FARM PERFORMANCE AND MANAGEMENT STRATEGIES

This article emphasizes the strategic and operations aspects of managing a farm. In this article, farm management performance is analyzed based on yearly Illinois Farm Business Farm Management (FBFM) panel data across 9,831 farms from 1996 through 2014. The alpha scores (or skill estimates) for farm managers are analyzed to determine if most profitable farmers possess specific skills or knowledge against adverse events in a volatile environment. Farms are evaluated under different scenarios of management skill portfolios. Fundamental farm management basics are discussed in this study, including budgeting, production planning, financial analysis, financial management, investment analysis, and control management. We find substantial difference of farm management styles and performance efficiency in management skill portfolios. We also find evidence of most skilled farm managers are more efficient on both revenue side and costs side. The approaches used in this study also allow comparison among farms of different sizes and types. The activities of top farms can be replicated by poorer performers and the study provide a unique way for comparing the farm management styles and ability of most skilled farm managers to that of less skilled ones. The innovative method is framed by comparing business strategies and performance styles in the following aspects: production and operations planning, land management and control, and production costs evaluation. Farm managers will want to consult it as well to improve the effectiveness, objectivity, and success of their decisions.