From Contributor to CEO: How to Support Your Ag Borrowers as they Embrace a New Mindset
By Lori Fetzer, Director of Animal Agriculture, Compeer Financial
The transition for farmers and producers from hands-on contributors to operational leaders and owners of their businesses can be challenging. It upends the daily tasks and responsibilities they’ve been focused on for years, if not decades, requiring a shift in mindset that cannot and does not happen overnight.
For instance, contributors on dairy farms who are deeply involved with milking and feeding cows, cleaning stalls and alleys, and managing breeding are now on the hook to think strategically about the business and determine the best course for navigating headwinds and building greater business resilience. Their day-to-day operational concerns slowly pivot into long-term goal setting and planning for the farm.
This pathway from contributor to CEO will look different for every person and every farm, but it all starts with asking the right questions and embracing an owner’s mindset. Ag lenders can make a difference for their clients in this process. They’re uniquely positioned to help their borrowers prepare for more strategic positions and should proactively offer their expertise, tools, and resources to ensure they step into new roles with confidence.
Taking Off the Contributor Hat
You have to think differently in any new position you take on but especially a leadership role. Doing so in the agriculture industry requires people to take the contributor hat off, but that’s easier said than done, as the shift to CEO pulls them away from what they’ve loved doing for years.
I’ve experienced this myself. Before my team leadership role, I was working with dairy clients on their farms—my heart was with them in the fields, and it’s what I was comfortable doing. Adjusting to my new role, with new responsibilities and new daily activities, took some time, and it required me to get comfortable with being uncomfortable for a while.
It’s a similar process for contributors who become CEOs. They’ll likely have a hard time finding a new rhythm at first, where they try to balance working with their animals and spending time in the field with developing integrated, forward-thinking plans that drive their operation forward. It’s a difficult balance to strike, but that’s where a quality lender comes into play—one that can help their client’s prepare and start to think differently about their organization so they can build a more resilient, stable, and prosperous farm to enjoy for years to come.
Finding a New Rhythm
When ag clients step into a CEO role, it’s time to push themselves to think strategically. How can we diversify our income? How can we set ourselves aside from our peers? How can we be the farm that our processor wants to come to? Are there new programs or practices that make sense for our business? What’s my succession transition plan going to be? Not just what’s on paper—but how will we execute the plan?
Ag lenders should help their clients answer these questions, challenge them to think ahead, and encourage them to spend their time and talent on critical aspects of the business. For instance, is a beef-on-dairy breeding program a viable option for their farm? It’s becoming an increasingly popular practice within dairy farming as it increases the value of offspring when beef herds are short on animals. Just a couple of years ago, a new calf went for around $150, and they’re now going for over $1K in some cases. Adopting new practices like this as the market experiences changes can help dairy farmers diversify their income, but they need to do their due diligence to understand if it’s the right move for their farm financially and operationally.
There are also unpredictable challenges that CEOs will have to navigate, such as the recent cases of HPAI (avian influenza) that have been detected in U.S. dairy cattle. Dairy farmers have decades of experience and knowledge built up to handle issues like this, but their role will be different as a CEO versus contributor. They have to work directly with the USDA and CDC to understand and incorporate biosecurity practices to protect their herds and communities and need risk management plans to activate their workforce accordingly.
Whether providing benchmarking tools so ag clients can compare their performance against the industry, educating them on risk management solutions, offering one-on-one financial counseling so they have a grasp on budgeting and forecasting, or sharing guidance on investments and profitability improvements, lenders can and should serve as a right-hand to their borrowers as they put on the owner’s hat and start to operate with a more strategic mindset.
Compeer Financial and AgriAccess experts are here to help, not only with lending expertise and support but also market and industry-specific insights that help the best contributors become the most successful CEOs. We ensure lenders feel supported as they guide their borrowers in making well-informed, confident decisions that best support their farms and shape a profitable, future-forward operation. Contact a relationship manager today to learn more about partnering with us.
