This letter originally appeared in the Fall  2005 issue of Financial Partner (F.P.) magazine, Farm Credit of Maine's customer publication.

During informal conversations with several of you, the subject of longer term planning has come up — both for your family businesses and Farm Credit. Some have asked how Farm Credit plans for the future … how we look at longer term challenges and opportunities for our company. This letter outlines our strategic planning process.

Until a few years ago, the board and management earmarked one board meeting a year as a “planning” meeting. At this late summer or early fall meeting, we’d focus on factors that could alter our underlying operating costs or sources of revenue in the longer term. Often we would utilize an external facilitator to ensure we remained objective and thinking “outside the box.”

"For our association, strategic planning is about being
open-minded."

A few years ago, we came to the conclusion that the pace of change in business today made it imperative that we discuss strategic issues regularly. It became part of my job, with board chair Bob Tetrault and vice chair Hank McPherson, to surface anything significant from a longer term competitiveness perspective at each board meeting. This approach has worked well for us.

An important part of these discussions is our assessment of economic and market conditions in our agricultural, forest products and commercial fishing industries. Directors, of course, play a major role in helping us stay on top of major trends in these industries. Another important voice for our planning efforts is what we hear from our customers.

All planning discussions, both at the board and staff levels, are part of the foundation upon which our written business plan is built each year. In October and November we try to flush out big issues that deal with our mission, vision, business philosophies and core strategies. In December, we zero in on a financial plan for the next year. In January, we finalize our strategic business plan, with goals and targets for many aspects of our business.

To do a thorough job of strategic planning, a business needs to periodically benchmark itself against other similar businesses. We do this by comparing our key performance measures against other Farm Credit institutions and Maine banks. We focus on portfolio quality measures, operating efficiency, balance sheet strength and overall profitability.

The final component is to ensure that our directors and staff have sufficient opportunity to grow and develop by attending training programs and conferences. A primary benefit of these activities is exposure to business practices that other commercial lenders employ.

For our association, strategic planning is about being open-minded. In many respects, the process itself may be more important than the written plan. Done right, this exercise forces a business to test its business strategies and focus on its plans. Of course, after that, it’s the execution of the plan that determines any business’s success.

In summary, a constructive strategic planning effort is important in many larger businesses. At Farm Credit of Maine, we try to keep it simple, keep it ongoing and remain prepared financially for the inevitable surprises that face us all.

As always, we encourage you to challenge us on any aspect of our business strategic planning process or any aspect of Farm Credit of Maine, your financial cooperative.

Raymond J. Nowak
President and CEO
Farm Credit of Maine

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