This past summer the Association of Agricultural Production Executives held a national conference on Peer Advisory Groups: Best Practices and Alternative Structures. Many of the potential benefits discussed there have been covered in previous articles and blogs. In this article, I want to reflect on some additional issues, concerns and possibilities that came out of the presentations and discussions.

Increased weather and market (input and output) volatility, as well as the adoption of new technology, has increased the pressure to get better, faster and will continue to accelerate. The need for ag producers to continuously improve and respond more quickly is becoming critical, and the performance gap between the best and the average is increasing rapidly. While I believe peer advisory groups have the potential to be the most effective continuous management improvement tools available, to be successful they require a significant commitment and a willingness to move beyond the fierce independence and veil of secrecy that characterize most farm and ranch operations.

The first prerequisite to a group's success is openness, trust and mutual respect among the members. Many groups use well-known personality profile tests such as Myers-Briggs, the DISC or the Predictive Index to better understand member differences in order to improve their communication and working relationship. The second prerequisite is that the group has to have a clearly defined objective or purpose. In almost every case, the purpose will evolve as the group gains experience and develops a level of trust to explore issues which would have originally seemed too personal or confidential to share. In the small-business world, members of support groups like the Young Presidents' Organization and Vistage said it took them a year or two to reach that trust point, but once they did, the group became their most important management resource.

Even though financial benchmarking at both the whole farm and enterprise level offers tremendous insight into relative strengths and weaknesses, most groups don't start there. First, it's because most farmers are almost paranoid about sharing financial information. Second, because farms prepare information in such an inconsistent manner, there is a significant amount of effort involved in defining the metrics to be compared and in making sure the numbers being used are actually comparable.

The reality is that financial benchmarking doesn't involve giving a copy of your balance sheet and income statement to everyone in the group. The starting point is usually providing the information to the facilitator who crunches the numbers and then prepares reports on whole-farm measures and enterprise-level direct costs. As the group evolves and sees value, it can move to more in-depth information. Providing the information to the facilitator is no more than most operations are already sharing with their lenders, board, or farm business consultant/fieldman.

As important as it is for a group to be made up of the right people, the importance of having the right facilitator was determined to be just as critical. The best facilitators can read the group, keep everyone involved and prevent one or two members from dominating the meetings. They work with the group to set the agenda and keep the group on track during the meetings. The facilitators for groups like Vistage and ACCREA in Argentina (a farm management and business association) also visit individually with the members between meetings. They handle meeting arrangements, identify outside speakers and do the preparation and analysis of any data being benchmarked, whether its field trials, production numbers, marketing performance or financial information. Identifying and training potential facilitators was identified as a major issue that needs to be addressed if the peer group concept is going to move forward as rapidly as it needs to.

Many groups meet 2-4 times a year. Only a few meet monthly. One of the suggestions from the participants was that some producers may find it beneficial to be part of two groups. One would focus on technology and production topics, where being in closer proximity would provide for more similar conditions. The other would focus on more strategic and private issues where greater distance between participants would make competition and confidentiality less of an issue.

Finally, it was clear that there is a need for an Internet-based clearinghouse that would assist interested parties in locating existing groups open to new members or to find others interested in participating in a group. It would also help in locating and vetting potential facilitators; seeking out expertise on issues a group is dealing with or inquiring whether any other group had previously addressed an issue one group was currently facing in order to benefit from their experience and reduce the tendency to reinvent the wheel.

When I observe peer groups around the country, what I find is that the more traditional the producer, the less likely they are to participate or stay involved. What I also see is that those who are most likely to participate are already among the most successful, and the result is the gap between the average producers and the top producers continues to widen even faster than it has in the past. Because the learning curve is accelerated, greater innovation is fostered and actions taken to address problems or capitalize on opportunities are more timely.

For a more in-depth discussion of peer groups and the information presented at the conference, check out the publication by Kayla Doerr on the AAPEX website at http://www.associationofagriculturalproductionexecutives.org/…. I think it could be one of the most useful things you've read in awhile.

Editor's Note: Danny Klinefelter is a professor and extension economist with Texas AgriLIFE Extension and Texas A&M University. He also directs The Executive Program for Agricultural Producers (TEPAP), a management short-course for farm producers held each January, and its alumni association, AAPEX. For information about a $2,000 DTN scholarship to attend 2012 TEPAP go tohttp://tepap.tamu.edu/…

(MZT/AG)

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