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Understanding Luck vs. Good-Decision Making to Become a Better Farm Manager

Ag economist David Widmar is among our 2019 guest speakers at select customer-education events.

 
 

Producers and farm managers make important decisions every day. Yet many fail to assess the quality of those decisions.

“Good decisions can have bad outcomes and bad decisions can have good outcomes.”
– David Widmar, ag economist

The best farm managers separate skill from luck to avoid confusing outcomes with the quality of their decisions, says Widmar.

Widmar recounts his own decision to speculate on some options, based on his assessment that USDA yield projections were too high. But the following month, rather than drop, yield projections were even higher. Still, Widmar said, when he sold his position 10 days later, he made a profit.

“I can start thinking of myself as a pretty good grain marketer if I get my bad decisions confused with good outcomes because I got lucky,” he says.

Producers need to think strategically about their business to improve decision-making. This includes pursuing opportunities with discipline, Widmar says. While a combine might be for sale at a good price, he said, buying it is a bad decision if you actually need a tractor. Good opportunities are those that fit or fill a need in your operation.

Widmar suggests asking yourself the following questions when assessing an opportunity:

  • What investments do I need to make in my operation?
  • Is now a good time to make these investments?
  • Is this a ‘good deal’ or does it meet one of my needs?

Once the assessment is complete, it is time to act, Widmar says, because sometimes no decision has the same impact as a bad decision.

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