Farm Ireland
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Wednesday 12 December 2018

Mike Brady: Our most successful farmers don't wallow but see opportunity in crisis

 

Agricultural consultant, Mike Brady.
Agricultural consultant, Mike Brady.
Milking parlour.
Winston Churchill: never let a good crisis go to waste.
Mike Brady

Mike Brady

The are many different types of people in the world today. In fact, we are groomed from the day we are born to be the person we grow into being later on in life.

The surroundings one is born into from a family, school, society, sport, creed, etc point of view combine together to form the values that guide us throughout our lives.

However, we as humans often tend to stereotype people depending on their upbringing. In the general population, farmers have a reputation for complaining about everything from weather to prices. Is this accusation true of every farmer in the country or is it just those who complain most get all the airtime?

We all know the reality is that farming by its nature is a cyclical business, weather and prices are volatile so in any decade there will be periods where its all good and "we make hay" and also there will be periods where its all bad and all we hear is "doom and gloom".

Winston Churchill once famously said "never let a good crisis go to waste" in reference to the conditions after World War II.

Our most successful farmers think like Churchill, they don't wallow in the doom and gloom nor do they engage in pitching farmer against farmer, instead they see opportunity in crises such as Brexit and the current drought for the progression of their farm business.

They prepare well-researched business plans and simply get on with it.

I once read a book by a Japanese-American called Robert Kiyosaki called Cashflow Quadrant which perfectly explains the differences between people when it comes to successfully managing and/or owning a business.

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It is very revealing to look at Kiyosaki's ideas from a farm business perspective. Kiyosaki categorised people into four sides of a quadrant as follows:

* Employee

* Business owner

* Self employed (you won a job)

* Investor (money works for you)

Employee

Employees exchange time for money. Not many farmers by definition fit into this category, but many act as if they are employees by slavishly following the same routine from day to day, expecting things to get improve rather than making them improve. The limit to an employee's income is the amount of time they work.

Self employed

A self-employed person is someone who owns a job. In general, they work very hard, are very good at what they do, are poor to delegate and the graveyard is full of them. At their funerals, one can hear mutterings by friends and relations such as "he was some man to work", "his children would not hold his coat". The limit to a self employed's income is also the amount of time they work. Many, if not most Irish farmers fall into this category.

Business owner

He/she hires people so that they can get more done. An ability to manage people is a pre-requisite to be a successful business owner. This is the new breed of Irish farmer, they work smarter not harder. More Irish farmers must strive to get into this category.

Investor

An investor is somebody who invests money into a farm business but is not the owner of that business. This is a person who uses money to generate an income. This is a new concept in Irish farming, but a real example is the Employment Incentive Investment Scheme (EIIS).

This government scheme allows individuals to invest cash for a period of four years into an approved farm business for a low annual rate of return, but in return they obtain full income tax relief on the sum invested up to a limit of €150,000 per person per annum.

This allows the farmer a low-cost loan for four years to fund a new venture until its up and running and the investor a good return on their money when tax relief is taken into account.

We need more of these schemes in Irish agriculture as it has the assets to back such schemes.

Kiyosaki defines success as making money or increasing net worth; true, money isn't everything, but it is the lifeblood of any growing business and essential for those with ambitions to grow a business. The thrust of Kiyosaki's advice is if you want to be successful in business you should strive to be on the right side of the quadrant, those on the left side just make money for those on the right side.

This very strategy is playing out before our eyes in many sectors of our industry at present. The pig, poultry, vegetable, potato and cereal sectors are dominated by a small number of farmers who understand this concept. The dairy sector is currently juggling with the labour issue to make that leap from the left to the right-hand side of the quadrant, but it will get there, too.

As a farmer, challenge yourself as to which side of the quadrant you would like to be on. Perhaps you are happy to be an employee or a self-employed farmer on the left side, which is fine if you are happy and content. But next time you see your neighbour driving on his farm business instead of asking "what's it all for", think of the cashflow quadrant and question which side is he on.

In conclusion, there are only two types of farmers in the world today, happy farmers and unhappy farmers, which are you?

Mike Brady is managing director at Brady Group agricultural consultants & land agents, email: mike@bradygroup.ie.

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