Is your farm keeping up?

Just about every farmer and livestock producer I know would rather be outside with his crops or cattle than taking care of business inside his office. 

But that just isn’t realistic anymore. The digital revolution, with its expanding interconnectedness and cloud-based software, is changing the game for agricultural producers. You’re seeing it every day in your offices. You’re being asked for more documentation and data, whether for regulation compliance, employee records or financial reporting. There’s growing demand to connect operational and financial data to make more informed business decisions.

You’re not the only one looking for those deeper farm insights. Buyers, lenders, regulators, the U.S. Department of Agriculture’s Farm Service Agency, insurance companies and alternative revenue sources, such as carbon credits, are also seeking more detailed farm management data. New sources of capital have entered the market and are more focused on data than many traditional lenders. We’re also seeing more pressure from agriculture’s capital providers to address sustainability, traceability and environmental, social and governance concerns and to report results.

We also know that, going forward,  government support will focus more on conservation and sustainability programs. That will require additional data capture and reporting methods. Other revenue diversification opportunities likely will too. Some forms of crop insurance are relying on access to better data, a trend that’s likely to continue.

Resisting change or keeping pace?

All this means the farm office has never been more important. But here’s another reality: Farms and livestock operations typically haven’t invested in their offices at the same rate they’ve invested in land, equipment, genetics or other production-oriented needs. They are notoriously behind other industries in capturing and integrating detailed layers of operations to achieve higher productivity and profitability.

In some ways, it’s easy to understand why agriculture has not kept pace. In the past, investing in financial technology hasn’t shown a return on investment. Adopting new technology is expensive. In many parts of rural America, Wi-Fi is slow, unreliable or even non-existent. System interoperability has rarely been seamless. We’ve seen non-standardized data and clunky and time-consuming systems.  And then there’s the age-old human trait of hesitancy to change.

But these challenges are disappearing. Information power users are, in fact, seeing higher profitability and more solvent operations. Progressive farm offices are incorporating the latest financial technology, which uses artificial intelligence, automation and cloud-based systems to capture the diverse data of their businesses. They can seamlessly capture and integrate detailed layers of their operations, allowing them to interact with their financial and farming information in ways they couldn’t before. With more detailed farm-management data, they gain greater clarity to make better decisions.

The future farm office

So, what will the future farm office involve? With the growing need for data standardization, interoperability and repeatable processes, we’ll see more systems talking to each other. Your farm office will have more parts, whether it’s people, software or both. Experts say the modern farm office will:

• Be mostly standardized and automated;
• Be mostly self-auditing;
• Be able to auto-detect billing, inventory and delivery errors for both accounts payable and accounts receivable;
• Provide exponentially better financial insights to farm owners; and
• Operate accurately in near real time.

Where to start

First,  you’ll have to accept that your office will take ongoing investment. That means money and time. As my Pinion colleague Peter Martin says, “This will be a never-ending build as the world evolves. You are embarking on a painful but rewarding change-management campaign.”

You’ll also need to evaluate the members of your farm office team. Can they meet your needs? Where are the skill gaps? Should or can they level up? Is there succession in the team? Do you have repeatable processes? Are there adequate controls? Would outsourcing provide superior outcomes?

Here are five steps you can take today:

• Decide if you believe in the importance of transforming your farm office.
• Ensure your basic IT needs are addressed. That includes hardware, software, cybersecurity, updates and back-up.
• Evaluate skills gaps and address them internally or through outsourcing.
• Start the data standardization process. That means adopt repeatable processes for data entry and capture across your farm.

Adopt farm-wide scalable systems. These are cloud-based, interoperable and focused on standardization.

Transforming your farm office to these capabilities is a big step. Seek expert help for guidance, technology and equipment purchases, training and support. Taking the right steps will set up your farm business and help you gain the edge in an increasingly  competitive and complicated market.

Editor’s note: Maxson Irsik, a certified public accountant, advises owners of professionally managed agribusinesses and family-owned ranches on ways to achieve their goals. Whether an owner’s goal is to expand and grow the business, discover and leverage core competencies, or protect the current owners’ legacy through careful structuring and estate planning, Max applies his experience working on and running his own family’s farm to find innovative ways to make it a reality. Contact him at [email protected].