The team approach to gathering and exchanging information can make the decision-making process better.
The substantial swings in feedgrain prices in 2008, along with prospects of only modest profits in 2009, have pork producers asking their trusted advisors a lot of serious questions about positioning their operations for better times.
In these unsettled times, the advice and guidance consultants offer may run the gamut — from “sell the pigs now” to “now is the time to operate facilities at 110% of capacity.”
With the potentially conflicting opinions, it is easy for producers to become confused as they attempt to make sound business decisions.
To prosper in these periods of rapid price gyrations, the successful producer is wise to rely on consensus from his advisory team. Notice that I stressed “team.”
In my experience, there is much to be gained in strategic planning by producers of all sizes and types of agricultural enterprises when all of the individuals providing information and advice are involved in the discussion and decision-making process.
I find it very frustrating and unsettling to try to offer advice to a client when I don't know the whole story behind the decision-making process. It is quite possible that my advice would differ if I had access to all of the facts, rather than my observations of conditions on the day of my visit.
More is Better
Several years ago, I was involved with helping a pork producer making a major decision about the direction of his pork production enterprise. During an all-afternoon meeting, sitting around his kitchen table, this producer asked his veterinarian, nutritionist, lender and me to work through the various options he was considering. Each of us had independently given him our opinion about the direction we felt he should be headed — but the opinions did not fully mesh.
Each of us brought different information and perspectives to the discussion. It was extremely valuable for all of us to hear what the others had to say and to probe everyone's contributions with pointed questions.
In this scenario, everyone had the same information on which to base their recommendations, and we all participated in the decision-making process. At the end of the day, a decision was made that all of us supported.
As this producer implemented the plan of action, there was no second-guessing by any of the advisors. The producer proceeded with the implementation knowing that all of us were furnishing information keyed to the goal we had all been a part of setting.
Picking Your Team
I think members of an advisory team should be selected, in part, for their access to others with information and experiences that will make the decision-making process better. In other words, look for team members who aren't afraid to turn to others for their recommendations.
Increasingly, as public funding for production research and information decreases, it is increasingly important to select team members for their ability to keep you informed on the latest research developments.
Who you select for your advisory team depends largely on the skills and talents that are missing in your daily decision-making process. Most often, this team will include:
A lender who understands the financial consequences of your decisions;
A nutritionist who understands your biggest cash expense - feed;
A veterinarian who specializes in hogs and understands the health implications of any change in production technology; and
Someone who understands your biggest fixed expense - facilities.
In addition, you quite possibly will need input from your tax advisor if you are considering major investments or decisions that could have tax consequences.
Together, this team can help you formulate a plan that should keep you successful in the business of pork production for many years to come.