and around the world.
You can also discover efficiencies by comparing the farm business to other businesses. Many of the solutions can only be seen if you back away from day-to-day operations a bit and really analyze what is going on.
Dr. Joerg Zimmermann has interned on farms in Canada and France and operates a 5,000-acre farm in Russia together with his business partner. He currently lives and works in Winnipeg.
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