In a recent seminar, one producer asked an interesting question, “If there was one thing you hope every farmer and rancher in this room does, what would it be?” Well, as a professor, farmer and economist in the industry, naming one thing was quite a challenge!

In response, I shifted the scope slightly by pointing out that in order to do, one must first adopt a basic premise: opportunity cost. Weighing the positives and negatives of an action is the concept of business, and of life as well. For example, opportunity cost applied to business could be assigning one’s limited resources (land, labor, capital and time) to activities. Of course, the goal is the highest possible return or most efficient use of those resources. This is particularly relevant in today’s world of vast and varied choices. Critically thinking through choices and their intended or unintended consequences can be critical for short- and long-term sustainability.

In some cases, opportunity cost can be the balance of time in various activities of the business. In other words, are you spending your time on the $100 daily decisions, or on the $10,000 or $100,000 business activities? In actuality, a balance of all three is required. But as one moves up the ladder of management and ownership, the larger decisions will require special attention.

Opportunity cost can also be applied to the balance between business, family and personal activities. What is the cost of additional acres or livestock, or business growth to the family or personal life? While taking on another enterprise may diversify business revenues, it may also add to the constant worry of an already overly stressed producer. Remember that physical, mental and emotional health are all vital factors in the success of business and life.

Additionally, one aspect I respect among the younger generation is their commitment to the balance of business, family and personal time. However, it can go too far. For instance, when a young person is constantly connecting with friends while at work or in the middle of an educational presentation, the balance needs to be revisited. Recently, a store manager for John Deere hosted five students who were to observe daily operations. Of the five, only one came prepared with questions and engaged actively. The others were checking in with friends and social media sites while half-heartedly involved in the management activities. Perhaps a quick consideration of opportunity cost would have led these four students to different priorities.

In short, the world grants us almost unlimited opportunities. It is up to each individual to rationalize where one’s time and efforts will make the biggest difference. Thus, in considering what changes to make or what action to take next, first weigh the opportunity cost for all those involved.

P.S. In my last class at Virginia Tech, a student asked me, “If you were stranded on an island with others, what economic concept would you teach?” My answer, of course, was opportunity cost!