One of the things we professors do is review manuscripts being considered for publication in academic journals. This morning, I reviewed two papers. One was on the application of business management techniques to identify new opportunities on farm operations. The other was on the benefits of diversifying farm enterprises. In that paper, they showed that those farms in a region in Kenya that had higher levels of diversification also had lower levels of food insecurity (being able to feed the family).
These papers point out some pertinent economic/managerial concepts. First, the farm is a business, no matter what is produced. In the first paper, they reported the results of walking a Slovenian dairy farmer through alternative opportunities, finally settling on breeding livestock. How many of our farmers could benefit from a systematic review of current or emerging opportunities? Nearly 100%! Always look to improve operations or go down a different path, if needed.
Second, diversification is important. The paper focused on enterprise diversification, but market diversification can be just as important. Enterprise diversification allows you to smooth income over several alternative enterprises, taking advantage of high prices or yields in one to compensate for low prices or yields in another. Market diversification, selling to more than one buyer, helps protect you should one market go sour.
These simple concepts underscore the need to plan for business success. We at Penn State Cooperative Extension have a number of programs to help you develop a business plan. Other states have some great resources, as well. Just be sure to take time to plan for business success and to carefully think through all management options.