Business governance helps keep family farms 'on the rails'


Why do family farm businesses fail? Quite often it’s not economics but rather family governance issues and relationship problems, says farmer and business consultant Dick Wittman.

Many farms fail because operators don’t run the farm in a professional manner, says Wittman who learned plenty of valuable lessons managing a family-operated 20,000 acre crop, cattle, and timber operation in northern Idaho. He now heads Wittman Consulting, specializing in farm business management and transition planning.

At the Farm Business Management Agricultural Excellence Conference in December, Wittman noted that many farms with good financial footings falter because they either don’t know the basic rules of conducting a business, or they know the rules, but don’t document them and apply them consistently in daily farm operations.

In this interview with RealAgriculture’s Bernard Tobin, Wittman discusses best practices that must be implemented for a family farm business to excel and pass successfully from generation to generation. For starters, farmers need to define vision, values, and a management process and they need to put it in writing. “It’s also important to put the right people with the right talents in the right seats,” he adds. (Story continues after the interview.)

Farmers also need to “separate the train tracks” — there needs to be clear understanding of who owns the farm versus who is management and who is providing labour. Retirement fear is another hurdle that must be cleared; the roles of retiring patriarchs must be defined as should paths for grooming successors.

Setting goals and developing strategy to reach targets is a must, says Wittman. To implement them professionally, he recommends active engagement with an advisory team and peer networks.

To keep things on the rails, Wittman says farmers need to commit to accountability — that includes regular and honest performance reviews.

Click here for more Agricultural Excellence Conference coverage.

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