Correspondent
WISCONSIN RAPIDS
For many farmers today being successful involves more than generating additional income by increasing crop yields or milk production. For them success also includes achieving and maintaining a certain quality of life they want for themselves and their family.
Increasing profitability while improving the quality of life is not an easy or simple undertaking but it can be accomplished by combing whole-farm planning with a holistic approach to farm management. This process was the focus at a hands-on workshop during the second annual statewide conference for women farmers Nov. 13-14 at the Mead Hotel and Conference Center.
Laura Paine, grazing and organic agriculture specialist with the Wisconsin Department of Agriculture, Trade and Consumer Protection, led the session. She began by explaining that whole-farm planning is a process by which farm families evaluate their farm system and priorities, and set long-term goals for their operation.
“Holistic management involves a triple-bottom line approach that incorporates financial, environmental and quality of life factors into the whole-farm planning process and provides decision-making tools to help you achieve your goals,” Paine stressed. “This process helps balance economic, environmental and quality of life factors.”
The process begins by understanding who and what are included in the whole-farm management approach. “These include the decision-makers, the resource base and money,” Paine said.
Decision-makers are all the people involved in making day-to-day management decisions. “They are also the people who have the power to veto or derail any decisions that are made without their input,” she noted. “These could include partners, spouses and children.”
In determining a farm’s resource base, one must take into account the major physical resources that generate revenue or that support the operation. That includes land, buildings, equipment and machinery, Paine said. “It also includes people – clients and customers, suppliers, neighbors, community organizations, friends, bankers, Extension educators and networks. Although they don’t make decisions, they can provide vital information and support.”
Money is definitely a key component of the resource base and has a direct affect on your ability to create the life you want. “It is considered separately in defining the whole so that it’s easier to determine all the financial resources available,” Paine explained. “This could include income, cash on hand or money in savings accounts, money available from friends and family, investments such as stocks or bonds and a line of credit from the bank.”
The next step is to create a holistic goal that asks decision-makers to describe the life they want to achieve, what they must do to create that life, and what needs to be in place in order to sustain that far into the future. “Having a written holistic goal gives you a guide by which you will make and test your decisions, ensuring that you move forward toward the life you want,” she affirmed.
There are seven basic tests to help ensure that any decisions made are socially, environmentally and economically sound. They are cause and effect; social, biological and financial weak links; marginal reaction; gross profit analysis; energy and money; sustainability; and society and culture.
The cause and effect test forces decision-makers to define the problem and ask whether the action they’re taking addresses its root cause. “Often much time and money are spent dealing with symptoms when a correct diagnosis of the root cause of the problem would lead to a more appropriate and long-term solution,” Paine noted.
Weak link tests offer the opportunity to ensure that actions address the link that is the weakest at any given moment. A social weak link is a decision, even if it’s right, that offends or confuses people whose support is needed either now or in the future. “This test can help win friends and influence people,” she said.
The biological weak link test will help address the weakest point in the life cycle of a particular organism. “By determining the weakest link in the life cycle, you increase your ability to effectively improve the survivability of a beneficial organism or to remove and reduce the numbers of a harmful organism,” Paine pointed out.
Holistic financial planning helps clarify whether resource conversion, product conversion or marketing is the weakest link. Determining the weakest link of the chain of production will yield the highest return on any money or time invested in strengthening the entire chain.
The marginal reaction test is used when comparing two or more possible actions to help determine which one provides the greatest return and helps prioritize efforts and expenditures to help maximize progress toward a holistic goal.
A gross profit analysis is used to compare two or more enterprises and helps determine which of them will contribute most to covering the fixed costs, overhead, of the business. “Although somewhat more time-consuming, this test will show which enterprises, after direct costs and associated risks have been factored in, will produce the most income with the least additional cost,” Paine explained.
The energy and money source use test requires determining whether the energy or money to be used is derived from the most appropriate source and if it will be used to advance your holistic goal. Energy and money that are used to build infrastructure are preferable, as are uses for a one-time investment that will sustain itself.
Considering the sustainability of a decision involves looking at its long-term consequences relative to a holistic goal. “While the other tests ask what you think, the society and culture test asks how you feel about a possible course of action,” Paine said. “An action or decision may have passed all other tests but you may choose not to proceed because it just doesn’t feel right.”
Paine said that before implementing a decision, it’s important to determine what the earliest warning signs might be that you’re going off track. Then monitor closely for any of those signs and take action quickly if things start to go wrong. If you find yourself headed someplace you didn’t want to go, you can either adjust your plan or make an entirely new plan.
Remember, you’re monitoring not merely to see what happens; you’re monitoring to make things happen to achieve the desired changes to meet your holistic goal.
