Farm Horizons, April 2017

Small farm survival

By Starrla Cray

Amidst all the big dairy operations, can a small farm still survive?

Dr. Jeffrey Bewley, extension dairy systems specialist with the University of Kentucky, says “yes” – but success won’t happen by accident.

“The reality is, economics are tougher for small farms than they are for larger ones,” he said at the 25th annual Carver County Dairy Expo Feb. 20. “We’re working at a competitive disadvantage from the beginning.”

During his presentation, “Small Giants: Strategies for Small Farm Survival,” Bewley drew wisdom from the book “Small Giants: Companies That Choose to Be Great Instead of Big,” by Bo Burlingham.

Although the book isn’t specific to the business of farming, Bewley said some of the same principles apply.

Become a ‘small giant’

A few “small giant characteristics” include:

• Leadership – Successful leaders know who they are, what they want out of their business, and why. Bewley recommended reading the Harvard Business Review in addition to dairy-focused magazines. The magazine is focused on strategy and innovation ideas for managing a business.

• Community – Companies are rooted in the communities where they do business. Bewley said farmers are generally quite good at this, and he encouraged them to “keep it up.”

• Employees – Workers are engaged. (On a small farm, “employees” are often the children in the family.) Bewley said that when looking for workers, he doesn’t necessarily look for the person with the most skill. “I’m looking for passion and a desire to learn,” he said. “Good work ethic and someone who will treat others well.”

• Customers/Suppliers – A personal connection to others in business can enhance success. Bewley said farmers can enhance their relationship with consumers by sharing information about their operation in daily conversation.

“There are so many misconceptions about what goes on at dairy farms,” he said, explaining that farmers can contribute to an overall positive image of the dairy industry.

• Passion – Successful leaders love what they do. For farmers, working with the land and with animals is often highly rewarding, Bewley said. However, he added that “it’s easy to lose sight of it, particularly when times are hard.”

Farmers should evaluate their passion for the business, and know when it’s time to change current methods, or even when it might be time to walk away.

Embracing change

Small farmers need to be adaptable.

Bewley illustrated this point with a quote from Charles Darwin – “It’s not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

Bewley advised farmers to continually be learning, networking, and thinking of ways to increase revenue (not just decrease costs).

Small farmers should develop a business model, and strive for greatness in that area. The model will look different for different farms, such as organic, grazing, agri-tourism, marketing genetics, on-farm processing, high yield, contract heifer raising, contract feed, or partnerships with other farmers.

Bewley said a partnership could be something as simple as three neighbors who use the same teat dip purchasing together in order to get a volume discount.

“I know a group in Kentucky that does this for some things on their farms – not everything – and they get some really good deals this way,” Bewley said.

Another part of being adaptable is resilience, which Bewley defined as “the ability to recover from or adjust easily to misfortune or change.”

Bewley said farmers are usually resilient by nature, as “something goes wrong on a farm every day.”

A few tips for becoming more resilient include learning from crises, remaining flexible, expecting the unexpected, using existing buildings and equipment in creative ways, doing things oneself instead of hiring to have them done, and diversifying crops/animals/products/informational sources.

Knowing when to invest

Small farms have a smaller margin for error than larger operations, and farmers need to be careful how they invest their resources.

Bewley said he’s seen operations with “high cost, low output,” which doesn’t work. Sometimes, farmers will overinvest in things like parlors, land, and “toys” (equipment and technology), and under invest in important things like cow comfort (including cow cooling) and preventative health care measures.

He advised farmers to have a CFO/CEO mentality, and encouraged them to become familiar with their return on assets, operation expense ratio, and other financial and economic details.

In the ups and downs of farming, Bewley encouraged small farmers to stick to their business model, and to spend their energy on things within their control.

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