I have spent the last couple of months travelling across Canada and the US, speaking to producers on numerous topics. Anywhere from finance, to technology, to data, to human resources. However, I begin almost all my public speaking with a single question, “who in the room is an entrepreneur?”.
Now, you may think this is a simple question. In any other industry individuals who have started or transitioned into a multi-million-dollar family business wholeheartedly answer a resounding yes to the question above.
But agriculture is a different beast altogether.
Whether I make them stand and sit down or raise their hands, the consensus is clear, most primary producers DO NOT consider themselves entrepreneurs. And this is the root of an industry-wide problem that is coming to fruition.
In the past, agriculture has been small family farms that worked in the dirt. The land was rented for property taxes, and the farm’s profits were just enough to feed the family at hand. Through a decade of land appreciation at unprecedented rates and mass consolidation in an industry that fights it at every turn, we are now in the position we are in.
Most primary producers in Canada are the 1% wealthiest individuals.
Stop laughing, and consider the facts.
The government of Canada released statistics that the top 1% of wealthiest families in Canada have over $1M in investments and make $200K or more profitability. Using this math at current land prices, in some areas, this would be ownership of two-quarters of land at a $50 per acre average profit on farms, 4,000 acres. Most farms I deal with on a regular basis have achieved both levels. Whether or not you like it or are overly humble, most farms have accumulated enough wealth to be the richest 1% in the country.
Back to the topic at hand – you run a million-dollar business with numerous moving parts and are independent from other operations; why do farms still not recognize themselves as entrepreneurs? The answer is quite simple; we never had to.
Most business owners, from the inception of their idea, have to deal with raising capital, human resources, business structures, legal documents, and financial institutions requesting a significant amount of assurance on their numbers. In agriculture, these are foreign topics. Most family farms are self-funded (no outside investment), most are family operated, which means no third-party labour. Until the last decade of land appreciation, most banks would take a net worth on a napkin as a formal credit check. The industry itself is why we are in the predicament we are in.
I am okay with those who disagree that this is an issue. Just know that your competition (other producers) are already taking steps to move ahead in all these areas. Our entire business model is built on helping them do just this. Whether it be projections and financial consulting for the banks and internal management, human resources coaching and business structure assistance for the progressive growers, or just the mass consolidation that continues to take place, the top 20% of farms have begun to transition into entrepreneurship.
In an industry that is not moving at the speed of agriculture, this is a manageable predicament. However, with the rate at which cost of production, land prices, expansion and consolidation, and technology and data are moving in this industry, those who do not keep up get left behind. In addition, with inflation at the current levels, if you are not moving forward your money is going backwards.
The true difference between entrepreneurship and all other business models is that we can transition and move our business based on industry trends much more quickly than large, regulated corporations and businesses.
So, when land prices continue to rise above profitable levels, we can diversify in many other areas more quickly than most (in fact, my consulting business is a diversification of Hebert Grain Ventures, the farm). I have already seen this occur as many farms have branched out into seed growing, value-added processing, retail, and venture capital, to name a few. This is a sign that the times are changing when farms are not just farms anymore.
For the ever skeptics, you can agree to disagree. This is just an opinion backed by some preliminary facts and data. However, the truth is, I will only see success in this industry once I pose the question to a crowd and all of them raise their hands when asked, “who here is an entrepreneur?”.