Getting Creative – How Small Farms Can Continue to Compete

“Do you think a large number of farms would pay for an internal accountant as a contractor?”

 

I remember the day I sent this text to my current business partner. It was around four months prior to leaving public accounting to join the Hebert Group. Not sure if he already had his plan in place, or if he actually thought it was a step back in my career, but the answer was “probably not enough money in it”. 

 

Fast forward to five years later and we now run an internal financial management consulting business with over 250,000 acres in Western Canada. I will have to go back and ask him sometime.

 

We often get criticized on social media and in public for having a big-farm mentality. To be upfront, this is why we started the coaching and consulting businesses in the first place. It was to show producers that all of these large farms started as small operations and through high-risk and progressive investment became what they are today. 

 

I have learned that the histories of these farms are almost identical in all aspects. A few differences in the trajectory, but the same philosophies, luck, and risk-taking. Coincidentally, a large number of people at the farms I work with or know even went to college together!

 

Why does this matter? 

 

I believe for smaller operations (and by small I’m talking about anywhere from 1,500 acres to 20,000 acres) to continue to compete and get the same service as the big guys is through collaboration. Farm operations are  always known for being independent, but when collaboration occurs between farms it can lead to synergies that will benefit your business. You just need to be open to the possibility that you require other farms as business partners in certain areas.

 

An example that comes to mind is a farm’s finance management. Instead of doing what’s always been done and turning to the big public accounting firms, farms of any size could move to internal or fractional financial management. This would likely involve hiring a consultant or small consulting firm who would have the time to dedicate to your business, showing up to the table with suggestions on how to improve finances and grow your operation. This fractional CFO would have other farms as clients, and would be well versed in industry and market trends.

 

The other area I see a lot of collaboration these days is in agronomy. Often it is the agronomist who starts up a professional business, but why couldn’t ten farms team up and hire a full-time agronomist? Even if it was a charge per acre rather than per farm, a conglomerate of farms using the same advisor would provide significant value and you would split the cost of this individual – a cost that might be too large for one operation on their own.

 

We are currently looking for a full-time agronomist for our operation. Honestly, we would rather have our own and have them be part of our operations, technology management, crop management, leadership, and other areas. But to share them with another farm has definitely been a consideration. 

 

The ability to utilize professionals that are not employed outside of primary producer agriculture makes that individual a team member and not an external advisor. This is what I love about the job, as one week I am running projections in the fall and the next week I am running a grain cart on a 30,000-acre farm.

 

I believe that these types of collaborations will work in many different areas of agriculture. The size of the farms that collaborate does matter but is not the defining factor. We have had the following discussions in this regard:

 

• Mechanics – Having a few farms work together to open a central shop in town and hire one or more mechanics to work on machinery or have a service truck for visits during the growing season. This would provide access to their own staff and the ability to green light or cost share an annual salary for what could be only a minimal amount of work per farm.
• Executive Assistants – A number of the farms I work with have this role as priority number one. They have realized that having someone to cover travel, bills, calendars, phone calls, and do all of the administrative tasks of the business will free up a significant amount of time for them to focus “on” the business.
• Journeyman Professionals – How often do you utilize electricians or other trade professionals on your farm? With the dryer systems, bin yards, and other shops going up across the country, the need for these professionals is increasing and their availability is getting reduced. So, what if you hired a local electrician? What if you then contracted them out when you did not need them? The possibilities with some of these ideas are endless.
• Custom Work – How many farms have thought about investing in a spray plane or a floater? These types of custom applications may not be a high enough return for one farm, but not if they teamed up! The agronomic benefits to small farms that cannot float fertilizer due to the cost of application would be huge, as would be only having to foot a portion of the bill between the conglomerate. 

 

These are just a few ways where I believe collaboration between smaller farms can provide the advantages that larger players currently have. Volume discounts and equipment multiples may not be in the cards, but the ability to utilize professional advisors or custom applicators is still a possibility without the high capital requirements. It is up to each and every one of us to consider all the options and give our farms and businesses the best possible chance of a successful future.