A John Deere Publication

Eric Walker left his career in finance to take over his father Daryl's New Brunswick dairy farm in 2009 but brought the knowledge and management systems he gained with him.

Agriculture, Farm Operation June 01, 2023

A Question of Governance

Is it time for a voting board of directors?

by Lorne McClinton

Farms across Canada and the United States have grown enormously in size and complexity over the past decade. Farmers manage staff and make $100,000 decisions all the time. Despite the scale of change happening on farms, the vast majority's decision-making systems and governance style haven't changed in a century. But Eric Walker would do things differently when he took over his family's dairy, Lonsview Farm Ltd. in New Line, New Brunswick.

"We created a five-person board of directors (BOD) to make all major decisions for our farm so there can never be a tie," Walker says. "Members are my father Daryl, my brother Matthew, myself, and we recruited two non-family members that we all agreed on to join us.

"We went this way because the valuation in farms is so large that you don't want to have everyone at the table to have the same built-in bias," Walker says. "It's too easy to make decisions because you've done something a certain way for 20 years. You need to have someone from the outside who asks, 'Well yeah, but why?'"

One of the biggest changes he implemented was to have all major farm decisions be approved by a voting board of directors. Eric's board consists of two family and two non-family members and himself. He says having non-family members ensures that everyone sitting at the table won't have the same built-in biases.

What's their purpose? Most farmers make all decisions by themselves; they answer to no one except possibly their banker. So, delegating this to a BOD requires a significant shift in management style. But doing this offers major advantages. One large benefit is that it provides an organized system for setting policies and direction for the farm, making all significant and strategic decisions. Each board member brings their own perspective, experiences, and expertise to the table. This means a much wider variety of factors and interests will be considered whenever a major decision is made.

Most farmers today must take landlords' and non-farming family stakeholders' opinions into consideration when they make decisions about their farm. Having a BOD can help reassure them that the farm and their interests are being managed in a responsible, ethical, and sustainable way. They can also foster a sense of unity and purpose among all farm stakeholders and bridge the growing disconnect between farms and the wider community they operate in.

Walker had spent a decade working in the finance industry in Alberta before he came back home to take over the dairy from his father. So for him, upgrading their operation's governance by adding a board was an obvious move to make. It's part of his plan to bring their management systems more in line with best practices found in other industries.

"I grew up in the banking world where every major transaction requires a cost analysis, a cost benefit analysis, a SWOT analysis where you look for strengths, weaknesses, opportunities and threats," Walker says. "It helps to determine whether it's a good decision and if it aligns with our business plan." Having a BOD helps ensure that they don't overlook something vital that they should have considered.

While the number of farms with a voting BOD is still relatively small in Canada, it's rapidly becoming a common way for large American farms to govern their operations. Walker says nearly every 2000-cow and larger dairy farm now has one. Board members often include people with diverse working backgrounds such as an accountant, a lawyer, a nutritionist, an agronomist, a vet, and a business owner.

Ceding some control to a voting BOD is a very big step for many. Poll after poll shows that being their own boss is one of the main things farmers like about their career. But as the old saying goes, heavy is the head that wears the crown; it's stressful to carry the full weight of every major farm decision on your shoulders. So it's liberating to be able to share the load with a solid board of directors, a team of good decision makers you can rely on. ‡