Out of the Crisis.Org

[Louis Altazan]

Many years ago there was a farmer who was very much like all the other small farmers in his area. He worked hard all day, but just didn’t seem to make much money. He was afraid to raise his prices, because the buyers might quit buying his crops. Then he would be worse off than he was now. It was also hard to find and keep good farm hands. Many had left the area to take higher paying jobs doing other things. The situation looked pretty grim.

One day after work the farmer was sitting on the porch thinking. He thought, perhaps, if I could increase production, reduce waste and grow a better crop, I could raise my profit, and make my crop a better value to the buyers. Now this was hardly a novel idea. In fact it was the goal of all the farmers.

They had tried lots of things. They paid their workers a flat rate so the more they produced the more they could make. Many even had a bonus system, that would allow workers to make more if the farms profit increased. Any worker that was found wasteful was chastised. If that didn’t work they were fired. There were even signs posted saying things like, “More crops equals more pay,” and “Quality is your job,” but these just didn’t seem to help.

The farmer wondered, since the problem was almost universal, if the way they were farming might not be the problem? The next day the farmer drove into town and over to the university. He spoke with the Dean, who referred him to a professor of management. He met with the professor, told him of his dilemma and enrolled in classes that very day.

In his classes he learned that his farm was a system. To improve the output, the entire system would have to be improved. He learned that the workers were a part of the system, but not responsible for it. That was his responsibility.

With the new knowledge, he began looking at his farm and found many things he could improve. Instead of buying seeds based on cost or brand, he tested to find which seeds produced the best results. He did the same with fertilizer and also experimented to find what quantity and application method of fertilizer produced the best result.

He worked to improve his soil and the method he used to irrigate. By changing the nozzles and decreasing the flow rate, he found he could get better results with 40% less water. He cleaned his barns thoroughly and changed his methods of seed handling and storage. He found ways to reduce damage to seeds, keep them fresher and cut the need for fertilizer.

Production began to increase, cost began to go down and the farmer was making a lot more money. He also studied the crops in the market place. Most of the farmers grew the same crops, because they were easy to grow. Unfortunately this also made them quite plentiful and drove the price down. They also ran specials on the crops that were most profitable, reducing their profit further.

Instead, the farmer found crops for which there was demand, but others could not grow efficiently. He applied his same methods and training to find ways to make growing the difficult crops profitable. Now his reputation for being able to grow difficult crops started to spread and buyers started to seek him out.

The farmer based his prices on his cost and the profit he desired, rather than what others charged. The other farmers told him he could not do this, it wouldn’t work. He then worked to build value into the crop at the price that produced profit. Since the quality of his produce was very high and because he could easily grow crops that other farmer found unprofitable, he found a ready market. He advertised to this market about the benefits of his crops. He demonstrated to the buyers how his crops, though in some cases priced higher, were actually less expensive, due to the quality and high yields.

The farmer found by paying his workers more money, in the form of a salary, he could attract the best and brightest in the area. He sent them for training so they could also help improve things on the farm. He bought air conditioned tractors, to make the working conditions better so that his well trained workers would not leave his farm for other work.

Now some of the other farmers were starting to take notice. They looked at his farm closely, saw the very clean surroundings, the happy workers, with high morale and the air conditioned tractors. They asked the farmer how he could be making more money, when obviously he was spending a lot more on his farm than they were.

The farmer explained that by using better farm management philosophy he had greatly increased his production and lowered his cost. He then showed them the books he had read on the topic. Also he explained how each improvement was made for sound business reasons. This increased profit rather than raising cost.

Mumbo jumbo and double talk they thought. “We want nuts and bolts answers, not useless theory.” This guy has been lucky, plain and simple. The farmer’s “luck” seemed to hold out because his farm continued to grow and profit, year after year.

In time other “lucky” farmers came along and it became much harder for the original farmers to make a living. Many downsized or left farming and moved away. They reasoned their trade must be dying. The unreasonable buyers just didn’t understand. They wouldn’t pay a fair price, and the big guys were taking over. Besides who wants to do this kind of work anyway . . .

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Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA