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Who are the decision-makers on your farm? How well do you communicate with them?
What is the biggest challenge you face on your farm? What is the root cause of that problem?
Is there an issue causing a “log jam” to your farm’s success?
How much profit are you planning to make on your farm? Is 40 percent net attainable? Why not?
Questions like these served as jumping off points for discussion during the two-day Advanced Financial Planning Workshop for fruit and vegetable farmers led by Cindy Dvergsten of Holistic Management International. The workshop left accounting and farm recordkeeping aside, instead focusing on giving farmers a holistic framework with which to evaluate farm decisions, form a financial plan to sustain their farm, and monitor the impact of their implementation over time.
I first learned about Holistic Management in college; that is, I knew that ranchers in the West were using it to better manage their land for profitable and ecologically sound grazing. Since then I have heard PFI livestock graziers use the Holistic Management language, too. I wondered if the Holistic Management financial training would suit the complex needs of fruit and vegetable farmers (I hoped it would!).
Usually during workshops I stay focused on the agenda, the next stage of the day, and if anything I’m hearing could be implemented into future PFI programming. I had more time to sit in on this workshop, and found myself asking these tough questions about my own, non-farming life. I sensed that the others, also, were going deep, squaring-up to the challenges and realities they might have been trying to ignore. As people shared their challenges and the group looked for the root cause of the issue, it felt like a lot of stress in the room had been let go.
The next step was to find the tool – creativity, technology, rest, money, or labor – that would allow you to correct that “weak link” in your farm business, then evaluate those potential actions using a series of testing questions. These testing questions were the most valuable aspect of the workshop for several attendees.
Turning to evaluating farm income and expenses, Cindy reminded the group that “you’re more likely to walk the way you’re facing.” That is, if you have a plan for success and a plan by which to monitor it, you’ll end up closer to your goal (even if you fall down!). Most (hopefully all!) farmers pencil out potential income and expenses to determine whether or not their enterprises will be profitable, but the Holistic Management method goes further. After determining what the income will be, the next number you determine is how much you want to have as net profit. This net profit is NOT what the farmer pays themselves – the farmer salary is included in the expenses. This is net profit to re-invest in the farm to further work toward your holistic goals, or to invest in other accounts. From here, the farmer prioritizes their expenses, with expenses to address their weakest link as the top priority.
All of this can be easy to say and theorize about, but creating a plan with numbers and timelines is critical. To do this, Holistic Management provides 11×17 paper worksheets and excel workbooks to guide farmers in creating their plan. These tools were an enormous help to the farmers, who began working with their own numbers on the worksheets during the retreat. They worksheets were also useful for managing time – I used one to chart my PFI work plan for the year!
Some of Holistic Management’s materials can be downloaded for free from their website, but the best way to learn to use Holistic Management is from a practitioner or trainer, alongside the materials. I’m excited to see how the workshop attendees integrate Holistic Management into their farm planning, and hope this approach to farm financial planning will help them achieve their own farm goals and others in the Practical Farmers network.
Thank you to the staff of Ewalu Retreat Center (shout out to Jackie!) for accommodating our group, and to Cindy Dvergsten for making the long trip of Southwestern Colorado.