In agriculture, the difference between average and top producers isn’t always dramatic leaps but often small, consistent improvements that add up to big results. These elite farmers, often referred to as “5 Percenters” by Dr. David Kohl, set themselves apart by excelling in key areas of efficiency, financial management, planning, and communication. Here's a closer look at what makes them leaders in their field.
They prioritize efficiency
Efficiency is a hallmark of top producers. They excel at producing high yields while keeping costs low, leveraging their knowledge and skill to ensure productivity without waste.
These producers:
- Grow reliable crops year in and year out – Their “green thumb” ensures consistently strong yields.
- Master the art of marketing – They don’t aim to hit market peaks but are adept at forward marketing, tracking trends, and seizing opportunities to stay competitive.
- Invest wisely – They focus on inputs with the best returns, avoiding wasteful spending.
- Operate just a little better than their peers – By consistently improving efficiency by even 5%, they achieve better cost structures and significantly higher profits over time
Research and records show that top producers consistently achieve lower production costs while maintaining higher yields. This translates into better profitability and liquidity. Interestingly, efficiency often proves more critical than farm size, with smaller operations thriving thanks to precise management and attention to detail.
They regularly analyze finances
Top producers don’t leave financial outcomes to chance. They rely on data to guide decisions, tracking key performance indicators to understand past performance, current standing, and future goals.
These farmers use both internal benchmarking (against their own historical performance) and external benchmarking (against peers) to identify areas for improvement.
Their financial discipline extends to:
- Outstanding bookkeeping – Accurate, up-to-date records enable precise financial analysis.
- Tracking family living costs – By aligning living expenses with farm and non-farm income, they maintain financial stability.
This financial awareness helps them adapt to market trends and control costs, reinforcing their position at the top.
They create detailed plans and budgets
Budgeting is another area where top producers excel. They develop detailed annual budgets that project revenues, costs, and cash flows, using these forecasts to make informed decisions.
Key practices include:
- Identifying break-even points – Knowing the profitability thresholds of each enterprise helps guide pricing and marketing strategies.
- Focusing on long-term goals – Rather than chasing short-term tax benefits, they consider whether investments, such as new machinery, will drive sustained profitability.
This forward-looking approach ensures that decisions are not only financially sound but also aligned with overarching goals.
They communicate well and often
Effective communication is crucial for managing modern farms, where relationships with suppliers, buyers, and landlords have evolved.
Top producers:
- Hold regular team meetings – These go beyond daily tasks, fostering alignment, adaptability, and morale while valuing input from all team members.
- Build relationships – Whether negotiating fertilizer contracts or selling grain, they navigate a landscape where personal ties may no longer play a central role.
For example, today’s grain buyer might be located two counties away, or landlords may be absentee owners unfamiliar with farming. Clear, professional communication is critical in maintaining these relationships.
They are resilient
Agriculture’s inherent cycles—tight margins and boom periods—test the resilience of producers. Top managers stay grounded during lean times and maximize opportunities in prosperous periods by focusing on these key factors.
Their consistent efforts in efficiency, financial management, planning, and communication enable them to weather challenges and thrive over the long term.
By striving for continuous improvement in these areas, any producer can begin to close the gap and step into the ranks of the 5 Percenters. The rewards? Greater profitability, resilience, and peace of mind in an ever-changing agricultural landscape.