By Greg Wolf
Surely it’s OK to acknowledge that this 2014 wheat harvest is a disappointment, in spite of many fields yielding “better than expected.” Those expectations were pretty low, and certainly production is down significantly at least throughout south-central Kansas. And it has been bittersweet to watch the harvest stretch out in length due to rains, which have done nothing to help the wheat and brought several challenges, including torn up fields, deteriorating wheat, and an explosion of weeds in thin fields. The rains have been incredible for other things, including summer crops and my lawn, but not so much for this wheat crop. And that brings us back to disappointment. I thought I might just write a little about a disappointing harvest—not just about the 2014 wheat harvest, but using it as a metaphor for all the disappointing “harvests” we have in life, whether agricultural or otherwise. In the midst of a disappointing harvest, I’ve thought of several thing one can do to keep courage up and gain more from a harvest that seems deficient.
First, I think it is good to look back. By looking back I mean seeing the present harvest in context with the past. And looking back, we’ve have some big harvests in recent years. Looking even further back into Kansas ag history, historical averages reveal that 2014 won’t be as far below trendline as it first appears. So that is helpful—harvests are relative, after all. Another thing to gain by looking back is to learn. A short harvest is an especially good time to sharpen up some enterprise analysis—to evaluate cost structures, both direct and fixed, and dial in to true profitability or loss and margin percentage. All of this involves looking back—this is the very nature of much (most) accounting work. But don’t stop there; that enterprise evaluation work will serve as an excellent platform for planning for the next crop, and crops. It will elevate cost consciousness and marketing function for a producer and quite simply “raise the management bar” for a producer headed forward. That’s not a bad outcome from a short harvest.
Then, I can see value in trying to look big. I’m not talking about “too big for your britches,” which usually isn’t a problem when harvests are dismal. I’m talking about the bigger picture—as in beyond enterprise analysis and into the bigger business picture. This includes such things as crop selection and rotation, capital and debt structure, long-term profitability, marketing program, risk profile and more. A poor harvest not only enlightens thoughts about wheat production but it also provides a nice vantage point to look at the entire business itself—especially if the harvest really does bring some financial pain. Will it bring a tense conversation with a lender? Even if not, it is a good time to think about size and structure and leverage. It’s also a good time to think about the life cycle of the business and that of the producer too, and the next generation. Does the operation have a vibrant plan for it’s path forward, or is it plateauing, at best, or treading water, at worst. Poor harvests have different impacts on different businesses—so, as this poor harvest unfolds, it will pay dividends going forward to think “big.”
Next, it always helps to look forward. Looking back and looking big are for the most part prerequisites to this area of looking forward. In other words, it is intelligence gleaned from historical and present analysis that both informs and motivates future plans. There is not so much inherent value in analysis, but it has tremendous value when leveraged to improve business decision-making in the future. Exercises in enterprise cost analysis, as well as profitability trend analysis, can together serve as a springboard to better decisions even about succession planning, or evaluating a growth possibility, or even of an asset (i.e., land or equipment) liquidation. Furthermore, the process of analysis can be as beneficial as its product. Properly shared analysis can have a powerful result of educating others (e.g., off-farm partners or heirs, children growing up into the operation) and unifying a management group about planning for the future. Wow, that’s great stuff, triggered by a bad harvest!
Finally, the best antidote of all for harvest disappointment is to look up. Strings of successes are certainly enjoyable, but it is often easier to remember the source of our blessings when disappointments come. Looking up helps remind where all our harvests come from, whether “good” or “poor,” and gives us occasion to trust for the future. This year’s harvest is a story of too little, too late, in terms of rain—yet, even when there was more than enough rain to provide not just “seed for the sower” (toward the next harvest) but “bread for the eater” (Isaiah 55:10), fulfilling the fundamental mission our industry has toward humanity. Even in a harvest disappointment, we have reason to be glad for a God who is good enough to give us all we need, and more:
Nevertheless, he left not himself without witness, in that he did good, and gave us rain from heaven, and fruitful seasons, filling our hearts with food and gladness (Acts 14:17).
I’ll say it again—I don’t think it is wrong to be disappointed. But here are some ideas that will help lead to a better harvest outcome.
Editor’s note: Greg Wolf is a consultant with Kennedy and Coe, LLC (www.kcoe.com) and works to help clients of the firm navigate toward better returns in all areas of their businesses. He is based in the firm’s Pratt, Kansas, office and can be reached at 620-672-7476.