BEST PRACTICE OF LEADING FARMERS. Phase II

BEST PRACTICE OF LEADING FARMERS Phase II August 2006

Acknowledgements An AdFarm / Pike Management Group Joint Venture We welcome comments and critiques of this report as part of the process in identifying policies and programs that can quickly transform Canadian agriculture to financially viable and sustainable world-class stewards of the land Making Transformational Change in the Business of Agriculture SASKATCHEWAN AGRIVISION CORPORATION INC. 502 45th Street West, Second Floor, Saskatoon, SK S7L 6H2 Canada Tel: 306-384-4491 Fax: 306-244-4497 Email: info@agrivision.ca Web: www.agrivision.ca i

Purpose of this Report Dear Reader, It is not news for farmers across Canada to be told their profit margins have been declining for decades and, based on information from leading economists, this situation will continue for a number of valid reasons, unless there are significant changes. Despite the clamour about lack of profitability and survival of the industry, some farm operations show a profit each year and, in fact, grow their business year over year, despite the market and climatic challenges. How can this be? Is it good luck or good management, intergeneration transfer or the year they started farming or a combination? Various government support programs have been devised for farmers over the years to no avail. The best that can be said for government support is it keeps most farmers operating for another year, but does not offer either a viable short-term or long-term solution. Plus, programs are largely based on ways to sustain farm operations within the traditional production paradigm. A logical strategy was to examine those family farm business operations that are financially successful, particularly during these challenging times. As a result, SAC developed the Best Practice of Leading Farmers Project, which has the objective of identifying the secret or the specific business practice and models that enable short-term and long-term sustainable profits at the farm gate. This report summarizes the key findings from the eastern half of Canada and correlates the results from a previous western Canada project completed in 2004. In many ways, what was learned from top farmers is not rocket science. But, on the other hand, the way they manage and operate their farm business is radically different than average farms. This Best Practice study is clearly part of the solution to the farm crisis. The findings and common sense recommendations for improved business management skills are obvious. There can be profitability at the farm gate but it requires a transformational change in thinking and direction for the average farmer. The report summarizes the best management practices that are common among all top farmers. The report is a clear checklist and road map to implement or support the application of best practice throughout the Canadian farm sector. Sincerely yours, Saskatchewan Agrivision Corporation Inc. C.M. (RED) WILLIAMS, PhD, PAg, FAIC President AL SCHOLZ, PAg, CAC Executive Director ii

Table of Contents EXECUTIVE SUMMARY............................................................. 3 KEY FINDINGS SUMMARY REPORT INTRODUCTION.................................................................. 7 BEST PRACTICES................................................................ 9 Cost Management................................................................. 9 Enterprise Growth................................................................. 9 Produce More.................................................................... 10 Technology...................................................................... 10 Marketing Excellence.............................................................. 11 Financial Where-with-all........................................................... 12 Relationship Building.............................................................. 12 Continued Learning............................................................... 13 Management Team Clearly Defined.................................................. 13 Management of time and logistics.................................................. 14 Adaptability...................................................................... 14 Benchmarking..................................................................... 15 Risk Management................................................................. 16 Outside Advisors................................................................. 16 People Management.............................................................. 17 Take time to think................................................................ 18 Summary........................................................................ 18 Difference Between East and West.................................................. 19 APPENDIX I: BEST PRACTICES GREATER DETAIL................................. 21 APPENDIX II: CASE STUDIES...................................................... 37 APPENDIX III: ADDITIONAL CASE STUDIES........................................ 111 APPENDIX IV: INTERVIEW QUESTIONNAIRE...................................... 133 APPENDIX V: FRENCH........................................................... 137 1

Executive Summary BEST PRACTICE OF LEADING FARMERS IN EASTERN CANADA Key Findings Phase II Phase II of the Best Practice of Leading Farmers project focused on identifying the top management practices used by top producers in Eastern Canada. The project analyzed a short list of 156 farm operations in a variety of agricultural sectors. Successful farm managers responded to a detailed questionnaire about their management practices. A group of top producers was then identified and personally interviewed, which supplied in-depth supplementary details about the management of the farm business. Leading farmers differentiate themselves from the average producer by focusing on what the project team refers to as the 20% rule of thumb the revenue these top producers receive from marketing their products is in the top 20% compared to revenue received by other farm enterprises within their agricultural sector and their cost of production is in the bottom 20% when compared to other farm enterprises within their sector. From a cost management perspective, top producers manage costs well by calculating their exact cost of production and place top priority on controlling fixed costs. They do this by focusing attention on reducing their per unit production costs which in turn improves their return on investment. They research their decisions and rely on accurately calculating profitability projections to increase the operation s efficiency and growth. From a revenue perspective, top producers have grown their businesses faster than industry average. They have done this via enterprise growth which most often occurs through land acquisition and/or the purchase of new ventures that are usually linked to the farm operation. Growth in both scale and profitability often occurs within the primary business. Leading farmers also achieve greater revenue by producing more than average yields or gain from their asset base. The quality of their assets, whether land or livestock and across all farming sectors and geographical areas, is also higher than average. They search for new and innovative methods to improve their rate of production. Quality enhancements and branding of products are two methods used to increase value and improve net return. 3

Marketing excellence is a major factor in consistently attaining higher revenue and top producer performance. Achieving top returns for their product is a high priority for leading producers and distinguishes them from the average producer. They boost their marketing intelligence by regularly accessing current information and they have a strong industry network. They watch for and capitalize on market opportunities through daily use of internet, links to brokers, email updates and other available resources. Technology use such as computers, GPS and new genetics is linked to higher performance and improved farm efficiency. Top producers evaluate the benefits and costs of new technology and adopt it only when positive results are assured. Strong financial where-with-all allows these producers to take advantage of opportunities and to withstand periods of economic and environmental turmoil. Top producers maintain long-term business relationships. They develop and maintain strong relationships with their bankers, accountants and lawyers and regard these relationships as information avenues that expand their knowledge. They network with people who share similar interests and are active in local, national and even global organizations. Most top producers have post secondary education and continue to take advantage of learning opportunities. They also take advantage of the new educational opportunities offered through technology. On these farms, sound management techniques result in an efficient team that works together. Each staff or family member is apprised of the farm s goals. Management roles and responsibilities are clearly defined in order for staff and family members to capitalize on the competencies within the team. Top producers improve communication on farm through formal and informal meetings. Effective time management is top of mind. Top producers look for methods and tools that will assist them in running their business more efficiently and profitably. Benchmarking is an integral part of many farm business management programs. It is used to measure performance and set goals. 4

Top producers adapt quickly to changing market situations. For many, their ability to adapt has led to specialization or diversification. Leading producers also seek out and analyze new opportunities to increase revenue and spread risk and are often able to anticipate market changes. Top producers are forward-thinkers and search out a variety of tools to manage risk. They are most often knowledgeable about current affairs and the programs and policies affecting their industry. Top producers value their employees. They work closely and often alongside both family members and employees. They emphasize the importance of good working relationships and take intentional steps to develop a team environment. Leading producers are very often excellent communicators. Top producers avoid burn-out. They understand that they must find ways and time to relax and renew. They all take time, sometimes reluctantly, to recharge their mental and physical batteries. On a national level, the Best Practice of Leading Farmers project definitively shows many similarities between the practices of top producers in Eastern and Western Canada. Best farm management practices in both regions are, in fact, much the same regardless of the sector, size and output. 5

Introduction Farmers across Canada are facing some of the most challenging times this industry has ever experienced. Those who can survive and prosper in times like these are truly exceptional professionals and worthy mentors. This report is a summary of key findings from Phase II of the Best Practice of Leading Farmers project. This phase focused on identifying the top management practices used by top performing producers in Eastern Canada 1. Phase 1 of the project studied the practices of top producers in Western Canada 2 and was completed in 2004. Defining a leading farmer is very subjective. Many factors and method of judgment could be used. The 2006 project team, led by AgCoach Insights a joint venture between AdFarm and Pike Management Group, chose the following factors as the criteria for selecting a leading farmer business: 1. Farm operation must have been in business for at least 10 years. 2. The primary source of income prior to and post farm business crisis is from the farm business operation. 3. Average Gross Income from farm business operations for each of the years 2002-2005 must have exceeded $250,000. 4. The growth rate as measured by Gross Income and Net Income Before Depreciation and Taxes (NIBDT) is significantly higher than industry average for that agricultural sector. 5. Any and all forms of business structure proprietorship, partnership, corporation or co-operative are eligible. The first step of the project analysis included 156 farm operations who met the criteria and agreed to share their management practices by completing a detailed questionnaire. These producers represented a wide variety of sectors in production agriculture including livestock, crops and horticulture. The second step of the project involved in-depth personal interviews with a group of top producers who provided additional detail and farm practice insights. 7

From these two steps a series of best practices were identified. While some of the findings are obvious, others may fly in the face of traditional farm business practices yet offer some intriguing insights. One overriding principle seems to differentiate leading farmers from average producers. Leading farmers inherently focus on following what the project team calls the 20% Rule the Revenue they receive from marketing their products is in the top 20% compared to Revenue received by other farm enterprises within their agricultural sector AND their Cost of Production compared to other farm enterprises within their agricultural sector is in the bottom 20%. The following summary of key findings highlights these key practices as well as a number of other best practices that complement and strengthen the farm business. As you review this summary report, please note that the authors have used the terms leading farmer, leading producer and top producer interchangeably. All three terms describe individuals leading the business operations of some of Canada s best farm enterprises. 1 Eastern Canada is defined as producers with farm enterprises located in Ontario, Quebec and the Atlantic provinces. 2 Western Canada is defined as producers with farm enterprises located in B.C., Alberta, Saskatchewan and Manitoba. 8

Best Practices The following are best practices followed by leading farmers. Some of these practices are obvious. Some may fly in the face of tradition. COST MANAGEMENT Top producers know their cost of production not approximately, exactly. They know these costs as they relate to per unit production and they know them from a total farm perspective. These producers make financial and management record keeping a top priority and have a system to do it efficiently. Top producers focus attention on both Fixed and Operating Costs. And they give high priority to optimizing their Fixed Costs by spreading these over more acres, more crop units or more livestock units. Top producers review their costs on a regular basis depending on the farming enterprise it may be monthly, quarterly or semi-annually. It is not uncommon to include outside consultants in these sessions. Cost comparisons are made to industry benchmarks. Valuable insight is gained through these exercises. Top producers take time to research their costs and their decisions. They gather information from a variety of sources and compare quotes. Many use scenario planning as a means to confirm their decisions. This approach is used in planning for major projects such as building a new barn, making a land purchase or buying new equipment as well as operating expenses like farm inputs. Decisions on marketing and production are made based on profitability projections both short- and long-term. Leading producers utilize this information in the management of their operation; it is a vital component for increased efficiency and growth. ENTERPRISE GROWTH Whether it is a means of spreading fixed costs or a strategy to counter cost increases, enterprise growth has been a practice used by many leading producers. Growth occurs through a number of avenues, be it land purchase or acquisition, the adoption of a new venture, vertical integration or growth from within the existing operation. 9

The primary reasons driving enterprise growth are to reduce per unit production costs and improve ROI (Return on Investment). Top producers appear to have grown their business faster than industry average. In most cases, these producers decision to grow their enterprise has been driven by knowledge not trends. Timing of growth appears to be as important as growth itself. In the majority of cases, leading producers have been able to time growth to take advantage of low costs and/or good times. PRODUCE MORE In all types of farming enterprises, top farmers produce more from their asset base than the average producer. Whether it is litres of milk, bushels per acre or pounds per calf, top producers achieve higher gain. Their ability to produce more is derived from a number of factors. It begins with the quality of their assets whether it s livestock or land, quality is job one. And they don t skimp on the inputs to gain greater output from these assets. Top producers are very inquisitive; they are always searching for new and innovative methods to improve their operation. They look for and evaluate new technology be it in areas of genetics, nutrition, disease and/or pest management. They are continually seeking ways to produce more from their valued asset base. TECHNOLOGY Top producers use technology as a tool to achieve higher performance but they are not driven to acquire the next newest invention simply for the sake of having it. From a technology perspective, some of these producers could be categorized as innovators but the majority of these farmers are probably early adopters. Top producers evaluate the benefits and bottom line value new technology can deliver much more thoroughly than the average producer. If they can see a positive reason to adapt the technology then they utilize it. If not, then they pass. Computers are an essential tool on most leading producer operations. Almost all use a computer for managing the finances of their operation and nearly half utilize computers for production management. Computers play important roles in running equipment from climate control in barns and storage sheds, to GPS and auto-steer on equipment to automatic feeding systems. 10

The Internet is also used more extensively on these farm operations than by average producers. Top farmers cite the quick and easily accessible source of market and production information the Internet provides. And they use email for global communication and networking. These producers utilize agronomic technology to continually improve their farm efficiency. Top producers in both the livestock and crop sectors have adopted new genetics resulting in improved quality, production and efficiency. Technology has played, and continues to play a key role in the performance of leading farm operations. Top producers are attaining lower costs and increased profitability through the adoption and application of new technology. MARKETING EXCELLENCE The marketing of agricultural products is driven differently depending on the sector. In some sectors marketing rests in the hands of the producer. In other sectors, marketing is delegated. In all sectors, achieving top returns for their product or commodity is extremely important and a key factor that differentiates top producers from average producers. Marketing excellence is defined as receiving a higher than average return on their product. To achieve marketing excellence top producers are implementing one or more of the following practices: They make marketing intelligence a high priority leading producers have a solid understanding of the global markets and prices. These producers read and follow market situations (online, through newsletters and through marketing experts) much more closely than the average producer. They utilize production contracts and forward pricing to capitalize on market opportunities and spread their risk. They enhance the quality of their product. For example poultry and dairy producers implement specialized feeding programs which in turn earns them a premium on their product (omega-3 egg production). They participate in ventures that enable them to take their product one step closer to the end consumer. For example, they own shares in a processing plant. 11

They direct market their product though local businesses, farmer markets or direct farm sales. They brand their product in a manner that allows them to gain increased value. This can include individual product brands or category brands like natural beef. Top producers utilize marketing practices and channels that work best for them. They place a value on their time and they employ marketing practices that use this time most efficiently. FINANCIAL WHERE-WITH-ALL A properly capitalized business is a healthy business. And a farm with the financial where-withall to support the business and the business plan is in a considerably stronger and less vulnerable position than an under-capitalized operation. Top producers in almost every case are acutely aware of decisions that will positively or negatively impact cash flow and their balance sheet. And they almost always have a good and close working relationship with their banker a relationship where both the producer and the banker understand the goals of the farm and what is required to move the farm business forward. Leading producers also utilize sound financial risk management tools and practices. From insurance to agronomic practices, they make management decisions that limit negative impact on cash flow and their balance sheet. Good financial where-with-all provides top producers with the necessary means and resources to take advantage of short-window opportunities and withstand times of economic and environmental turmoil. And it also provides a greater degree of peace of mind. RELATIONSHIP BUILDING Top producers see great value in developing long-term business relationships, especially relationships that provide them a link to information. Just to what extent the producer has to go to find and develop these relationships depends on the sector. Many leading producers are active in groups and organizations at a local, provincial and national level. In addition to strong relationships with key suppliers including their banker and input retailers, top producers also develop relationships with industry influencers including government, industry and university researchers. 12

The networking component of interacting with other people who share a common interest is a very strong draw for these producers. They take advantage of the opportunity to discuss business with their peers and key influencers. They are always searching for new information in areas such as marketing or new technology that they can apply to improve their efficiency and profitability. These relationships provide a link to expanding the producer s circle of knowledge outside their local area. These producers think outside the box and see value in using their connections to search out and develop global links. CONTINUED LEARNING Leading farmers are strong believers in ongoing education. The majority of top producers have some level of post-secondary education, and they take advantage of continued learning opportunities. These opportunities provide a source of outside stimuli and are accessed through formal certificate or diploma programs, on-line education and one-day seminars. Top producers seek out conferences and seminars in areas that interest them. They see value in making time to capitalize on opportunities to further their knowledge and education. Technology has opened up new means to accessing education in rural regions and top producers have taken advantage of the opportunities. The Internet and technology advancements such as teleconferencing, video conferencing and webinars make the search for knowledge much more accessible and more efficient. Education opens the door not only to knowledge but also offers the opportunity to network, to know who the key influencers are and what research is being done. Networking can lead to participation in research and development trials in most sectors. In livestock and in crops, top producers often find that networking offers greater access to new genetics. MANAGEMENT TEAM CLEARLY DEFINED Management of a successful farm, like any successful business, requires sound management. Larger operations have the ability to divide the management responsibilities among various individuals while the majority of tasks must be completed by one or two people in smaller operations. Whether the heads in the hats are few or many, having an efficiently functioning management team working in unison toward the goals of the business is a key to the farm s success. 13

On operations where management responsibilities are shared there is a clear division between roles and responsibilities. One person may look after the crop enterprise, another the livestock enterprise and another the financial affairs. Whatever the breakout, top operations capitalize on the competencies of the team with members evolving into the role most suited to them. There is rarely a written agreement concerning the responsibilities of each role but rather an understanding this is especially true in family operations. Good communication is an integral part of the success of these management teams. Scheduled team meetings are common to ensure an effective flow of information and smooth decision making. Good communications appears to lead to better efficiency and greater profitability. In family enterprises, it also makes for healthier relationships. MANAGEMENT OF TIME AND LOGISTICS Top producers identify time management as a critical component of success. They acknowledge that managing their time effectively is a challenge but one they are continually working to improve. Effective time management brings greater efficiency and profitability to the operation. Leading farmers are quick to adopt new methods and technological tools that assist them with their time and improve efficiency in their day to day operations. Cell phones are common and Blackberries are frequently used. Top producers know how to use these effectively while not becoming slaves to them. Managing a large operation can be a logistical nightmare especially in busy seasons of the year. Leading producers understand the importance of logistics and have both the capacity and the capability to manage accordingly. This skill set appears to be becoming increasingly important and one that top producers are seeking additional support. By increasing the efficiency of their business, leading producers find they have better access to personal time. They choose to use this time in different ways; for some it is family time, while others take the opportunity to increase their networking and/or further their education. ADAPTABILITY Diversified or specialized? That is a question producers have been wrestling with for generations. And it appears there is no right or wrong answer; it depends on the operators, the farm enterprise and the situation. 14

What does appear to be consistent among leading producers, however, is their ability to adapt to market opportunities and do so at the proper time. Top producers are flexible and appear to adapt more readily to opportunities and situations as they arise. To some this means diversifying into a new venture such as a hog producer seeing opportunity in the greenhouse business. To some producers it means specializing, like a poultry producer specializing in omega-3 eggs, or the greenhouse operator specializing in one type of flower. And to others it means just taking advantage of opportunities that pay better today such growing their own feed versus buying it, selling direct through farmers markets or to local stores and restaurants or devoting a percentage of their acres to growing and selling an IP crop. Top producers search out and analyze opportunities that will increase their revenue and spread their risk. The majority seek insight from outside advisors when making important decisions such as these. BENCHMARKING Top producers understand their farm business. They know their financial and production profiles. And they use benchmarking to compare the performance of their farm operation against that of their peers. Benchmarking assists them in identifying strengths and weaknesses of their operation as well as areas in need of improvement. It also allows them to set future goals and improve their production levels. Historically benchmarking has been used to compare yields, piglets/sow, return per bird, production per cow, etc. Today s top producers are taking benchmarking to a much more sophisticated level. Some are comparing to global performance and most are eager to compare to provincial and national benchmarks both from a production and a financial comparison perspective. Communication technology has improved the ability of producers to access information. Leading producers are finding that benchmarking also makes the business of farming more rewarding. The farm operation is looked at not just as a business, a profit centre and/or a lifestyle but also somewhat like a dynamic game where they can compete against themselves and their past performance and also compare/compete with others both locally and nationally/internationally. 15

RISK MANAGEMENT While entrepreneurial by nature top producers prefer to limit risk wherever possible. These producers utilize a variety of risk management tools in running their farm operation. They also have the sense of awareness to continue searching for new and better tools to include as part of their risk management strategy. Top producers recognize weather as an uncontrollable variable in farming. They think ahead and are prepared to meet weather-related challenges when they arise. They employ strategies such as purchasing insurance and varying seeding dates to spread the risk in crop production. Leading producers make maximum use of the risk management tools that are available but through experience and intuition take risk management to a higher level. They analyze the risks associated with buying or leasing land and equipment, signing production and marketing contracts, and in vertical integration. They consider crop varieties with different maturity dates as a tool to incorporate into production plans. They consider the purchase of marketing contracts as a strategy to mitigate and manage risk. Leading farmers are very knowledgeable when it comes to government policies and programs. They are also on top of trade talks and actions that may affect their business. They recognize that many markets are dependent on what is happening at a global level not just at the provincial or national level. Whether it s vegetables or flowers being marketed to Ontario, beef to Japan or potatoes to the USA they are careful to keep current on what is happening and plan effectively. OUTSIDE ADVISORS The quest for knowledge is a common trait among leading producers. They realize information is key to the operation of a successful business and obtaining this information from informed advisors can be very beneficial. How they acquire this information varies. They may take advantage of services offered by suppliers such veterinarians, nutritionists or agronomic consultants. Many retain the professional services of accountants, lawyers, financial consultants, and in some cases, production consultants. Some farm operations (both large and small) are beginning to set up a Board of Directors or Board of Advisors that include one or two respected individuals who can provide another 16

perspective to their farm business. While this means sharing information that has traditionally been deemed confidential, those farm businesses that have chosen this route are finding it takes the management of the enterprise to a new and more professional level. In all cases, leading producers have a systematic method of obtaining and capturing information from outside advisors. It could be through regular personal meetings, receiving newsletters and documents to read or it may be updates via telephone and/or email. They realize that information is important and they are open to all sources. They also realize that as leaders of their businesses it is their responsibility to make the final decisions for their farm. PEOPLE MANAGEMENT Leading farmers are also good people managers. They place value on employees whether they are family members or hired workers. In many regions there is stiff competition for good labour and they understand the need to maintain a good working relationship and create a desirable work environment. They work hard at developing loyalty and trust. They find that good people management leads to greater effectiveness and efficiency. It also results in less down time and can lower costs. This understanding enables top producers to do a better job of attracting quality employees. They develop a reputation for being a good employer and have a high success rate when it comes to employee retention. Verbal agreements with workers are common but those with a larger employee base often have written agreements. They pay employees fairly and some operations add incentives such as benefit packages and bonuses. Family members including spouses, parents, siblings and children are often a major source of labour on the farm. The roles and expectations of these members are carefully defined and their contributions are recognized and valued. Top producers find that communication is critical in attracting, retaining and managing people. Top producers are good communicators. They accomplish this through scheduled meetings, detailed to do lists, listening to and interacting with their people. While everyone knows and respects the lines of authority, top producers strive to develop a true team environment and atmosphere. 17

TAKE TIME TO THINK Today s leading farmers take time to think. When and how this time occurs depends on the individual. It may be a day off to go fishing, to catch up on some reading, to go for a drive or even to get on the tractor for a day. For many leading farmers it may take the form of a planned vacation away from the farm for a week or more. These longer vacations are often combined with business, providing the best of both worlds time to recharge their batteries and a chance to network and increase their knowledge base. Top producers find that time away from the business allows them to gain a new perspective and to look at both challenges and opportunities from a different angle. It also encourages positive thinking and re-energizes the leader. And while their neighbours may view enviously at this holiday time, top producers see the importance of investing in themselves. They understand the long-term benefits of taking time to think, on both a personal and business level. SUMMARY Leading farmers in the 21st century continually meet the challenges that come their way. They value education and continually search for knowledge. They are good communicators and look to develop relationships that will assist them in improving their business and its profitability. They recognize how competitive the industry is and protect and foster any competitive advantages. They are quick to adopt new methods and technology but are careful to analyze the value these bring to the operation before making a decision. They recognize the importance of employing risk management techniques to their business. These top producers look to and consider information from outside advisors and sources and take advantage of networking opportunities. Top producers have a good understanding of their cost of production and focus on being a lowcost producer. At the same time they actively seek and employ marketing strategies that enable them to capture top 20% prices for their products. All these decisions and practices assist them to grow their business, increase their profitability and strengthen their reputation as being best in class. 18

DIFFERENCE BETWEEN EAST AND WEST Phase 1 of the Best Practice of Leading Farmers project focused on identifying the top management practices used by top performing producers in Western Canada. Phase II studied the practices of top producers in Eastern Canada. Are there differences in practices used by successful producers in these regions? A comparison by the Phase II project team indicates that there are considerably more similarities than differences. In fact the basic practices used by leading producers in both regions are almost entirely the same. However, three features appear to be slightly more prevalent in the West than the East: Size appears to be of greater importance in the West. This observation may be a result of the fact that a greater percentage of participants in the western study operated grain and beef enterprises and the study was completed during a period when margins were low and thus volume was required. Participating in Identity Preserve (IP) programs was noted as a vehicle to greater profitability by a number of western farmers where this practice was not noted as strongly by eastern farmers. Travel leading producers located in the West appear more open to travelling extensive distances to receive quality input and information and to network with their peers. Again, it should be noted, however, that the similarities in management practices used by leading producers in both Eastern and Western Canada were considerably similar. 19

APPENDIX I: BEST PRACTICES GREATER DETAIL HIGHER GAIN..................................................................... 23 COST MANAGEMENT.............................................................. 27 RELATIONSHIP MANAGEMENT.................................................... 33 21

Higher Gain (Produce More Marketing Excellence) Phase II of the Best Practice of Leading Farmers project found that one overriding principle differentiates leading farmers from average producers. Leading farmers inherently focus on following what the project team calls the 20% Rule. The 20% Rule has two components. First, the revenue these producers receive from marketing their products is in the top 20% compared to revenue received by other farm enterprises within their agricultural sector. And secondly, their cost of production is in the bottom 20% when compared to other farm enterprises within their agricultural sector. This report fleshes out in greater detail the practices leading farmers are using to increase their revenue. Whether it s litres of milk, bushels per acre or pounds per calf, leading farmers produce more from their asset base than the average producer in their farm sector. These farmers utilize new methods and technology to increase their production and achieve a higher return. From a marketing perspective, achieving top return for their product or commodity is extremely important and differentiates leading producers from the average producer. The marketing of products differs depending on the agricultural sector. In some sectors such as beef cattle the producer has direct control over the marketing of his products. Other sectors, including dairy and poultry, are supply-managed and therefore producers have less control over the marketing of their products. Regardless of the market channels top producers consistently achieve higher than average returns. QUALITY ASSETS The ability of a producer to achieve a higher gain begins with the quality of their assets whether it s land or livestock. Top producers understand the importance that balanced inputs add to achieve greater output from these assets. Clare Schlegel, a hog producer from Tavistock, ON explains that in the hog business disease is always a concern. Schlegel works hard to keep their herd healthy and consults their veterinarian regularly to avoid any loss of production and revenue. Ontario cattle producers, James and Joan McKinlay believe that their 130 purebred cow herd is 23

the base of their operation. The cattle account for 70% of the farm s gross receipts. They plan and direct-market their genetics, focusing on the goals of their established customers. They believe in performance testing through Beef Improvement Ontario (BIO) who provide data collection and management services to back up performance claims. This helps them to select and promote animals with better genetics. Webster Farms in Nova Scotia s Annapolis Valley produce cereals, berries, vegetables and dry beans. The Websters measure their growth not by increased acres but by improved margins. Our crop management tends to place us in the top 20% of yields in the crops we are growing relative to the industry standard. That s a direct result of attention to details, explains Greg Webster. They use historical annual yields by crop and variety for the last 5-10 years as internal benchmarks. And they are focusing their efforts on getting as much margin as they can out of their land resources. KNOWLEDGE AND KNOW-HOW Top producers are very inquisitive. They constantly search for innovative methods to improve their business both in product and efficiency. They evaluate new technology in areas of genetics, nutrition and pest management, and look for ways to produce more from their asset base. Many follow food and health issues and keep on top of consumer diet trends. For example, diet trends can create a new demand in the marketplace for products such as omega-3 eggs. One Ontario poultry producer who follows these trends is Roger Pelissero. We re always looking to where the market will be tomorrow, instead of where it is today. Top producers make marketing excellence a priority. They have a solid understanding of markets and price and keep informed through sources such as newsletters, consumer magazines and the Internet much more closely than the average producer. They place high value on developing relationships with marketing experts. For example, Ontario producer James McKinlay pays a lot of attention to market reports, getting good advice and has hooked up directly with the elevator to gain market insight. He uses forward contracting options to help him lock in a better price for their soybean, winter wheat and canola crops. Direct marketing can enhance the value of a product by 30% or more. Such is the case at the Dykerman s vegetable farm on Prince Edward Island. Eddy Dykerman explains that this is possible because they do all the packaging, own their distribution trucks and sell direct to local retail stores. They receive a higher price for their products because they cut out the distributor. 24

While this has financial benefits it also involves paying careful attention to the marketplace and knowing where it is at all times. Being a shareholder in a local farmer-owned beef plant has provided producer Darlene Sanford from Prince Edward Island with a year-round, direct market for their finished animals. Sanford books her cattle ahead with the plant so they know when they will be marketing each month. This also assists with cash flow. BRANDS Top producers recognize when there is value in branding their product. The partners at Topsy Farms, a sheep operation on Ontario s Amherst Island have developed a logo and use it as much as possible to market their products from signage on their vehicles to labels on their wool and sheep products. They have a reputation for supplying a consistent quality lamb and usually sell their animals in the top 10% of the market. Webster Farms from Nova Scotia have evolved their brand over time. We started to use Webster Farms to identify frozen strawberries in a retail pack several years ago, explains Greg. We carried the brand over to our U-pick operation and have since followed that with using the Webster Farms as a brand name for our dry bean marketing. Both enterprises have taken their brand one step further and have developed websites for additional branding and marketing initiatives. CONCLUSION Top producers have a keen understanding of their individual asset base. They have good knowledge of their markets and are constantly searching for innovative ways to sell their product and increase their profitability from their unique position. And they put high value on producing a quality product as efficiently as possible. 25

Cost Management (Producing for less) Phase II of the Best Practice of Leading Farmers project found that one overriding principle differentiates leading farmers from average producers. Leading farmers inherently focus on following what the project team calls the 20% Rule. The 20% Rule has two components. First, the revenue these producers receive from marketing their products is in the top 20% compared to revenue received by other farm enterprises within their agricultural sector. And secondly, their cost of production is in the bottom 20% when compared to other farm enterprises within their agricultural sector. This report fleshes out in greater detail the practices leading farmers are using to ensure their cost of production is as low as possible. The first practice is discipline. Top producers are aware of the importance of knowing their exact cost of production so have processes in place to manage their costs effectively. Costs are allocated to specific enterprises (livestock, crop, etc.) and they calculate per unit production for their entire farm operation, no matter the size or diversity. Knowing the exact costs of production is critical in knowing what marketing targets are required to produce a profit. RECORD KEEPING Record keeping is an integral part of managing costs. This is considered a key practice and one where responsibility is clearly defined. Farms involving multiple managers assign the responsibility of record maintenance so they are kept up in a timely manner. Stakeholders, including farm partners or the management team, then review records on a regular basis. Often the aid of outside advisors such as accountants, bankers and financial consultants will be enlisted at least semi-annually, if not quarterly or monthly. Most of these producers use computers to efficiently manage the farm including record keeping. The study found almost 80% of those surveyed use their computer for bookkeeping and nearly half indicate they use it for crop and/or livestock recording. The most popular management software programs used on-farm were Microsoft Office, Simply Accounting, AgExpert, or AgPro software. 27

Although top producers use a variety of record keeping systems, the system used is less important than the function of record keeping. Access to timely, accurate records, in a format that makes it easy for managers to make quick and accurate business decisions, is more important than the actual system. Top producers also pay careful attention to recording both their fixed and variable expenses. Close monitoring of financial statements and ratios assists Ontario farmer Clare Schlegel in making decisions about investments in their operation. BUYING/NEGOTIATING One component used to achieve low costs of production involves buying right. This is true for both large, fixed capital purchases such as land and equipment and also with major input costs like feed and fertilizer. These producers stay on top of things and take advantage of opportunities when they come available. While leading producers appear to know when and how to buy, surprisingly the gap between what they pay for annual inputs compared to other farmers is smaller than may be expected. Darlene Sanford, a PEI cattle producer explains that since BSE their operation has a tighter reign on everything, especially expenses. You need to do as much as you can on your own and buy supplies as cheap as possible. We negotiate and sometimes participate in group buying, she says. Top farm managers pay strict attention to cash flow and profitability and want to see strong profits coming from the business itself. In some cases farm land appreciation may be driving up their net worth statement putting them in a strong equity position. As a result, equipment manufacturers and dealers often seek them out as it s a useful sales tool to have leading producers buying and using their brand. FIXED COSTS Top producers are considerably more aware of the importance of keeping their fixed costs as low as possible. The majority of producers have a good grasp on their variable costs (i.e. labour, fertilizer, fuel, feed) the numbers they see on a day to day basis in any production cycle. Only top producers, however, have an equal grasp on their fixed costs (i.e., land, equipment, buildings, insurance, property taxes) as these costs are often paid bi-annually or annually and are not dealt with daily. 28

Today, fixed costs for many businesses are nearly equal to their variable costs and only top managers spend the time to understand, analyze and manage this ratio. The knowledge provides them with a better understanding of how to appropriately expand their operation and balance the size and scale of equipment or livestock numbers to make their farm business more profitable. BENCHMARK COMPARISONS Industry benchmarks provide producers with a means to measure their cost of production and compare to others. Reviewing and making comparisons to benchmarks gives producers a keen awareness of where their farm stands within their sector. Top producers will look at publicly available benchmark data but where they see the greatest value is in the private benchmarking data of their peers. Many belong to informal peer groups to compare figures and gain insight into their cost and production efficiencies. This really establishes success standards, rather than averages, as top producers aspire to be much better than average. On La Fleur du Pommier apple farm in southeastern New Brunswick, Lépold Bourgeois and his partners use benchmarks from Quebec and Nova Scotia along with a model from Cornell University to compare their apple production costs. He notes, It s always good to find out what others are doing cheaper and see if you can adapt their techniques to your operation. TECHNOLOGY Information technology has taken financial farm management to a new level. Top producers research and then utilize tools that help them lower their cost of production and become more profitable. In addition to technology like software programs to assist in their record keeping, top producers aggressively seek out new technologies such as computerized feeding systems, GPS or new genetics that result in lower costs and/or deliver higher yields. This practice lowers their overall cost per production unit. PEI vegetable growers, Eddy and Gerald Dykerman of Brookfield Gardens, take regular trips to explore other farm operations in Ontario and Quebec but always with an eye on new technology. The brothers also enjoy going to farm equipment shows both in Canada and Europe so they can learn about new equipment that will improve their efficiency. 29

LABOUR COSTS For some types of enterprises, labour is a considerable cost. In the study, over 75% of producers indicate they have at least one paid staff member, excluding family members. Among those, providing fair wages was cited as the most common retention strategy. Meanwhile, the success of the farm business can be significantly impacted when the labour market is tight or qualified help is hard to find. Top producers recognize the importance of labour from both a cost and a management perspective. These producers are also aware of programs that can assist them in attracting quality labour and help reduce costs. Nova Scotia s La Fleur du Pommier apple farm like many other farm operations has difficulty finding people with agricultural/horticultural knowledge and equipment experience. Along with the four partners, the farm requires one full-time person, 12 part-time people along with 30 seasonal staff. They keep staff motivated by developing innovative projects and when possible they offer wage increases. Because their employees are paid by the hour, time and logistics management are important. We need them to be efficient so we need to be organized on our end, explains partner Lépold Bourgeois. DECISION MAKING Top producers take time to research their costs and make their decisions wisely. They are constantly looking for ways to reduce their costs and increase their profitability. Although they have a keen awareness of their own cost structure they actively look for additional information from various sources before they make a decision. Outside advisors, in areas of both finance and production, provide valuable information to aid these producers in their decision making. Good knowledge of their costs helps them plan for major projects in advance. One Ontario dairy farmer used scenario planning to plan and build a new free-stall milking parlour. After doing the initial research, this producer sought outside advice. The advisor further challenged his thinking and brought additional ideas and insights to the table. In this case, well planned mechanization became the crucial technology in growing their farm and increasing their efficiency. 30

CONCLUSION The majority of leading farmers strive to be as low cost as possible in order to increase their bottom line. Cost management, along with reducing per unit production costs are practices they incorporate on a daily basis whether it is finding a more efficient method to feed cattle, transport product or manage labour. For top producers, it s a matter of attention to detail and making sure things are done on time and as efficiently and effectively as possible. These producers also claim this practice does not involve just one big thing but rather it is keeping an eye on a series of little things because it all adds up. When costs are kept to a minimum, the result is more profit. The numbers that really matter are those you use in the expense column, says Ontario sheep producer Ian Murray of Topsy Farms. At the end of every season the books tell you whether you should keep going or not. At times it looks as though we should have quit, but we are persistent. 31

Relationship Management (Knowledge and Networking) The ability to develop strong and meaningful business relationships is a key component in the success of the enterprise. These relationships provide a link to information. Top producers are constantly searching for information to improve, grow and add value to their business. They see the importance of developing long-term business relationships. NETWORKING The Best Practice of Leading Farmers project found that 95% of producers belonged to some industry or community association. Two of the major benefits of belonging to such an organization included networking opportunities and access to information. Top producers recognize the value of networking or interacting with other people who have similar interests. They take every opportunity to discuss business with their peers and people of key influence. These discussions provide knowledge of trends and the direction the industry is taking. They bring issues to light and provide the producer with a greater voice. Producers also gain access to information on the latest technology including genetics, production, equipment, processing and marketing from trusted and reliable sources. This information assists producers in future planning and decision making on their own farm. James and Joan McKinlay are beef cattle producers near Ravenna, Ontario. They are both very involved in a number of industry organizations and believe this has added significantly to their business and knowledge. Networking allows us to interact and gather information so we are aware of what is going on in our industry, explains Joan. It also provides mental stimulation and personal development and can also be another avenue to promote our cattle. Sharing information on a monthly basis with other local producers provides poultry farmers, Paul and Eva Cook with a means to compare feed conversions and other production measures. It also provides them an opportunity to discuss issues and evaluate strategies that will enhance their industry. 33

LEARNING Top producers strongly believe in continued learning. They take advantage of opportunities to enhance their knowledge as well as their network of resources. Roger Pelissero s participation in a leadership program at the University of Guelph has been extremely worthwhile. Not only has this greatly increased my network of agricultural business leaders but the insight into other operations provides me with new ideas and a different angle to analyze our own operation, says Pelissero. These opportunities can often lead to participation in research and development trials providing producers with access to the latest in technology. MARKET ASSISTANCE AND ADVICE Top producers see the importance of developing sound business relationships to assist them in the area of marketing. They are seeking the most efficient and profitable way to market their product. At Brookfield Gardens on Prince Edward Island, Eddy Dykerman and brother Gerald export their products off the island though the PEI Vegetable Growers Co-op. Our philosophy is that growing vegetables and marketing them outside our local area are two different skill sets, Eddy explains. We rely on the manager as he has contacts across North America, access to daily market reports, and an accurate picture of the marketplace. Through him we receive competitive prices, and then he sets up the deal. The co-op manager not only locates markets and ships product for them, he is also a valued source of information. The Dykermans bounce ideas off him and get advice on what to grow that matches market demand. LOOKING OUTSIDE Top producers recognize that information is a key component to the success of their business. They understand the benefits that outside knowledge can bring to their operation. Top producers like Roger Pelissero rely not only on the services of his egg grader but also on that of his veterinarian, nutritionist and the scientists of the companies he does business with to provide him with outside advice. 34

The McKinlay s also gather information from outside sources and utilize this knowledge in their planning sessions. They rely on the advice from accountants, lawyers, financial consultants and those in marketing and production to assist them in their decision making. CONCLUSION Frequently looking to the outside for information and advice is common practice among leading producers. They place high value on the relationships they build and the knowledge they gain. These relationships and this information play an integral part in the decisions that are made and the overall success of the business. 35

APPENDIX II: CASE STUDIES BEST PRACTICE OF LEADING FARMERS CLARE SCHLEGEL ONTARIO..................................................... 39 CEES HAANSTRA ONTARIO...................................................... 45 HILL & HILL FARMS ONTARIO.................................................... 49 DARLENE SANFORD PRINCE EDWARD ISLAND................................... 53 JAMES & JOAN MCKINLAY ONTARIO............................................. 59 IAN MURRAY, TOPSY FARMS ONTARIO........................................... 65 EDDY DYKERMAN PRINCE EDWARD ISLAND...................................... 73 ROGER AND LORRIE PELISSERO ONTARIO....................................... 79 LÉPOLD BOURGEOIS NEW BRUNSWICK.......................................... 83 PAUL & ROBIN BROWN ONTARIO................................................ 89 PAUL & EVA COOK NOVA SCOTIA................................................ 93 WEBSTER FARMS LIMITED NOVA SCOTIA........................................ 97 HUGUES DENIS QUEBEC........................................................ 103 BERNARD AND NICOLE DION QUEBEC........................................... 107 37

Clare Schlegel Ontario Strategic relationships, enterprise growth, risk management, strong succession planning, and attitude are keys to success on this family farm. INTRODUCTION Clare Schlegel is highly regarded by many as an innovative producer. For 27 years, he and his wife Catherine have operated their mixed farm near Tavistock, ON. During the past 3 years, the family has managed to double their top line revenue primarily the result of land and business acquisitions, and forming strategic alliances. Today their farm business has grown to consist of 5 different companies and primarily 4 distinct enterprises. These include: 2 hog enterprises, 3 poultry enterprises, one noncommercial trucking enterprise, and a crop enterprise. Each enterprise is large enough to involve at least 1 full-time person and able to capitalize on the latest technology and efficiencies of scale. Each also involves a partnership or alliance in some form. BUILDING RELATIONSHIPS It s evident that Schlegel believes in aligning with like-minded people to achieve synergies. In their crop business, he s farmed together with a neighbour for over 20 years. Their neighbour has the planting and harvesting equipment while the Schlegels have the trucks and grain handling facilities. They recently added a fourth truck to move feed for his brother and to haul hogs for another neighbour. This helps maximize the utilization of this truck resource while bringing in additional income. 39

CLARE SCHLEGEL ONTARIO Meanwhile, Schlegel and 2 other neighbours are principles in a 2,500 sow-hog loop that has been operating for about 10 years. Schlegels finish about 50% of the hogs and provides the trucking requirements for the group. Dedicated trucks minimize disease risks for the entire group. He believes this arrangement is one of the oldest and perhaps most successful in Canada. Splitting the farm into several companies also aligns with the couple s succession plan as their son plans to come back to the farm. This structure will make it easier for him to get started through the purchase of one of the companies. The Schlegels have also partnered with an employee in one of the hog companies with the intent that he will buy them out in the future. During the past 10 years, the family has invested in a lot of land as part of their retirement plan. Today, unless the land can carry itself after they make the down payment, they rent land even though this has many drawbacks, especially in a livestock-based operation. We were looking for a retirement plan that would provide us with a good return on our investment, says Schlegel. Instead of investing in RRSPs we used the money to help grow our business. As a result, over the years the return has been better and our business has been efficient. STRATEGIC PLAN IN PLACE Schlegel attributes their success to having clear goals, strong fiscal management along with good timing. We set goals to achieve economies of scale and use the technologies that are available to achieve those results, he explains. We try hard to be more intuitive and really manage our costs. The family does have a strategic plan with written personal goals. This drives their business plan and decision making although Schlegel feels strongly that personal fulfillment is as important as business goals. He notes, My wife Catherine has obviously been an important contributor over the years to all our operations, particularly in the strategic direction and decisions that we ve made. While the family has a strong focus on personal goals, they use the professional services of accountants, lenders, lawyers, marketing and financial consultants to meet their business needs. 40

CLARE SCHLEGEL ONTARIO KEEPING GOOD PEOPLE Their personal philosophy impacts how they treat their partners and employees and they have had no problem getting and keeping good people. Schlegel notes that all are empowered to make decisions, and they often make better ones when he is away. Aside from the various partners, the farm has 5 full-time, non-management staff and one parttime employee. They ve been recruited by watching for hard-working, honest people with similar backgrounds to themselves. All employees have a written job description that is updated annually. He points out that the job descriptions should be more explicit than they are but they tend to evolve quickly in a small organization. As well, Schlegel continuously conducts informal reviews to ensure everyone is happy. Schlegel notes, they try to pay well but emphasizes the job is more than just a job and that we are all part of the food chain meeting people s most basic need. Therefore, emphasis is placed on a workplace that meets the needs of the employees as well as those of the small company they work for. As an added incentive, the businesses share profit with employees at the end of profitable years. Schlegel is the senior manager and has individual enterprise managers for each business that oversee the day to day operations. Their feedback allows him to make the strategic plans and larger decisions. He describes his management style as investigator and collaborator where he selects the stakeholders, asks their advice and seeks input, but then usually makes the final decision himself. NUMBER CRUNCHING While all their growth is positive, some of the biggest challenges the couple has had to overcome are leverage and managing the financials. Therefore, they closely monitor financial statements and ratios to help make decisions about what they can do along with what they should be doing. Schlegel notes he keeps a close eye on their debt-to-equity ratio and tries to keep it in line. He points out that due to the cyclical nature of agriculture, the timing of investments is as crucial as the investment itself. Unfortunately, this is often as much luck as skill so determination and believing in the future are also critical, he says. 41

CLARE SCHLEGEL ONTARIO Schlegel believes in knowing costs and benchmarking production. For all crop production they track crop insurance data and monitor input costs. Meanwhile, in their broiler operations they compare to historic data to track feed conversion, growth rate, and margin per kg of gain. In the hog operation they follow average daily gain, cost per kg of gain, mortality and morbidity. They also review industry benchmarks in the hog business and track production efficiencies against these. One partner belongs to an industry benchmarking club to gain deeper insight rather than using American benchmarking firms. TECHNOLOGY IMPORTANT Schlegel considers information technology (IT) crucial to their farm business noting, We are truly in the information age, and therefore the IT component has been critical for our monitoring and management. They use computer technology to monitor and control barns and feeding programs, compute and analyze their farm accounting systems and use global positioning systems (GPS) in the field. Meanwhile the Internet is also an important tool for research, email and monitoring markets. MARKETING Because they have diversified into a multi-commodity farm business, different systems are in place for marketing product. While they do not always end up in the top third of the market, Schlegel looks ahead for demand in the market and tries to supply that product to their partners in the supply chain. Even though broiler chickens are supply-managed and the price is set for them, they try to meet specific quality targets of the processor. Schlegel notes that this marketing system is excellent and has served them well over the years. For 10 years, the hog loop has had strategic alignment with an Ontario meat processor, where hogs are sold on a window contract. The processor markets much of this pork to Japan and sees these long-term arrangements as a critical marketing component that drives value for the entire supply chain. This arrangement has worked well for both the producers and the processor. When hog prices are high, producers receive less. Then, when hog prices are low, producers receive more. Over time, it s just the average price, but volatility is taken out of the hog cycle. 42

CLARE SCHLEGEL ONTARIO In spite of this strategic arrangement, We have accepted the fact that we produce a commodity and have therefore aligned costs with market prices, he adds. On the crop side, corn is fed on-farm, wheat is marketed when the best opportunity presents itself either for cash or forward-sold, and soybeans are grown under identity preserved (IP) production contracts, or for seed and some for the commercial crusher market. In addition, some higher value edible beans are grown. Schlegel s not convinced that IP contracts offer enough of a premium to justify the extra hassle and risk. RISK MANAGEMENT Diversification has played a major role in the family s risk management strategy. Diversification has been very important to our success, he explains, as it has helped to spread out risk and stabilize our farm income. Other tools are also used to mitigate risk. They contract inputs to lock in prices, buy crop and other forms of insurance, share equipment, and have loans with various renewal dates. Disease, particularly in the hog operation, is always a concern. Therefore, they work hard to keep their herd healthy and consult with their veterinarian on a regular basis. Today, Schlegel is somewhat concerned about the high exchange rate of the Canadian dollar and climbing interest rates as these both impact the profitability and competitiveness of their operation. Schlegel notes being in a strong financial position is critical to their business. We had limited expansion in the past. Now we are in a better position so we can grow and we know this will see us through the tougher times. The more equity we have the better off we will be, he adds. BENEFITS FROM NETWORKING Another key factor in their success is Schlegel s involvement in commodity groups, particularly in the pork industry. Over the years, he has been extremely involved in local, national and international industry organizations. He s currently serving as president of the Canadian Pork Council. This industry involvement provides him with knowledge of issues larger than the farm while allowing him to gain a different perspective. It s also an opportunity to share experiences and compare notes with other producers. 43

CLARE SCHLEGEL ONTARIO He says, It keeps you in touch with industry, stimulates you to do better, keeps you realistic and makes it easier to find solutions when you learn from others mistakes and their solutions. He points out that he also gains a lot of knowledge through the close working relationships he has with partners in the hog loop and cropping operation. PRIDE IN THEIR WORK It s evident that Schlegel is proud to be an agricultural entrepreneur. He notes it s important to have a positive attitude, remain optimistic, yet realistic through the good and bad challenges that face the industry and their operation. In spite of all the potential challenges ahead, Schlegel strongly believes that farming still has a bright future. I grew up on a farm and it is my way of life. I would love to see my children farm. I m proud to see and build a successful home and enterprise and take a lot of ownership in it, he explains. One could not do that working for someone else or in a business that is passing. Farming, in one way or another, will always be here. 44

Cees Haanstra Ontario Today s farming environment is challenging to say the least. This dairy farm is poised for revenue growth based on a strong equity position, industry knowledge, a hands-on approach and a genuine love of the business. INTRODUCTION Cees Haanstra along with his wife Hinny and their four children own and operate Greiden Farms Ltd., a dairy near St. Mary s, Ontario. The Haanstra family moved to Canada from Holland on January 9, 1992. In those 14 years they have built their land base (600 acres owned and 600 acres rented) to 1,200 acres to grow their own feed, and their cow herd from 120 to a 400 head cow herd. Our knowledge about dairying and lots of hard work and hours spent in the dairy barn and around the farm has been key to our success, credits Haanstra. It s not hard when you love the business you re in it s my hobby too. BALANCING GROWTH AND COSTS Finding balanced growth often means taking a close look at the costs associated with growth versus increased revenue and missed opportunity costs. A farm manager has a lot to consider including the investment s timing, current debt load, industry trends and future outlook and much more. It is a very difficult decision that often comes down to doing what you can when you can. We should have bought more quota a little earlier but sometimes you need help from the bank and they re a little different now than they were 15 years ago, says Haanstra. We were new in the country and our set-up and ideas were new at the time, and the bank was not sure how it 45

CEES HAANSTRA ONTARIO would work. Now that we have been successful we could, but we weren t in the financial position at that time to do so. Those new ideas that seemed a challenge to the bank are part of why the Haanstras have been successful they have in-depth knowledge and passion for the dairy business, streamlined operations and focused on herd health to maximize the production of their dairy. COST PER LITRE Haanstra measures growth by the number of cows and the number of acres they farm. Currently his goal is for 5-600 acres more land and 200 more cows in the next 5-10 years. Haanstra watches the return on invest very closely, I don t like to go over a certain debt load per litre of milk. If it s short term that s okay but if it s a long term trend, that isn t healthy, says Haanstra. My view is that if you can pay off debt heavy you can reinvest heavy. The other factor Haanstra measures is if the expansion or increased production strategy he s considering brings the cost price per unit or per litre of milk down. And if it reduces the cost per litre Haanstra will expand more quickly to capitalize on the increased revenue. That said, Haanstra is continuously improving and increasing the average production of the herd. His strategy for growth has paid off in 14 short years filled with both hard work and a lot of enjoyment. The farm in the last three years has grown 25-30% through land, cow and quota acquisitions. GROWTH MEANS MORE TIME AND PEOPLE MANAGEMENT As anyone who has been involved with a dairy knows time management is crucial and daily milking and chore times are basically written in stone to keep the operation running smoothly. Haanstra has found that going from 200 cows to 400 cows takes a lot more management time and a slightly different set of management skills. When you are a small dairy you do most of the work yourself or with your family, when you grow you have to hire and manage people as well as the farm. Haanstra s employ both full and part-time help and both find that scheduling employees can be challenging. Haanstra competes for quality employees with nearby factories that have higher salary scales. A health plan, along with offering a farm-family lifestyle and showing appreciation for a job well done helps. As well, Haanstra tries to increase worker satisfaction by giving them 46

CEES HAANSTRA ONTARIO specific responsibilities, allowing them an opinion in a decision and sometimes making the decision on their own in certain situations. DO WHAT YOU LOVE Along with viewing his daily work on the dairy as his hobby, Haanstra also often includes visiting with different farmers as part of his holidays. Usually if I take a day off it s business related, says Haanstra. For some this hardly seems like a break but for Haanstra it s a labour of love. He enjoys being self employed, working with animals, making a good profitable living and seeing the business develop. Haanstra will be encouraging his children to farm because he believes that having a successful farm business offers good quality of life and a high standard of living he d like them to work towards and enjoy. 47

Hill & Hill Farms Ontario This farm manager works on a collaborative management team that uses benchmarking, strategic alliances and networking to diversify when crop prices and hogs prove challenging. On Hill & Hill Farms management roles are clearly defined. Pete Rowntree is one of four managers. The other three managers in this family held corporation are Hill family members. Rowntree is a paid employee and has been an integral member of the business for over 20 years. He is responsible for the seed production, processing and seed marketing on this highly diversified farm. The grain elevator, cash crop, and hog production units are managed by members of the Hill family. This business is made up of three separate entities. Hill & Hill Farms Ltd. is the cash crop operation growing corn, soybeans, wheat and edible beans. Custom planting, spraying and harvesting are important aspects of this operation. Hill & Hill Farms is also involved with seed production, seed processing and seed retailing. River Ridge Farms Ltd. is the hog production entity, operating a 700 sow farrow to finish operation. Varna Grain Ltd. is the commercial grain elevator operation handling corn, soybeans, wheat and some identity-preserved soybeans. Rowntree believes diversification has been instrumental in taking the farm through thick and through thin and has also been the farm s key to successful growth. We have a profitable grain elevator, not just cropping and hogs, he says. Diversification also buffers Hill & Hill from some of the market volatility. Diversification helps keeps us going, says Rowntree. In the past, if the hogs were good and crop returns were low, they offset each other. The grain elevator, seed processing and retail business continue to be stable and profitable. 49

HILL & HILL FARMS ONTARIO Benchmarking is used extensively to help identify the operation s strengths and weaknesses. Rowntree says the managers benchmark the progress of the farm s business components on a regular basis. To ensure accuracy, they seek top-of-the line advice through the George Morris Centre in Guelph. They also meet with a group of hog producers twice a year to review numbers and benchmark the hog business. Peer interaction offers both formal and informal situations for benchmarking and idea exchanges. Although Hill & Hill sold their shares in a cooperative seed venture to a larger company, Rowntree continues to meet with the original group of seed processors and growers to exchange ideas on the seed business and figure out how we can improve and also work with the larger company. Rowntree also attends meetings of the Canadian Seed Growers Association. Hill & Hill brings in business consultants, who network knowledge from other farm managers. This allows them to compare their farm to their peers in terms of rate of growth and the shared challenges in farming. Our biggest challenge, like many other farms right now, is the lack of margin on the cropping side of the business, says Rowntree. The portion of our crop production that is marketed as seed does generate additional margins by way of grower premiums and retail margins. Even with benchmarking, peer associations and business consultants, in Rowntree s estimation Hill & Hill management tends to be conservative in adopting new technology or products and often waits until at least a few others have tried it first. Managers have developed business associations to assist them in developing marketing plans that will benefit the various companies in the operation. Rowntree has formed close associations with two seed companies to assist in retail seed product marketing. Marketing hogs in a depressed market presents additional challenges. To get a leg up on markets and create opportunity, the hog operation is involved in a three-site production system (the farm is farrow to finish), and is currently investigating hog finishing opportunities in the U.S. Rowntree identifies trends and creates marketing opportunities by aligning the seed business with innovative partners. He is responding to the popularity of bulk seed shipments by packaging seed in bulk. The companies we are associated with were the first ones to offer bulk seed service on a large scale. Bulk seed has become a big portion of our retail seed business. 50

HILL & HILL FARMS ONTARIO When asked to point to marketing strategies that have contributed the most to Hill & Hill s success, Rowntree names diversity, hedging and forward sales. Even marketing strategies are diversified. The farm sells seed products directly to customers, who are often other growers. They also sell to dealers for resale and into seed production and processing markets as well as into commodity crop processing markets. They also process various products on farm. It s no surprise that time is a premium in this multi-faceted farm business. Time management is recognized and discussed. Regardless of production pressures, management tries to meet weekly to keep the business on track. Rowntree says that staffing, cost control, customer service and relationships are often at the top of the agenda. Gauging time efficiencies is a well-honed management skill. Depending on the time of year and our requirements, we move staff from the grain elevator to the cropping business to the seed business. Labour recruitment strategies include a pension plan, a health and disability plan, time flexibility and last, but hardly least profit sharing. These benefits are supported by an opendoor-to-management policy. Strategic planning sessions are held on farm several times a year where budgets, cash flow, new venture opportunities and succession planning are formally discussed. They work with what are identified as their farm s biggest risks: declining margins and price risks. The intricacies of management of this complex operation are streamlined through the use of technology applications. Computers are an integral part of the farm infrastructure and assist with bookkeeping, payroll, tax preparation, crop/livestock recording, inventories and budgeting on various software programs. Business and production pressures are offset with time for relaxation. Rowntree takes motorcycle trips with his wife, and says spending time with their children in ice hockey arenas is considered a social time for the family. However, time away doesn t come easy. I find it tough to book off on a regular basis, he admits. 51

HILL & HILL FARMS ONTARIO Future ventures will most likely involve marketing and production contracts, joint ventures and leases that Hill & Hill believe will reduce upfront costs for items such as land, facilities and machinery. They currently meet 30 per cent of their equipment requirements through leasing arrangements and own the other 70 per cent. Leasing, Rowntree says, reduces pressure on cash flow and helps them meet requirements. Success like everything else can be relative. When asked if there is anything he could have done differently over the years, Rowntree says, Maybe a few little things, but nothing major. Hill & Hill is where they want to be. Perhaps the best indicator of Rowntree s personal sense of success is his belief in farming as a viable business opportunity that can offer a high standard of living. I would encourage my children to farm, he says. A farm business offers a good quality of life. 52

Darlene Sanford Prince Edward Island For the last 18 years, Darlene Sanford has worked closely with her father Julien Arsenault on their 1,000-acre farm in Mont Carmel, PEI. Together they background and finish 400 to 450 head of cattle annually. Not only does Sanford love what she does, but her passion for the industry is demonstrated through her leadership and determination to make the beef industry stronger throughout Atlantic Canada. In 2002, Sanford along with other Island producers, were forced to change how they market cattle period. That summer their only local beef packing plant shut down and, if that wasn t enough, BSE hit in May 2003. At first, cattle were shipped to Ontario but it didn t take long to figure out that wasn t sustainable. With no other options, we had to come up with a different way of doing things, she explains. Sanford was president of the PEI Cattlemen s Association during this difficult time. Today, through teamwork, forward thinking and a lot of fortitude, they are thankful to have a local producer-owned beef plant. This plant came about as a result of beef producers working together with government and retail to form a value chain. OWNERSHIP IN VALUE CHAIN In December 2004, Atlantic Beef Products Inc., started processing top-quality beef from the area. It will eventually process more than 500 animals a week. The plant, located in Albany, PEI, is owned by 200 producer-members. As a shareholder, Sanford now has a year-round direct market for their finished animals. We book cattle ahead with the plant so we know when we ll be marketing each month and this also helps with cash flow, she notes. 53

DARLENE SANFORD PRINCE EDWARD ISLAND Product from the new plant is sold through under the Atlantic Tender Beef Classic brand. To be part of this program, producers commit to follow brand specification. This ensures all producers follow a consistent feeding and health regime, resulting in high quality beef products. Because we have a branded product that is fed a specific feed formulation it is more valuable to retailer and consumers, explains Sanford. As well, we get compensated for using more expensive mineral in our ration. While they haven t yet seen leaps and jumps in their returns, they are selling in the top third of the market. Sanford expects even higher returns to come eventually. The group is still trying to build up supply to get the plant to full capacity. As a result, it has not yet achieved full potential so right now all profitability is going back into plant. Sanford notes, however, they plan to move to value-based grid pricing and then additional value will go back to producers through a traceability program. Prior to the plant opening, we knew that if it didn t go ahead then we would no longer be in the beef business, she states. We knew our position, what transportation costs to Ontario were and if the situation didn t change our farm would have exited the feedlot business. NETWORKING IMPORTANT Sanford s attributes success in their own operation to the combination of her father s 40 years of experience coupled with her ability to bring in new technologies. Meanwhile, she recognizes that you can always know more about what you re doing so she has a strong appreciation for education, hands-on experience and learning. One way Sanford keeps up with what s going on is through her involvement with industry associations and peer interaction. She has held many positions on the PEI Cattlemen s Association and, as a result, sits on various committees across sectors and participates in meetings about farm income, environmental farm plans, along with many other initiatives. She s also a Canadian Cattlemen s Association representative for the Beef Information Centre. Sanford believes all of the above activities, although time consuming, are extremely important to the success of their business. If you don t know what s going on, where do you get information to make decisions? she asks. It helps us keep up to speed with industry and then make our decisions based on the latest information. 54

DARLENE SANFORD PRINCE EDWARD ISLAND KEEPS AN EYE ON COSTS Belonging to a Beef Feedlot Improvement Club provides another forum to learn more about how their operation is doing relative to others. While the club doesn t share full disclosure on costs or profitability, it allows members check on each other over the fence and bounce ideas around. This gives us a general idea of how we re doing compared to other members, she explains. Sanford has compared her costs of production to those in a study published in PEI but notes the information is now dated. Furthermore, using external benchmarks can be difficult because of the geographic location and differences in feeding practices. For example, she can t compare feeding costs to those in Western Canada because of different climatic conditions and feed ingredients at times they feed waste from the potato industry which sometimes includes French fries. Therefore, they rely on their own internal benchmarks and try to keep cost of production as low as possible. They also buy rather than lease equipment because, she explains, you still have it after five years and although it s depreciating and has some wear and tear, if taken care of it s still an investment that can continue to work for you. You need to do as much as you can on your own and buy supplies as cheap as possible. We negotiate and sometimes participate in group buying, she says. Since BSE we now have a tighter rein on everything especially expenses. GROWTH THROUGH ACQUISITION AND WITHIN Over the years this father-daughter team has grown their operation both internally by feeding more cattle and through acquisition of more land. They are often among the first to try something, whether it be new technology, equipment or production practices. They measure their growth through both production and financial records. Sanford and Arsenault look at return on investment and all the other business ratios before making an investment. Another comparison she likes to follow is the income-to-expense ratio against the 5-year average. Sanford notes it s also important to measure attributes such as soil ph levels and organic matter which on their farm have been improving over the years. Without question, BSE has been the biggest challenge to growth that they ve had to overcome. BSE has had a negative impact on our top line. She explains, We were in survival mode, now in recovery and during this time we ve lost a lot of equity. 55

DARLENE SANFORD PRINCE EDWARD ISLAND Fortunately the farm was in a strong financial position at the time. We always watch our equity because it tells you if you re heading in the right direction or whether you need to change, she says. Sanford notes that in the past the operation was more diversified from a product perspective. Today they finish cattle, grow their own cereals and forage and trade land but they used to have hogs, a cow/calf operation and also worked with an uncle who had a dairy operation. Now with the focus on the feedlot they may have to look at other marketing options beyond the new plant. But, then again maybe not, if the plant can handle all their cattle and provide added value. GET INPUT FROM OTHERS While Sanford and Arsenault are the two partners in the operation that make the decisions collectively, they do rely on employees to provide ideas and input. They have two seasonal staff that help them out but finding qualified seasonal/casual labour can be a challenge. They complete with other sectors of agriculture and fishery and note that many people are headed to Western Canada. Labour is a big issue that is growing every year, notes Sanford. They also turn to outside advisors when making decisions. Sanford and Arsenault work with their accountant and lawyer for financial and other business decisions. Meanwhile, they rely on extension services for production advice and education and their veterinarian for animal health and new product advice. When we need to know something we find the right person and ask tough questions, explains Sanford. Roles in the farm operation have developed naturally over time. Arsenault looks after the day to day feeding while Sanford looks after the marketing and paperwork. Meanwhile, field work and equipment repair is evenly shared. Everyone is able to do every job which makes us more flexible and allows for down time. FAMILY TIME IMPORTANT Despite the long hours and heavy workload, especially during the summer, Sanford recognizes the importance of taking time out to recharge batteries. Her family enjoys activities such as motor biking and downhill skiing. Meanwhile, she enjoys being home when their kids get off the bus and having a warm batch of cookies waiting for them. 56

DARLENE SANFORD PRINCE EDWARD ISLAND While they don t have a regular schedule for time off or vacations, she recognizes that it s good for the business. It doesn t have to be an extended vacation. It could just be an hour. She says, It s all in the way you use the time you have. That s why time and logistics management is important to her too. Sanford and Arsenault plan each day in advance so that jobs can be done as efficiently as possible. We look for the easiest way that saves time and money and try to match equipment to the task at hand, she explains. It s always in the back of your mind especially every time you need to go to town given the price of fuel today. Sanford is definitely a common-sense, hands-on operator. She believes there s a strong correlation between success and folks who get their boots dirty every day. She s not one to shy away from hard work whether it is in her own operation or on behalf of others at a boardroom table. She rolls up her sleeves and as a result of her leadership and vision, many other beef producers are benefiting today. 57

James & Joan McKinlay Ontario This family farm is set up for success through diversification, value added activities, and marketing excellence. For the past 30 years, James and Joan McKinlay have expanded their operation as the third generation on the McKinlay Family farm near Ravenna, ON. Today the couple raises cattle, crops and hay on their 465-acre Silver Springs Farms. While cattle are their passion, this couple has chosen value added avenues and diversification to help offset risk in their operation. The McKinlays attribute their success to their strong attention to detail and making sure things are done in time. They strive to be as self-reliant and low cost as possible. Both have a keen interest in learning and enjoy pushing limits they don t hesitate to try out new ideas. The farm operates under a unique business structure where both James and Joan are sole proprietors. Each one has their own land and cattle but they share the workload and market together under the Silver Springs Farms name. McKinlays believe in setting definite goals and working towards these. Together they have strategic planning sessions where they discuss cropping and livestock decisions. But they don t do this in isolation. Instead they gather information from outside sources to develop a plan often relying on advice from accountants, lawyers, marketing and financial consultants, production consultants, veterinarians, and investment planners. PUREBRED PERFORMANCE COUNTS A 130-head purebred cow herd is the base of the operation. While 90 Fleckvieh and Red Simmental cows are the main base for the herd they also have 25 Red Angus and 15 Gelbvieh purebred cows. Red Angus bulls are used on most of the herd. Their offspring, the Red 59

JAMES & JOAN MCKINLAY ONTARIO Angus/Simmental heifer and bull calves, are raised and sold to commercial producers along with purebred Simmental and Red Angus replacement heifers and bulls. In the past we used auction sales to market our genetics but today we prefer to focus on the goals of our established customers and sell direct to them through private treaty on the farm, says Joan. The couple believe strongly in performance testing through Beef Improvement Ontario (BIO). BIO provides data collection and management services to back up performance claims and helps them select and promote animals with better genetics. RETAIN OWNERSHIP Meanwhile, steer and heifer calves that don t meet their criteria for the replacement market are finished at a custom feedlot and marketed directly to a packer. McKinlays are paid based on rail grade and, while Joan notes that they don t get a huge premium for finishing their animals, the cattle do finish consistently so the income is more predictable. Our goal is to get our carcass data back from the packer, she says. We d like to be able to compare the carcass data directly with our genetic base so we can make decisions in our cow herd that help us to reach our potential. At times, McKinlays will also cull young bulls that don t meet performance standards for sires and sell them direct to consumers as beef through the freezer trade. As cattle producers, hay and pasture are the most important crops in their operation. While they used to sell some hay direct to other producers, today most of it is for their own herd s consumption. Rotational grazing and wrapped bale silage allow them to maximize their use of these forages. FORWARD CONTRACT FOR CROPS Cereals are also grown for consumption on the farm but the couple doesn t need all they produce. Therefore, McKinlays also grow specialty products such as pearling barley for the soup market. Meanwhile, their soybean, winter wheat and canola crops are marketed through a forward contract. James pays a lot of attention to market reports, getting good advice, and is hooked up directly with the elevator to gain market insight, notes McKinlay. Forward contracting options help him to lock in a better price for our production. 60

JAMES & JOAN MCKINLAY ONTARIO Joan looks after the books and estimates that depending on the product they can make an additional 20% to 40% through value added activities. In all their products, whether it be livestock or crops, she says, We have more emphasis on marketing and there are many opportunities if you pay attention to the signals. FOCUS ON RELATIONSHIPS AND CUSTOMER SERVICE The couple recognize the importance of building relationships. Therefore, the McKinlays have a strong focus on customer service whether their customer is a commercial cattleman, a retail beef customer, or a grain buyer. Three years ago the McKinlays bought a small apple orchard and are now involved in a crop sharing relationship with a neighbour to produce apples and raise cattle. The biggest advantage to this practice is that it allows them to spread out their labour. We own the cattle and apple orchard, the other producer provides the management and labour, and we share the proceeds, explains Joan. In the cattle business we enjoy the breeding aspects and have strengths in marketing so look after that end. Meanwhile, we don t have any experience with apples so leave the production and marketing of the apple crop up to him. The couple also share equipment with neighbours and hire custom operators to look after notill seeding, spraying and fertilizer applications when necessary. This helps to keep their costs down and Joan notes that they don t invest a lot of money in shiny equipment. We have a strong ethic that everything has to pay its own way, she adds. We don t carry debt and this helps with purchase decisions. As a result the farm is in a strong equity position today. This is extremely important to the farm and to us, says Joan. We re risk takers but we want to be comfortable. A strong equity position has many advantages in that it gives them leeway to pay cash for inputs out of season when prices are lower. They can also market product based on when it is ready rather than when they need to make a payment. We call the shots when we go to market, she explains. The diversity of their operation also affords them more stability while allowing them to balance flexibility both livestock and crops don t usually crash at the same time. They break down the operation into sectors and measure profitability against past years. 61

JAMES & JOAN MCKINLAY ONTARIO Like many other livestock producers, BSE has had an impact on their bottom line. McKinlay notes, however, that thanks to business from repeat customers and their own willingness to provide recipient heifers for embryo transfer services, they were able to maintain sales and markets during this difficult time. BENCHMARKING PERFORMANCE Livestock performance is important to McKinlays so they set goals and measure weaning weight, yearling weight, calving ease and other performance indicators in their purebred operation. They also use real time ultrasound to measure carcass traits on live animals. Meanwhile, the feedlot tracks average daily gain on animals there. Because they are in the seed stock business it is difficult, if not impossible, to compare costs of production with other producers whether they be in the purebred or commercial industry. In the 1990s, the couple belonged to a farm management club that shared averages but had trouble with comparisons because they were in the purebred livestock industry so their numbers didn t correlate with commercial producers. MAXING OUT ON LABOUR One of the biggest management challenges they face is finding good help on a part-time basis. McKinlays hire two summer students and for the last ten years have been able to attract young people interested in the cattle business. Retention strategies for summer students include providing: good meals, fair and respectful treatment, and compensation at above average rates as they compete with tourism, local service industries and construction. Students are also eligible for bonuses. On the farm both James and Joan look after tractor work, fencing, moving cattle along with marketing and advertising. Meanwhile in winter months James looks after feeding while Joan does the books. We are maxing out on labour, notes Joan. We have two people working on the farm and also have a seven year old son. One solution has been to hire childcare help during the summer so Joan can spend more time outside. 62

JAMES & JOAN MCKINLAY ONTARIO NETWORKING IMPORTANT TO SUCCESS Both James and Joan are very involved in a number of local organizations and believe this adds significantly to their business. They both regularly participate in skill building at local, provincial and national levels. For the past 11 years, James has been on the executive of BIO and recently stepped down from the position of president. He and Joan are both involved with the Ontario Soil and Crop Improvement Association at the local level and now Joan is serving as a provincial director as well. This group focuses on field crops, plots, environmental farm plans and works closely with the provincial government on technical issues. Joan also has an agricultural degree and is a former soils and crops specialist with the provincial government. Along with her many farm duties she also works part-time on contract with the Ontario Forage Council and the Ontario Canola Growers Association. Networking allows us to interact and gather information so we are aware of what is going on in our industry, explains Joan. It also provides mental stimulation and personal development and can also be another avenue to promote our cattle. MANAGING TIME With everything this couple has going on, time management is imperative. However, Joan admits this is an area that isn t totally under control. We work hard and this business takes a lot of energy, she says. Good time management is important to get the work done. Both James and Joan had off-farm jobs prior to farming so learned the importance of time management in other roles. Now they naturally apply this skill to their business. We don t let things drag on and this is key to our success, she notes. With discipline we handle more volume of work. That being said, she still recognizes the importance of taking time out to rebuild and recharge. They take overnight holidays with their young son three to four times a year and usually do something that he has an interest in. They also take time to attend industry conferences and consider this a break as well. Time away is good for the business as we get a better perspective, explains Joan. Working harder and faster isn t always good. You need to step back and make good decisions. 63

JAMES & JOAN MCKINLAY ONTARIO RECOGNITION FOR HARD WORK McKinlays are dedicated to making their operation the best that it can be. Each year, for the past 30 years, they have initiated an improvement project related to conservation and resource enhancement. In 2001 the couple was honoured as the winners of The Environmental Stewardship Award (TESA) through the Ontario Cattlemen s Association. It s obvious that the McKinlays are proud of their livestock and their farm. And they have a lot to be proud of. If he is interested, the McKinlays will encourage their son, Robert, to farm as they believe it offers a good quality of life. We get a lot of enjoyment and satisfaction from our business, she concludes. It is what we have always wanted to do. 64

Ian Murray, Topsy Farms Ontario Growth on this unconventional farm is the result of creating a brand for quality, value added activities, and marketing diversity. INTRODUCTION Back in 1971, when Ian Murray, four friends, and their families were seeking a different lifestyle, they had no intention of getting into agriculture. They purchased land on Ontario s Amherst Island and the original plan for their commune was to use lumber from an abandoned barn to build their home. Instead the barn became home to a few heifers and later pigs, chickens, goats and sheep. In 1975 they amicably disbanded the commune. Three of the commune members and a friend made arrangements to buy the farm operation from the other members. But in 1977, when their banker told them they needed to quit losing money on both cattle and sheep, they decided to focus on sheep. Today Topsy Farms is a co-operative family farm with five active farm partners: Murray and his wife, Sally Bowen; Chris Kennedy and his wife, Dianne Marshall; and, Don Tubb. Several of their children are also participants in the farm operation. All who live and work on the farm love and respect the environment they live in. Over the years, the farm has grown its base flock to 1,200 ewes on 1,200 acres and they now market 1,700 to 2,000 lambs annually through a variety of channels. Murray cites three key reasons for their success. First is their persistence and willingness to challenge how they do things. Second, they have an ethic for not blaming themselves or others for mistakes and instead learn from these through open-mindedness. And third, the partners capitalize on useful knowledge when they find it. 65

IAN MURRAY, TOPSY FARMS ONTARIO Given their experience and resources at any particular time, Murray doesn t think they could have done too much differently. We started out as a commune that didn t have access to capital. Therefore, the mistakes we made were small because we couldn t risk losing a lot, nor did we have a lot to lose, he explains. We went along as best we could based on the tripod of intelligence, hard work and stubbornness. MANY MARKETING AVENUES One practice that makes this operation stand out is their marketing diversity and expertise. Their philosophy is to always market top quality product; learn from the customer what he or she is willing to pay for; and, don t depend on a single market or customer. As a result, Topsy Farms adds value to its product line up and then uses several channels to market their products. The partners recognized early the importance of developing a brand. Part of this process was to develop a logo and use it as much as possible. They have signage on their vehicles and label all their wool and sheep products. They also have a 1-800 number and a website to promote their products. Murray notes they always finish their lambs and then sell them a variety of ways. Over the years they have created demand from consumers in Kingston, Ottawa, and Toronto, selling meat products direct to those customers. They usually sell anywhere between 100 and 120 carcasses annually through private trade and they plan to maintain and grow this market. Private meat sales act as insurance against down markets, explains Murray. While it is a lot of work, it s important to maintain relationships with those customers even in the good times so we still have a premium market when commodity prices are down. It s a risk management strategy that aligns with their philosophy not to depend on one market. And another plus is the direct feedback they receive from customers that indicates they are delivering a satisfying dining experience through a good tasting product. Murray is convinced that the closer you can get to your customers and understanding their needs, the better off you ll be. The farm also has a relationship with a local butcher. He moved 80 carcasses last year and his goal is to increase this as time goes on. Murray sees this arrangement as a real opportunity for growth and hopes to eventually use this avenue to supply product to restaurants interested in promoting local lamb on their menus. 66

IAN MURRAY, TOPSY FARMS ONTARIO In the past the farm did sell some lambs to a processor through a forward contract program. Topsy supplied lambs as needed and was paid based on rail grade. Not only did this method add value to the carcass but also another benefit was the information that came back in the grading sheet. They could actually see how their animals performed. The farm partners are disappointed this program has been discontinued as they saw many mutual benefits. The partners also market live lambs through the Ontario Stockyards. We only send finished lambs to the market and try to put out a consistent quality product the best the lamb can be, notes Murray. A practice they started many years ago was to group and grade animals by measuring loin development as well as back fat (based on feel). They mark lambs using a three red dot system whereby finished lambs of top quality get marked with one, two or three paint dots depending on weight. This helps the auction market sort animals into uniform groups before they enter the ring. Buyers have come to recognize the system. As a result, Topsy gets another 10 to 15 cents per pound (equivalent to 8% to 12% more) based on their reputation. Their animals usually sell in the top 10%. One frustration with selling live through the ring is that the partners don t get honest feedback from packers. He points out, We d like to know what could we have done to encourage them to pay more for our lambs but they don t seem to understand the mutual advantage of sharing that information. VALUE ADDED PRODUCTS Meanwhile, sheepskin and wool products provide another revenue stream for the operation. These products now represent 10% of the farm s revenue and are poised to grow more. Skins and wool products, such as blankets, wraps and wool, are sold direct through the farm s retail outlet, at appropriate trade shows, and through Topsy Farm s ebay store on their website. Murray also works directly with two woolen mills to turn the raw wool into Topsy Farms branded wool products and blankets. MacAusland s Woolen Mills in PEI receives the majority of their wool although Custom Woolen Mills in Carstairs, AB, has received shipments as well. The wool and blankets are sold on the farm and via the Internet. 67

IAN MURRAY, TOPSY FARMS ONTARIO If we sell raw wool to the Canadian Co-operative Wool Growers Limited we don t cover the cost of shearing. By going direct to the woolen mill, through ebay and our on-farm retail outlet we ve taken wool from a loss to making money on it, he explains. It could become fairly profitable but it will take another five years to know how we re really doing. Another company, Atlas Tanning looks after processing the sheepskins and leather products. Murray notes he is continually looking at new product ideas by working together with both woolen mills and the tannery. They are also considering participating in farmers markets as another avenue to get exposure and sell their products. Murray considers their marketing diversity as extremely important to their success. We are trying to de-commodify our products through various value added activities, he explains. And, this move has made a big difference to their bottom line especially in the last five years. Murray notes that dealing directly with consumers also makes the job more interesting. WATCH EXPENSES While Topsy Farms does not use any formal measurements to measure growth on the farm, Murray does keep an eye on bottom line profitability and ways to generate additional net per ewe. He notes that they have a very low fixed-to-variable expense ratio because their capital investment per productive unit is low. They also rent as much land as possible rather than owning it. The numbers that really matter are those you use in the expense column, he says. Our business is incorporated so we look at the business numbers and for growth there. At the end of every season the books tell you whether you should keep going or not. At times it looks as though we should have quit, but we are persistent. Murray s daughter-in-law, Sue, is currently in the process of switching their books over to AgExpert accounting software. When this is complete they will be looking for ways to use the program to better understand their operation from a financial perspective. MANAGING RISK Topsy Farms has grown a lot the last couple of years. The farm has managed to maintain revenue, even during difficult conditions related to BSE in 2003 and drought in 2005. Murray points out that it is important to take advantage of programs such as the Canadian Agriculture Income Stabilization program (CAIS) as a risk management tool. 68

IAN MURRAY, TOPSY FARMS ONTARIO Government dollars through CAIS and BSE payouts kept us going during this difficult time, he says. We re grateful for the support that we received as it has left us in a better position to carry on in the future. To deal with the risk of drought they now strive to stockpile hay for two years. Another risk they must manage is predation by coyotes. They currently have 12 guard dogs to protect their flock and this represents a significant cost. One rule of thumb is you need one good mature working dog for every 100 ewes so Murray recognizes the farm is short right now. Another challenge to growth is what Murray calls urban encroachment. As the partners live in an area that is attracting more tourists and new neighbours from an urban background, not only does the price of land continue to climb but also they must be very conscious of activities that may be criticized. For example, they won t drive down the road with a dead lamb in sight. Instead they either cover it up or take a longer route through a pasture to dispose of it. Government regulation is another challenge that continues to evolve. To stay on top of issues, Kennedy spends a lot of time on committees related to clean water, nutrient management and environmental concerns. Murray notes that their environmental activities are also important to the farm and they have an environmental farm plan in place. They encourage trees to grow along the fence lines and as these grow they will fence both sides of the tree row to keep the sheep out and to serve as wildlife corridors. Our footprint on the land is very light, he explains. We don t work the land so erosion is not an issue. And, when we use herbicides we prefer to spot spray only in areas that need it most. LOCAL AND PROVINCIAL INTERACTION The partners recognize that the local public is both customer and neighbour so the local perception and interaction is important to the farm s success. Murray is editor of the monthly Island newsletter and recently helped launch a community radio station for the Island. Meanwhile, Kennedy is the local representative and past vice-chair of the Ontario Sheep Marketing Agency. He is often a guest speaker at various industry meetings and seminars. 69

IAN MURRAY, TOPSY FARMS ONTARIO Kennedy s involvement at the provincial level is extremely important as it keeps the partners up to date on federal and provincial regulations that are likely to affect them. It also provides an avenue to get information on markets and new technology. Chris usually knows what is going on from both a political and practical perspective and we try to capitalize on this knowledge, explains Murray. Networking also helps identify problems that we share with others so we can find solutions. DEFINING RESPONSIBILITY The roles the partners play in the operation have evolved through natural selection and longevity. All have a post-secondary education. Murray describes their management style as teamers where decisions are made by consensus. They have a farm meeting every morning for planning ahead and to determine the best use of labor for that day. We intrinsically address time management but also recognize the need to be flexible, notes Murray. Kennedy carries the most weight in terms of every day management, mechanical duties, breeding stock, and marketing contracts. Murray looks after chores, firewood, finances, fencing, odd jobs, wool & skin marketing and private lamb marketing. Sally plays a large role in contacting private lamb trade customers and retailing of wool products. Dianne is more hands on and manages one of the lambing barns and also takes on the big job of hosting and feeding the shearing crew when they come to the farm. Meanwhile, Tubb is responsible for feeding, caring for the dogs and building facilities. Ian and Sally s children, Leah, Kyle, Jacob, and Jacob s wife Sue, also help out at various times especially during lambing. BRIGHT FUTURE AHEAD While Murray doesn t consider their operation a role model and is aware of their shortcomings, it is a system that works for them. Over the years they ve done a good job in a difficult business. He notes that the sheep industry, in particular, is in a good position for growth as our country currently imports lamb meat. He points out, When you can grow product in your own Canadian dollars, market locally and cut down transportation costs, you re in a good position to thrive or at least survive. 70

IAN MURRAY, TOPSY FARMS ONTARIO Murray believes strongly that there is a future for young people in agriculture, particularly for those who grew up on a farm. It s an excellent business to get into and should do well in the long-term, he says. Our generation has done the heavy lifting and now the opportunities are there. 71

Eddy Dykerman Prince Edward Island Success in this farm business is the result of supplying untapped markets, looking at new opportunities and treating employees fairly. INTRODUCTION Eddy Dykerman and his brother Gerald knew from a young age that they wanted to farm. Both had worked on Prince Edward Island (PEI) potato farms but realized quickly the high cost of entry in terms of both land and equipment. So, 28 years ago they decided to go a different route. In partnership with their father Bert, they became one of PEI s first vegetable growers. Dad always wanted to do something different and we realized it would take a lot of capital to get into potatoes, hogs or other commodities, says Dykerman. Vegetables would allow us to grow our farm from small to large with little investment in equipment because a lot of the work required hand labour. We saw the opportunity and went for it. In 1978, the family purchased an existing business on 40 acres and started growing vegetables. Today, Brookfield Gardens employs up to 25 workers during the busy season and produces 15 different types of vegetables on its 300-acre base near Brookfield, PEI. While their farm is in a strong equity position today, back in those days it wasn t easy to convince bankers to invest in their operation. It would have been easier and more efficient if we d had a stronger relationship with banking institutions in the early days, says Dykerman. Because we were growing vegetables rather than potatoes we were different. Lenders didn t understand our business so it was difficult to get financing to get ahead. But get ahead they did through hard work, determination to succeed, and good staff. When asked why they ve been successful Dykerman says, First, we have always looked at the long 73

EDDY DYKERMAN PRINCE EDWARD ISLAND not short-term and are strong believers in five-year averages. We don t make decisions based on a short-term view of our financials. Second, we don t give up. Third, we don t judge new ideas or technology too quickly. And, fourth much of the credit goes to our people. HUMAN RESOURCE LEADERSHIP Eddy and Gerald have since bought their father out and are now equal partners in the operation. They make decisions together and will also include their two crew chiefs in the process. The farm employs eight full-time non-management staff along with 17 seasonal staff from spring planting through harvest. Gerald is primarily responsible for land acquisition along with sales and marketing. He looks ahead to determine how much they should grow of each vegetable as well as demand for new crops. Gerald s wife, Joanne, looks after administration, payroll and the books. Meanwhile, Eddy is in charge of the production end of the business. This includes staffing and coordinating human resources to get seeding, spraying, cultivation, harvest and market preparation done in a timely and efficient manner. With labour costs running around 40%, retention and treating people in a fair and respectful manner is important to their success. But, finding efficient labour is one of the biggest management challenges the brothers face as they compete with tourism, construction and transportation industries for workers. When the PEI economy is strong, it s tough to find good help. Dykermans use all local labour with many employees coming from the city. With this in mind they try to run operational hours similar to other jobs their employees might work in the city. Another retention strategy is to pay an end-of-season bonus. To retain labour, it s important to keep the work as steady as possible so this means time and logistics management is critical to our operation, says Dykerman. We don t expect our employees to work 80 hours a week. We believe in a 40-hour work week and sticking to set schedules so work doesn t impact their personal lives. I think that s fair. The brothers consciously grow some crops to lengthen the work season because the longer the season, the easier it is to recruit. During the crop planning phase, the Dykermans take a hard look at where the various crops fit within the harvest, the jobs that need to be done, and then fill in the calendar in advance. 74

EDDY DYKERMAN PRINCE EDWARD ISLAND Because of the large diversity of vegetables, harvest starts as early as July and ends in October. Most employees put in 40 hours a week during the summer but know in advance that they will be needed six days a week during the fall harvest until the storage is filled. We try to match the job to the crew and equipment to keep them busy. We can always find extra hours if they want, but don t rely on that, he says. The brothers also use custom harvesters for some of their carrot acreage. Dykerman notes it s especially important to keep their crew chiefs on the payroll through slower times such as the winter months. They want to work full time and we need them in the summer. Therefore, even if they are trained to do tractor work and end up packing carrots, we still pay them at a higher rate. He adds, It s important for them to make a living too. SERVE NEW MARKETS Over time, the Dykermans have expanded their land base along with the crops they grow. Not only did they need to learn how to grow new vegetable products, they also had to grow new markets for them. While others have followed their path, many of the 10 to 15 vegetable growers on the Island have since exited the industry. Therefore, some of their market growth is due to others dropping out. Today, they are one of the few vegetable growers left on the Island. Our expansion is based on what we can market, says Dykerman. We never plant produce that we don t have a home for. Crop diversity is also important from a risk management perspective. High prices in one vegetable balances low prices in another. Not only does it spread out market risk but it also spreads out weather, insect, and disease risks. For example, in a dry year carrots grow deep, long and straight whereas cauliflower doesn t do as well and needs tremendous irrigation. MARKETING ON AND OFF THE ISLAND Dykermans started by delivering produce direct to retail stores on the Island, a service they still practice. He points out that this is rare today as most chain stores insist on using a distribution centre. Therefore, he anticipates some major changes in the future where they will no longer be able to go direct. As well he expects their range of vegetables to drop from 15 types down to two or three. 75

EDDY DYKERMAN PRINCE EDWARD ISLAND He estimates that by doing all the packaging, owning distribution trucks and going direct to retail stores they are enhancing the value of their product offering by 30% or more. They call the local stores daily and take orders for vegetables they have available. Because they are going direct it is important to keep an eye on the marketplace and know where it is at all times. The prices the Dykermans receive are higher because they cut out the distributor. Even so the biggest challenge they face is receiving a fair return for their products. At the present time they are not doing any value added processing on the farm but are considering it for the future. The brothers also contract a portion of their carrot crop with a local frozen food processing company. This provides another guaranteed market for their product. For production that is exported off the Island, the Dykermans go through the PEI Vegetable Growers Co-op. Carrots are stored, packaged and then shipped to markets that the Co-op manager has found. Our philosophy is that growing vegetables and marketing them outside our local area are two different skill sets, he explains. We rely on the manager as he has contacts across North America, access to daily market reports, and an accurate picture of the marketplace. Through him we receive competitive prices, and then he sets up the deal. SHARING INFORMATION The Co-op manager is also another valued source of information. They rely on him to bounce around ideas and get business advice on what to grow. The Dykermans also belong to a horticulture association where all members share information. The association also trials new varieties so is a good source of performance data under PEI conditions. Along with serving as a director on the Vegetable Growers Co-op and the horticulture association, Eddy spends a lot of volunteer time on agricultural policy issues. He s currently the President of the PEI Federation of Agriculture. He considers this work very important to the success of their farm business. It s important to keep up with new production practices with an eye on ways to do things more efficiently, he notes. It also keeps us up to date on future trends and issues that may have an impact on our operation in the longer term. 76

EDDY DYKERMAN PRINCE EDWARD ISLAND While Brookfield Gardens doesn t currently have a board of directors, they may look at having one in the future. This will provide another avenue for business advice. The farm is a partnership now but the brothers are considering incorporation for succession planning and tax advantages. Now that Brookfield Gardens is in a healthy equity position, the Dykermans use this to their advantage. They always negotiate better interest rates, can now pre-purchase inputs at better prices, and they can also buy larger volumes of supplies (i.e. packaging cartons) at a lower cost. Dykerman adds, A strong equity position allows us to continue operating during low points in the agricultural cycle and hang in through those. FAMILY TIME So with all this hard work and the people management that goes with it, the Dykermans still recognize the importance of taking time out to relax. Family time is important to both brothers so when they had kids they started taking turns taking weekends off. They also share a camper. This was a conscious decision to get off the farm because if you stay on the farm there is a tendency to go farming. In winter months Eddy likes to go snowmobiling while Gerald likes to curl. While they don t take holidays on a regular basis, Dykerman notes they do take trips to explore other farm operations in Ontario and Quebec but always with an eye on new technology. They also enjoy going to farm equipment shows both in Canada and Europe. This is a business that I enjoy and over the years it has provided well for our families, he says. I d encourage our children to farm as I believe it offers an ability to earn a high standard of living and a good quality of life. Not only is Brookfield Gardens providing a good living for the Dykerman families, but also for those who are fortunate to be part of their team. As agriculture is such an important component of the PEI economy, Brookfield Gardens is certainly doing its part to create jobs and add value in this industry. 77

Roger and Lorrie Pelissero Ontario Vertical integration, a keen eye on future consumer trends, strong business relationships, and belonging to an agricultural leadership network all contribute to the success of this family farm operation. INTRODUCTION Roger and Lorrie Pelissero recognize the importance of looking ahead to meet consumer s demands of the future. In 1984, the couple bought Pelissero Eggs from Roger s father and they haven t looked back. Today, with the help of their four children, this farm business has 11,000 layers that produce 285,000 dozen brown omega-3 eggs annually. One practice they have incorporated is vertical integration. Along with their layers the family also raises 96,000 replacement hens per year. They raise their own pullets to ensure the quality of the birds when they reach their layer barn while some are sold to other egg producers. They also have a contract to grow the research flock for Shur-Gain, a division of Maple Leaf Foods. Roger Pelissero attributes their success to three factors: innovation, following food health trends, and a focus on best production practices for their layers. First, they ve always tried to be innovative and stay one step ahead of the market by being product specific. The result is a focus on producing omega-3 eggs. We have an excellent relationship with our egg grader and work together to really examine the specifics of market demand, he says. We re always looking to where the market will be tomorrow, instead of today. Second, they closely follow the food and health issues, such as the Atkins diet. Diet trends can create quite a demand for specific products, such as omega-3 eggs. 79

ROGER AND LORRIE PELISSERO ONTARIO And third, Pelisseros are always searching for ways to improve the environment for their birds. For example, during winter months their facilities are kept at above normal temperatures so the birds don t have to waste energy trying to stay warm. The birds then have a complete focus on laying eggs. Over the years the Pelisseros have not hesitated to try something new. However, looking back to what they could have done differently, the couple would have increased their physical size in the early 1980s when the price of quota was $20 per bird. Today, quota is worth $170. PREMIUMS GROW REVENUE During the past three years the business has managed to grow its top line revenue by up to 10%. The main drivers behind this are health issues and the increased demand for omega-3 eggs. Pelissero also credits the Ontario Egg Board for its advertising and promotion campaigns that support the health benefits of eggs. As a result of producing omega-3 eggs, the family receives $1.50 per bird over average returns. This works out to a 10% premium. Pelissero credits the knowledge and strong relationships with both their egg grader and nutritionist for this premium. KNOWS PRODUCTION COSTS Meanwhile, the biggest challenges to growth have been overcoming debt along with understanding their financial numbers and how to manage them. In other words what it costs to grow. Pelissero recognizes the importance of knowing his costs of production noting that 80% of his costs are fixed. He regularly benchmarks return per bird, feed conversion and costs, egg numbers, body weight, mortality along with environment conditions. He also notes the layer community is fairly open when it comes to sharing business information. Therefore, he compares his numbers with fellow producers and looks at ways they are reducing costs. Today the farm is in a strong equity position and Pelissero uses this to their advantage. It has allowed for expansion and they get better interest rates from both lenders and suppliers. CONTINUES TO LEARN In the fall of 2005 Roger enrolled in the University of Guelph s Advanced Leadership program and has found it to be an extremely worthwhile program. The 30-member group consists of 80

ROGER AND LORRIE PELISSERO ONTARIO people from various agricultural sectors and regions in Ontario. They meet every couple of months in different locations for a 4-day seminar. Seminars focus on a number of challenges facing agriculture from coast to coast as well as international and North American study tours. Not only has this greatly increased my network of agricultural business leaders but the insight into other operations provides me with new ideas and a different angle to analyze our own operation, says Pelissero. When it comes to getting other outside advice, Pelissero relies on a number of people besides their egg grader and nutritionist. These include: lawyers, accountants, lenders, production consultants and veterinarians, along with scientists with companies that they do business with. TEAMWORK MAKES IT WORK At home it is very much a team effort between Roger, Lorrie and their family. Everyone knows what needs to be completed on a daily, weekly and monthly basis. The family has a work ethic of starting early in the morning and accomplishing as much as they can. When a challenge arises, they deal with it as a team and then move on. They are very optimistic about their business and the success they can achieve together. We all have complete confidence in each other and I feel this allows for a very productive team environment, he adds. And, the more input, the better. TIME OUT While they have a seven-day-a-week operation, Pelissero notes that if you are always focused on your business you can t enjoy life to its fullest. He believes that relaxing refreshes the mind and the body. Therefore, he takes time to enjoy his family, golf and play sports on the weekends. He and Lorrie also take one major holiday a year. They have no problem leaving their children to manage the business during this time. Vacation time is very good for our business as it motivates one s mind and is very refreshing, he explains. We find owning and operating our farm business a very rewarding way of life, he concludes. That s one reason he encourages his family to be involved and perhaps one day they will be interested in taking over the business. 81

Lépold Bourgeois New Brunswick To be successful in today s agricultural economy, this farm partnership incorporates best practices of direct marketing, value added production and diversification. INTRODUCTION Lépold Bourgeois along with his brother Euclide Bourgeois and two partners, Jean-Paul Bourque and Ronald Goguen, own and operate La Fleur du Pommier, an apple farm near the Village of Cocagne in southeastern New Brunswick. Founded in 1978 by four partners who grew up together, Bourgeois credits both their structure and open-mindedness as key reasons for their success. With four farm partners we re not exhausting ourselves and we get help and ideas from one another, he explains. As well, we re all willing to try new things. While we re not always as successful as we would like to be, this does lead us to better management practices. Over the years the farm has grown through both increased production and acreage of apples. But land acquisition both purchasing and leasing hasn t been easy. The farm is located close to Moncton where city expansion continues to drive up land values. We have a hard time with our rotations because of a shortage of land and it s becoming less available, says Bourgeois. Proximity to the city, however, has also benefited Bourgeois and his partners as it provides a local market for their fresh produce. Since 1980, they have been direct marketing produce and value-added products to area consumers through local farmers markets. GAINING ADDITIONAL VALUE IN THE WHOLESALE MARKET While apples remain the largest crop, Bourgeois notes the apple commodity market has been low for last two years due to globalization and competition. Currently 80% of their apple 83

LÉPOLD BOURGEOIS NEW BRUNSWICK production is marketed through wholesalers who then distribute to stores. This doesn t always bring the best prices. Even so they ve also found a way to get more value out of the wholesale market. Their farm has teamed up with four other apple farms to form the Verger Belliveau Pool. Production is marketed together through a distributor (also a farm in the marketing partnership) and then sold to two major grocery chains. Meanwhile, investment in refrigerated and controlled atmosphere storage has been critical to adding value on the farm. The storage permits them to market apples year round so they can wait and deal with buyers during other market periods to get better prices. Bourgeois notes that while the storage is costly, it is important to survival. DIRECT MARKETING, VALUE ADDED AND DIVERSIFICATION INCREASES PROFITS The remaining 20% of apples are sold direct through farmers markets, their own local farm stand or U-Pick. The farm also adds value to its apple crop through processing and sale of fresh apple juice, cider, cider vinegar, pies, jellies and jams. While the farm s top line revenue has gone down the last three years, its profits are about the same because of increased direct sales and value added processing. In the meantime, it s starting to look better on the wholesale market side as they are developing a value chain with Co-op Atlantic and Sobey s, but this will take some time. Diversification is also playing a larger role in this farm operation. While they started in apples, the partners now produce other crops such as strawberries, raspberries, and pears, along with some value added processing into jellies and jams. They ve also added mixed vegetables including sweet corn, broccoli, cauliflower, zucchini, squash, and lettuce mixes. The vegetables are all picked, washed and bunched, and sold direct at the farm or farmers market. Our farm is known for quality and freshness and therefore we ve always been in the top third of the market but in the past we sold less at these higher prices, notes Bourgeois. Now we ve created a brand we re focusing more of our sales on high-end produce where there is more value. This is a conscious shift from commodity-based to direct marketing. Over the last 10 years, diversification of crops has been important to the income statement. Sometimes prices for various crops are up while others are down producing and marketing 84

LÉPOLD BOURGEOIS NEW BRUNSWICK many different crops helps to even out the highs and lows. Also direct marketing has resulted in higher profits as the farm gains at least 50% additional value over commodities. WATCH COSTS AND CASH FLOW The partners also play close attention to their costs of production. They use benchmarks from government sources in Quebec and Nova Scotia along with a model from Cornell University to compare their apple production costs. It s always good to find out what others are doing cheaper and see if you can adapt this to your operation, he notes. Managing cash flow is another priority. Bourgeois recognizes that they take advantage of as many government programs as possible so they don t have to rely as heavily on the bank. They ve used programs such as NISA, CAIS and advances that are interest-free until the crop is sold to help manage cash flow. BRAND BUILDING The farm is also becoming more proactive in group promotion and developing a brand through its involvement in the newly-formed Really Local Ag Co-op. Bourgeois played a leadership role in its development and continues to sit on the board. He notes in the past the members were competing and cutting each other s throats. Now they are working together and revenues are up 200% to 300%. We re trying to distinguish ourselves by developing an eco-label representing quality produce that is grown using environmentally-friendly practices, he explains. Creating a brand has helped a lot to increase direct sales. The Really Local Ag Co-op is also an avenue to discuss production practices, yields, prices and marketing techniques. The members often host conferences and bring in speakers to learn more about their business. Meanwhile, the farm partners also attend a lot of agricultural conferences and meetings. These help our farm too as we get ideas from others while learning what s new and on the leading edge, he adds. Bourgeois himself participates in a business round table. This is an informal group of people from the business community who are not involved in agriculture. They meet once a month to discuss opportunities, management strategies, employee issues, and bounce around project ideas for feedback. 85

LÉPOLD BOURGEOIS NEW BRUNSWICK WORK AS PARTNERS Through their partnership structure, co-op and pool involvement it s apparent these producers enjoy and find benefits in working collaboratively with others. And working together is something they do well. As partners they describe their management style as teamers. This is a very inclusive style where the partners seek complete consensus when making a decision. While all four partners look after direct marketing at the farm stand and farmers markets, they do have roles that have evolved naturally through their areas of interest. Euclide Bourgeois is responsible for the finances, along with wholesale marketing and determining the best crops to plant. Lépold looks after production of the apples and small fruits, while Jean-Paul Bourque is responsible for the vegetables. Ronald Goguen helps out where he s needed. We have good relations as partners and with our employees, says Bourgeois. If we have issues we take the discussion to a business level in a meeting room where it belongs, not in front of others. KEEPING GOOD HELP IS ABOUT COMMUNICATION Not unlike many other farm operations, Bourgeois says that finding people with agricultural/horticultural knowledge and equipment experience can be difficult. He notes harvest labour is easier to find and manage with many of those who started with them in 1978 still working on the farm. Along with the four partners, the farm requires one full-time person, 12 part-time people and 30 seasonal staff. As an incentive, the farm offers gain sharing to reward employees. Because employees are paid by the hour, time and logistics management are important. We need them to be efficient so we need to be organized on our end, says Bourgeois. Staff numbers change throughout the season so they plan their crops and time planting for continuous production to spread out the workload. They hold weekly planning meetings and then during the busy season they meet at the end of each day to determine activities and resources for the next day. We look at machinery, people and the work that needs to be done so it can be done easily and on time, he adds. In addition to regularly scheduled hours, all partners and employees get one week vacation during summer, their busiest time. It s important for everyone to get a break, explains 86

LÉPOLD BOURGEOIS NEW BRUNSWICK Bourgeois. We ve noticed we have a lot more energy when we come back, whereas before we did this we would all be drained at the end of summer. In winter months they also operate a snow removal service. This provides additional income while putting both equipment and people to work. It s apparent that by implementing many best practices of leading farmers, these farm partners are not only adding value to their agricultural enterprise but also to the community in which they operate. So in hindsight, what would Bourgeois do differently today? We should have replanted and changed varieties in the apple orchard sooner to be in alignment with consumer preferences it would have meant more money. 87

Paul & Robin Brown Ontario A passion for agriculture and hard work ethic led this young couple to success in their feedlot operation. INTRODUCTION Paul and Robin Brown love being involved in agriculture. Paul and Robin both studied agriculture at the University of Guelph. After graduation in 1992, they began farming in partnership with Paul s father near Woodville, ON. Today the 700-acre farm grows feed for their 100-head cowherd and their 700-head feedlot. Paul Brown recognizes that entering into a multi-generational farm has its advantages and this has played a role in their success. But, just because they didn t start out from scratch that doesn t mean they shy away from hard work. They prefer to do most of the work themselves along with the support of one full-time employee. POSITIVE ATTITUDE The Browns are good at what they do and they attribute this to their drive to be the best they can be. We truly do enjoy what we do so it s easy to devote time to work you like, he explains. While this increases our time commitment, it also cuts down on costs. While they still have many years ahead, Brown wishes they had invested in more land at a younger age. I think we could have expanded more rapidly in the early years but at the time we lacked the confidence and expertise, even though in hindsight we had the tools. Over the years the couple has been increasing their cattle inventory, building new barns and acquiring land from adjacent farms as neighbours retire. Land prices, however, continue to hike up as agriculture competes with the urban acreage market. Purchasing land is currently not a 89

PAUL & ROBIN BROWN ONTARIO high priority as we work to improve our equity position so we can take advantage of future opportunities, he notes. Brown points out that while land prices can be a barrier to growth so too can government regulations. The nutrient management act and the more recently introduced source water protection act have created uncertainty in agriculture as farmers struggle to meet the legislated requirements. One area he does feel strongly about and support is animal welfare. The Ontario Farm Animal Council recently recognized the Browns for their volunteer contributions to animal welfare issues. Like many others in the beef industry their top line revenue hasn t grown much the last three years, as the couple has had to cope with BSE and the resulting decreased value of animals. Even so they remain optimistic that this will continue to turn around. We have a financially solid farm and were able to weather the BSE crisis, Brown notes. ON-FARM FEEDLOT ADDS VALUE The Browns raise and finish their own animals and they use a professional to buy calves for their feedlot. I rely on a cattle buyer because otherwise I would pay too much and never be home, he explains. All animals are finished when they leave the farm. Cattle are marketed year round and sold live through the auction. While they don t consistently top the market, they usually do well when compared to the weekly market reports. Brown figures that by finishing their own calves they are easily adding $600 in value to the animal but one must remember the cost to get it to a finished weight. They do have to purchase some feed grains so use marketing contracts to do this. This allows the Browns to buy grain at optimal prices. Production targets are important both in the field and in the feedlot. Brown targets corn production at 130 bu/ac, cereals at 90 bu/ac and hay to produce twelve 800-lb bales per acre. Meanwhile, calves weigh 550 pounds at weaning and are then fed for an average daily gain of three pounds a day. 90

PAUL & ROBIN BROWN ONTARIO OUTSIDE ADVISORS When it comes to other business decisions, the couple relies on the professional services of accountants, lenders, lawyers, certified crop consultants, production consultants, veterinarians, investment planners, and government extension services. Brown figures he has two management styles depending on the area of expertise. On the livestock side of the business, he is a fact finder where he collects information he needs to make a decision and then makes it alone. On the crop side of the business, however, he is more of an investigator where he seeks advice and opinions but in the end still makes the decision himself. Labour is a constant challenge as it is difficult to find qualified help at a price they can afford. The Browns find themselves competing with local agricultural retail outlets for people resources. One thing they do try to offer employees is an interesting work environment with the opportunity to learn many different skills. Because the couple do a lot of work with little labour, time and logistics management is important. As their children get older, Robin is taking on more responsibilities including the bookkeeping. It s important for us to manage our time will so we get all the jobs done, explains Brown. While Brown isn t currently sitting on any boards, he has served on various cattle associations in the past. He regularly attends annual meetings, industry meetings and networks with fellow university colleagues. This is important to his personal fulfillment and growth although he does pick up practical industry tidbits from others that get put to use on the farm. When it comes to relaxing the family does take small holidays enjoying winter activities with their kids and camping in the summer. We re lucky in that we can take time off when we want, he says. However, we enjoy our work so aren t away any more than ten days a year. Brown believes that their farm business offers the ability to have a good quality of life along with a high standard of living. When asked if he would encourage his children to farm, the answer is a resounding yes! 91

Paul & Eva Cook Nova Scotia This family farm continues to grow in step with demand for their product. Farming has always been part of Paul and Eva Cook s family for many generations. Their main motivators for owning and managing a farm business are to be self-employed and have some control over their family s future. Today, their farm, Powerline Poultry Ltd., near Bridgewater, Nova Scotia, has grown to become a consistent top producer in the province. Paul Cook cites two key reasons for their success. First, they strive to be as efficient as possible and pay close attention to finances and production. And second, they produce broiler chickens that are raised in a supply management system that provides them with a good return on their investment. During the past three years their top line revenue has grown as much as 20%. A lot of this has come through natural growth in consumer demand for chicken so this demand is met through increased quota. Cook notes during this time feed prices have steadily increased but fortunately the price of live chicken is tied closely to expenses and has gone up as well. Managing costs is important as our feed inputs are 50% to 55% of our expenses, he notes. Therefore, we must manage to get the most growth out of our chickens. Paul and Eva have been in the business for 20 years. The first 16 years were in a partnership with his father. Four years ago the couple incorporated and purchased the partnership facilitating the retirement of Paul s father. Had the incorporation happened sooner, Paul notes they could have done a better job at succession planning as well as expanded more quickly and been more aggressive at buying quota in the early years. 93

PAUL & EVA COOK NOVA SCOTIA WORKING IN A SUPPLY MANAGED SECTOR While their growth has come as a result of buying small amounts quota as the industry grew, the biggest challenge to growth has been the high cost of quota from producers exiting the industry. Cook points out, There is a lot of competition for quota and it is out of reach of average producers wanting to expand because of the finances necessary to purchase. Even so the quota system does have advantages. Cook knows exactly how much he ll be producing and when it will ship to the processor. He signs a production contract with a processor every eight weeks whereby he commits to ship live chickens to meet the kilogram quota. For example, the contract may be for 70,000 kilograms or 35,000 chickens weighing two kilograms each. With only two processors in the province, Cook doesn t have a lot of options for where the birds go or how much he will get. He does, however, enhance the value of the birds when he follows a specific feeding program. Under the NutraPrime feeding program, he buys chicks and feed from Maple Leaf and then sells them back to the processor. This results in a higher return than producers feeding on a regular program. While the quota system does have its advantages, Cook recognizes that he is not an equal partner in this arrangement. Being in a supply managed industry regulates you to a set price with limited opportunity to profit from increased performance or quality, he explains. COMPARING PRODUCTION AND NETWORKING As far as comparing his business to others, Cook notes that financial benchmarks are not available and would be too variable between farm operations. However, he does pay attention to production benchmarks that are available through the marketing board. He also meets regularly with eight other local poultry producers in Nova Scotia. This looselyknit group, including the Cooks, represent 10-12% of the provincial quota. Meetings are held on the farms once a month or every two months in the summer. Here they compare feed conversions, other production measures as well as discuss issues relevant to the industry. In the past Cook has served as chairman of the provincial marketing board and as a director on the national board. He thinks this involvement is beneficial in terms of information he picks up but doesn t consider being involved critical to their business. It keeps you up to date on issues affecting your industry while networking with other producers who share the same challenges you face daily, he adds. 94

PAUL & EVA COOK NOVA SCOTIA One political area of particular concern to Cook is international trade issues. The biggest risk to our business is the world trade organization (WTO) negotiations. These threaten the ability of Canada to apply over quota tariffs on chicken coming from foreign sources. As tariffs come down, this will put pressure on supply managed commodities, he explains. If poultry and dairy producers are shut down, we will stop buying grain and machinery and this will impact the entire agricultural industry across the country. Meanwhile, urban encroachment is another shorter-term challenge facing the Cooks. Their farm is now on the outskirts of town with the barn only 400 metres from a new Wal-Mart. This has Cook questioning whether they should be managing to shut down in the next ten years or manage for future growth. For now, they plan to continue to manage for growth. HAY BUSINESS COMPLEMENTS POULTRY OPERATION For the past 25 years, the Cooks have also been marketing good quality timothy/meadow fescue hay for the horse market. Each year they put up 10,000 square bales and market it to repeat customers and through word of mouth. While hay only represents a small portion of their revenue, it plays an important role in their poultry business. The hay business gives me a place to put poultry manure. Chicken manure is high in nitrogen and without chickens we wouldn t be in hay because it s too expensive to use commercial fertilizers, he explains. The two work well together and provide us with an advantage. Hay is sold direct to buyers either right off the field or from their storage facilities. While they own their buildings and storage, they do lease extra hay land to ensure supply to meet their customers needs. RELAXATION AT HOME AND ABROAD Between the poultry and hay businesses, the family is extremely busy and can t get away during summer months. So, a few years ago they decided it was important to bring relaxing fun time to the farm. Rather than buy a cottage or go camping, they put a pool in the back yard. This allows us to stay home and is something we can all enjoy daily, says Cook. Cook recognizes the importance of taking time out to relax. Four years ago they started taking a one-week vacation down south. Although a week isn t enough, it freshens you up, he says. It does put extra work on us to empty the barns and then extra work when we get back to restock, but it s worth it. 95

PAUL & EVA COOK NOVA SCOTIA WORK ON THE FARM While the Cooks often work alone, at times they do have seasonal help. Time management is different when they have hired help as it s important to be organized to keep employees busy. When they don t have extra staff they tend to prioritize differently and let go of volunteer activities. Paul makes the bulk of daily decisions although Eva is also involved in the operation on a fulltime basis. They make big decisions together and Paul s father, now retired, remains a source of information and advice. They also rely on equipment dealers, lawyers, accountants and production consultants, veterinarians and lenders for advice. STRONG FINANCIAL POSITION While they financed growth on the farm primarily through debt the couple has worked hard to reduce this over time. Today the farm is in a strong equity position and Cook uses this to their advantage. When dealing with lenders, I m driving the car, he says. They are providing me a service and if they can t deliver what I need, I will switch. I don t hesitate to tell them what I want. This also leaves their children in a good position for the future. This couple continues to build and grow their operation because they believe there s a future in it for their kids. The farm lifestyle is an important part of their upbringing and they would encourage them to take over the business if they want it. 96

Webster Farms Limited Nova Scotia Farming is a competitive business, this incorporated family farm owned and operated by three brothers uses decision by majority, operational excellence and diversification for success in the local and international marketplace. INTRODUCTION Greg Webster and his two brothers, Chris and Brian, own and operate Webster Farms Limited in Cambridge, located between Kentville and Berwick in Nova Scotia s Annapolis Valley. The farm is roughly 5% cereal production, 30% vegetables, 45% berries and 20% dry bean production on approximately 400 acres of land. Webster Farms is a third generation farm that operated as a sole proprietorship prior to 1981, and has been in business for 24 years as an incorporated family farm, with the brothers managing the operation for the past 15. The current high Canadian dollar has cut directly into what used to be a premium profit US market for the Websters, like many other Canadian export businesses. Their marketing savvy, ability to predict and manage risk as well as their attention to production and business details has turned their hard work into continued good business. ATTENTION TO DETAIL PAYS For some farm operators the farm work is the enjoyable part of their business and the details like bookkeeping and business management are enticing to avoid. On Webster Farms division of labour or responsibility has evolved over time, works on interests and strengths and gives each brother an area of management so that the details, and therefore the expenses and profit margins are proactively managed. 97

WEBSTER FARMS LIMITED NOVA SCOTIA There are several business units and costs and revenues are allocated to each enterprise. It let s us know ahead of time what is contributing the most and what isn t so if we are forced into a situation where you have to get lean in a hurry you know what we might want to shed first, says Greg. We capture costs by enterprise including labour and inputs, so if we re putting fertilizer on the strawberry crop that is what it gets allocated to. By dividing farm management responsibilities by function rather than business unit or enterprise the Websters fully utilize their skills to the benefit of all the enterprises that make up the farm. Greg oversees the office, office staff and day to day financial decisions. Chris looks after the marketing and crop land preparation and many of the cropping management decisions. Brian is responsible for the labour force activities, making sure jobs are prioritized and adequately staffed, as well as managing most of the strawberry harvest, crop irrigation and crop planting activities. During critical periods, each fills in where needed to get work done on a timely basis as opposed to when we can get to it. To make timely decisions the Websters use the majority rules principle, with the exception of high importance issues where they try for consensus between the three partners. For the day to day decisions it has to be decision by majority because if we had to build consensus we d never make a decision, says Greg. For the Websters it is the division of responsibility, cost-profit analysis by enterprise and decision by majority strategy that works to obtain the attention to detail necessary to be a top producer. Our crop management tends to place us in the top 20% of yields in the crops we are growing relative to the industry standard, that s a direct result of attention to the details, explains Greg. COMBINING DIVERSIFICATION AND MARKETING EXCELLENCE The Websters measure their growth not by increased acres but by improved margins. They use historical average yields by crop and variety from the last 5-10 years as internal benchmarks. At this point the farm s efforts are to get as much as they can out of the land resources they have. For the berry crop the Websters produce and market their own crop through U-pick and farm markets so they don t rely solely on wholesalers or distributors. However, the majority of the berry crop is sold direct to retails through warehouse distribution. For the dry beans they source their own seed production and produce and market the crop under their own brand name as well as a co-pack with one of the national retail chains. They propagate their own 98

WEBSTER FARMS LIMITED NOVA SCOTIA rhubarb rootstock and process and freeze their production plus that of other producers for a secondary processor. Cereals are grown for rotational purposes and to use the straw as mulch for the berry and rhubarb crops. We try to sell in the top third. In strawberries and raspberries we communicate constantly with other major producers to determine where the market price should be here in this region, says Greg. We intensively manage those two crops and work very closely with our customers on pricing and delivery. With the rhubarb we don t have that luxury, we have one customer and it s a frozen product that they can buy from around the world so you basically take what you get for it. Webster Farms is also one of the dry bean market leaders in the region and basically try to base their price on costs plus a reasonable margin to set the price. They have focused in areas where hard work, marketing savvy, customer relationships and a strong product brand can influence the profit margin rather than just grow commodity priced crops. We maintain control over market access, closely monitor market activity and get involved in pricing with retail buyers, explains Greg. We deal only with reputable firms and have a cash and carry policy for new customers. The Webster Farms brand has evolved over time. We started to use Webster Farms to identify frozen strawberries in a retail pack several years ago, explains Greg. We carried the brand over to our U-pick operation and have since followed that with using Webster Farms as a brand name for our dry bean marketing. They have developed a Webster Farms website for additional branding and marketing initiatives that is still a work in progress. Selling dry beans directly to the consumer through mail order, and U-pick strawberry and raspberry fields as well as supplying roadside stands and farm markets provide Webster Farms with some direct to consumer marketing channels. The majority is sold directly to distributors and retailers. Also, in addition to freezing rhubarb for direct sales to a secondary processing plant (for pie manufacturing) they also freeze raspberries on farm in limited quantities and export dry beans and strawberries internationally to places in the United States like the Boston area and occasionally to New York State. We market the dry beans as a packaged product in the Maritime Provinces so it s not just a commodity. By using several market channels Webster Farms increases their marketing opportunities for higher margins while decreasing their risk. 99

WEBSTER FARMS LIMITED NOVA SCOTIA The value added practices at Webster Farms make for satisfied clients and that keeps them on top of the market. We pre-cool all of our fruit so it has an increased shelf life and adds value to the customer when they know they can handle it a day or two longer, says Webster. We freeze the rhubarb and store it so it s available to our customers when and how they want it. Our packaged dry beans are all hand sorted to remove any defects remaining after the automated cleaning and sorting processes. MANAGING RISK The Websters are managing for the present and the future by addressing current challenges to their business operation, including water, labour and regulatory affairs management. They are currently exploring alternate irrigation methods to using surface water for irrigation, to improve water quality through different application systems, water sources and treatment possibilities. Skilled farm labour shortages exist in Nova Scotia just like much of the nation. Good help is hard to find and when you do, encouraging them to stay is often difficult. With 10, paid full-time non-management staff and five paid seasonal staff positions to keep filled the challenge of recruitment and retention is part of risk management for the Webster s. They provide production bonuses for harvest and seasonal workers and benefits for full time workers including paid holidays, vacation pay, sick pay, a medical plan and paid overtime. Regulatory affairs, historically a challenge for European farmers, are quickly becoming a farm management skill necessity across North America. Everyone faces similar frustrations, there s so much to deal with for international trade requirements and on farm food safety and environmental farm plans, explains Greg. It takes away from your production time and doesn t generate income but is a necessity to staying in this business. Greg and his brothers oversee the details but have had to engage many of their production employees in the record gathering process, and will likely have to hire another part-time person to manage the paper and ensure everything that needs to be is recorded. The Websters also manage risk by including non-production enterprises as part of their business. In addition to their production and processing ventures they also manufacture the wooden boxes and picking containers for strawberries and raspberries, manage a small woodlot and on-farm sand and gravel resources as well as provide custom storage and handling of recyclable pails and plastics for one of their customers. Diversification is very important to our success, says Greg. It allows us to maintain a full-time labour force that would be impossible to do otherwise on a horticultural farm. 100

WEBSTER FARMS LIMITED NOVA SCOTIA We haven t in the last three years qualified for CAIS, which is a good thing in one way, as it means we re making enough money that we are not totally reliant on government programs for our survival. 101

Hugues Denis Quebec This dairy farmer is passionate about his work. The international reputation of the family s Ayrshire dairy herd speaks volumes to the family s successful management strategies for sustained growth. Hugues Denis s passion for his dairy business includes a healthy respect for his family s heritage in agriculture. The dairy operation, passed down to him from his parents, has been in operation for 50 years. In 1988, Denis and his brother formed a family held corporation company. Since that time, they have managed their dairy operation into a profitable operation that supports two families. The dairy herd consists of 80 head of prime lactating Ayrshire cattle and 90 replacement animals. Denis says their dairy business in the past three years has been growing at a yearly rate of 10 to 15 per cent. Growth is measured two ways. To measure economic growth, we use dairy herd analysis to evaluate the performance of our herd, and we also work with the Financière agricole, a Quebec government organisation. The partners also analyze the economics of the operation on the basis of numbers that are supplied by accountants and consultants. Their fixed-to-variable expenses currently stand at a 50/50 ratio. By reducing our production costs and by being more efficient we have achieved a rate of growth we are reasonably happy with, Denis says. Our biggest challenge to growth has been a reduction in revenues. We have had to learn to be more efficient in order to survive. 103

HUGUES DENIS QUEBEC Denis describes their financial stability as below average primarily as a result of investments that have been made in the past few years. However, Denis says that the lower-than-average position has not limited growth. The lenders know us and they are aware of the investment program that we are following. Our financial situation is such that we are in a good position to negotiate with the bankers and the Financière agricole du Québec. The partners don t benchmark their operation, but a collaborative approach to management has served their dairy business well. My brother and I share management responsibilities, which work well since we are two families living on the revenues generated by our farm. Responsibilities are formally delineated. My brother is responsible for the machinery and accounts payable and also takes the lead in the field work, says Denis. I am responsible for herd management and also help out in the fields in the spring. Bookkeeping is handled by my brother s wife. DAILY ADJUSTMENTS Time management is a daily pressure in the dairy business. We must know what each person is doing every day. We each have our assignments and keep the others informed of our progress at a meeting on Monday mornings. Running a dairy operation requires daily adjustments, sometimes according to weather, for example. Marketing of the milk is handled by the federation and by the coops, but in addition to selling into the milk pool, Denis sells animals and embryos to other growers. The operation is known for a high level of expertise and quality animals. Our reputation helps us sell our animals, and our animals are known, says Denis, who is also a director in the local syndicate of the UPA. I also work in the Salon international laitier in St- Hyacinthe. This is important to us in terms of the sale of our animals and embryos. The dairy at one time exported animals, but with the advent of mad cow disease, they are no longer able to do this. They analyzed the situation and now successfully concentrate export activities on the sale of embryos. Denis says embryo transplant has been a great tool to make their herd one of the best Ayrshire herds in Canada. Their excellent reputation spreads far and wide via local, national and international visitors to the farm. 104

HUGUES DENIS QUEBEC ADOPTION OF MODERN METHODS We are pleased to show visitors our farm. Our feeding practices are very modern. We feed using the Total Mixed Ration approach. It takes less time to feed and is very efficient. They are also very precise in their fertility programs and use soil analysis to adjust the fertilisation programs. Innovation also includes a field exchange with neighbouring potato growers who use dairy fields for rotations. The dairy operation also benefits. We are able to legally spread all our manure and add value to our fields, says Denis. This practice has enabled us to benefit from the practices and experience of others. Dairy operations are notoriously time consuming on a 24/7 basis. In spite of daily demands, Denis says he recognizes the value of taking time to be with the family. We take time out when we need it. If we don t, then we will become crazy! We hired an employee this year, and this should enable me to take more time off. Optimism characterizes the future of this dairy operation. Denis says they expect to see their business continue to grow by 10 to 15 per cent each year. If hindsight could be foresight, he says he probably wouldn t have waited so long to start investing in the business. Regardless, the business is profitable and growing with a bright future. We want to be able to leave a profitable business to our children, like our parents did for us. This speaks well to the future of the dairy industry and the passion this family has not for only their dairy business but way of life. 105

Bernard and Nicole Dion Quebec A disease crisis almost put this family farm out of business. That s when they decided to get serious about bio-security while diversifying their revenue streams through vertical integration and looking ahead to new value added market opportunities. After disease almost wiped out their entire hog operation in 2002, Bernard and Nicole Dion decided to diversify their revenue sources and specialize in producing pork with value added traits. Today the couple operate Ferme J.P. Dion et Fils Inc. located in St-Liboire, Québec. The operation has 320 sows, a piglet building that has a capacity of 1200 and a finishing capacity of 1300. They specialize in producing hybrid replacement gilts, purebred boars for insemination centres, and finishing hogs that produce pork high in omega-3 fatty acids. Bernard Dion cites three key reasons for their newfound success. First, they have vertically integrated their operation and now specialize in genetic selection and produce replacement animals for direct sale to other commercial producers. As a result, they are heavily involved in national genetic selection programs and their operation is known for its quality genetics. The couple has very strict standards for genetic selection and this has enabled them to open new markets their breeding herd is now one of the top five performing herds in the province. Second, looking ahead to consumer trends, they formed a strategic alliance with partners that have developed the production methods and the feeding program to produce pork with the omega-3 trait. The couple is also the official supplier of genetics that favour the production of omega-3 pork for this company so this ties back into their breeding operation. And third, they look after their own marketing and sales efforts using referrals, reputation, quality and certification as marketing tools. The farm is certified under ISO 14001 (International Organization for Standardization Environmental Management Systems) and CSA Z771 107

BERNARD AND NICOLE DION QUEBEC (Canadian Standards Association Environmental Management System for Hog Operations) and in early 2006 received its animal welfare certification. To his knowledge, their farm is the only one in Canada that has achieved ISO 14001 and CSA Z771 status. While this certification doesn t result in higher prices, it does give the farm business more credibility. This helps secure contracts to do on-farm research and development work in genetic selection, production practices, and feed rations with various firms. The Dions are often first to try something new and their contract work gives then an inside view of new production practices and technology prior to hitting the market. They are also interested in new breeding techniques and credit a virtual herd with helping to make genetic selection decisions more quickly than traditional breeding programs. While production and daily gain performance is important, today we are more focussed on selecting genetics for meat quality, notes Dion. MANAGING AND BENCHMARKING INFORMATION Information management is critical to success in this farm operation. The Dions use computers to look after all their financial, breeding and performance records. They use a number of software programs for accounting and herd management along with feed and ventilation control. They also recognize the importance of benchmarking their activities. The couple refers to production statistics from prior years, their annual operating budget as well as provincial production benchmarks. Dion is also a member of RéagiPorc. In Quebec, only 46 hog producers raise breeding stock. Some of these producers participate in this management program where they supply data, ratios and other production figures. The data is compiled and sent back to each member so they can compare performance with the group. The Dions work closely with their accountant and keep a close eye on their own financial statements with particular emphasis on their monthly income statement and the profit margins. Their debt-to-equity ratio is closely monitored as well as they lost a lot of equity during their disease crisis. Monitoring fixed and variable costs is important too. With feed representing 50% of their production costs, they work with their nutritionist to find ways to reduce feed costs while improving feed conversion and average daily gain. 108

BERNARD AND NICOLE DION QUEBEC Along with good financial records, the Dions recognize the importance of strategic planning. Each year they sit down with their omega-3 pork partner to look at trends and advancements of different value added products. From there they set goals and develop a detailed budget. Their veterinarian is another important member of the advisory team. Not only does the vet help prevent losses but he works closely with the Dions to prevent the introduction of new infections in the herd. TEAMWORK GETS IT DONE Dion considers himself a team player when it comes to decision making on the farm. He seeks input from Nicole and son, Michael, along with their three full-time employees. Decisions are usually made by consensus. Bernard typically plays the role of general manager while Nicole looks after the accounting and manages the multiplier unit. Meanwhile, Michael is responsible for logistics, deliveries and production. Employees carry out many operational functions that keep the farm running smoothly. Two of the three full-time employees have been with the Dions for more than 10 years. In addition to these three, the Dions also have seasonal employee. They have written agreements with all and conduct performance appraisals on a regular basis. As a retention strategy salary is negotiated based on the qualification, experience and needs of each person. Frequent dialogue and mutual respect are important to us, as is continuous training, he adds. OVERCOMING THE DISEASE CRISIS The biggest challenge the farm team has had to overcome is to maintain bio-security and sanitary status. We had to completely revamp our management and production practices and procedures to reduce and eliminate disease introduction, says Dion. This was a driver behind the ISO and CSA certification however it has also helped with marketing and opening up research opportunities. 109

BERNARD AND NICOLE DION QUEBEC NETWORKING HELPS BUSINESS Dion also recognizes the importance of networking to the success of their business. He is the current president of the Centre de développement du porc du Quebec (CDPQ Quebec centre for swine improvement) and of the Société des éleveurs de porc du Québec (SEPQ) (Québec Society of Hog Producers). He is also first vice-president of the Canadian Swine Breeders Association. His involvement in these organizations gives him access to many new contacts so he can stay well informed on new technologies and industry developments. Even though it sometimes means he has to work longer hours at home, Dion doesn t mind spending time volunteering in the above organizations. He accepts it because not only is it good for business but also for his own personal development. To help manage his time he s now starting to delegate more responsibilities to his son and employees. And Dion has learned that he can be confident in his team. Last year he and Nicole went to Australia to visit their daughter Nancy. They were gone for three weeks. This was the first time in his life that he d taken off three weeks in a row. Not only was this a good experience for them but also for his son and the team at home. It s important to relax because in agriculture you are always under stress whether this is financial, the presence of disease or the marketplace, he explains. You need to get some relief from this constant stress. Dion and his wife have slowly been allocating more time to relax and this summer the couple joined a local golf league. And while, agriculture certainly has its challenges, Dion is up for them. He enjoys taking action that increases the profitability of their family farm. He aims for perfection and delivering high quality products that consumers are looking for. One goal is to be a leader in pork production in Quebec it looks as though the Dions are well on their way. 110

APPENDIX III: ADDITIONAL CASE STUDIES DAIRY ONTARIO................................................................ 113 DAIRY FARM ONTARIO......................................................... 115 MIXED FARM AND SEED RETAIL BUSINESS ONTARIO........................... 117 DAIRY FARM ONTARIO......................................................... 119 POTATOES PEI................................................................. 121 VEGETABLES ONTARIO........................................................ 123 DAIRY OPERATION QUEBEC.................................................... 125 HOG OPERATION ONTARIO..................................................... 126 POTATO (GREENHOUSE) ONTARIO.............................................. 127 FRUIT AND MAPLE SYRUP NOVA SCOTIA...................................... 128 GREENHOUSE OPERATION ONTARIO........................................... 130 111

ADDITIONAL CASE STUDIES Dairy Ontario This second generation three person partnership has felt the impact of BSE. The post-bse loss of the cull cow market cut deep into cash flow, but prudent management has kept this 61 year old family farm going strong. This farm business credits timely expansion, balanced with keenly-interested family labour and of course, a lot of hard work as the key to their success. It works better to make use of family members instead of outside help, they have a real interest in it, says this Ontario dairy farmer. We expanded here in 1996 and it has allowed us to become more efficient by adopting technology. They currently have 160 head, including heifers and young stock, and grow the majority of their own feed. FINANCING GROWTH AND MINIMIZING RISK This farmer considers their equity position to be average, and high if you include the value of their quota. They ve been able to finance timely expansion over the years and that has paid off, most recently with 10% growth in the past three years. However, like many other businesses, their strength is also their potential key weakness. The ongoing threat to supply management in Canada is an area they see as their biggest risk. They participate in industry activities to stay on top of the situation and in an effort to help influence results. BSE, and the resulting lack of a cull cow market, has cut deeply into their cash flow, but by keeping labour costs low and the barn full of high producing cows to keep the bulk-tank full, this farm business continues to perform well. AIM HIGH Our goals are realistic but we keep them high and that s the challenge, he says about keeping their business goals high. To have enough cattle, labour and enough time to manage it properly is a real challenge. They compare feed production yields with company and provincial plot results in areas with similar heat units and measure their daily milk production with their own computer program that is based on DHI reports. They use crop consultants, accountants and financial advisors to keep them at peak performance. 113

TAKE A BREAK Anyone familiar with dairying knows that it is hard, hard work. This farm business makes relaxation a priority, with at least one, one-week vacation and several smaller breaks to keep the thinking fresh and energy levels high. Part of this fresh approach is also basing their division of labour on individual interests to keep everyone enthusiastic about in their work. 114

ADDITIONAL CASE STUDIES Dairy Farm Ontario Many outside the industry think that Canada s supply management system takes both the opportunity to diversify and marketing risk out of the dairy farming equation. This Ontario dairy farm has taken an alternative approach, embracing both diversification and risk management for a successful balance. With 130 head, including heifers and young stock, this hard working dairy farmer has both the focus and drive to succeed. He has managed this 25 year old dairy near Dundalk, Ontario for the past eight years. FOCUS AND DRIVE Determination and hard work is what gets you ahead in the beginning until you are established, he says. You also need to know where you want to go so you know what you are working towards. Part of that focus is making sure the hard work pays. We use the cost of production and the DHI industry standard to benchmark, he explains. We try to stay above the Ontario average but don t try to be the highest because sometimes that s not the most profitable. They use a team that consists of an accountant, nutritional consultant, vet and crop advisors to ensure that they are maximizing their returns. RISK MANAGEMENT This dairy farm has a lot invested in quota, and from their viewpoint that makes them vulnerable. The World Trade Organization talks and several outside groups attempts to dismantle Canada s supply management system makes taking out loans for more quota to grow their business a somewhat risky venture. Their solution continue the growth by borrowing to buy more quota and cows but make the loan periods as short as possible to minimize risk. 115

DIVERSIFYING IN DAIRY In the final year of a four year process, this entire Ontario dairy herd will soon be certified organic, giving them access to an 18% premium market. We are in the final year before shipping. It s a four year process, three years to converge the land and one year for the livestock, explains this enterprising dairy farmer. There aren t many others doing it. Going organic gives them a niche market with a premium which serves their current bottom line well and also gives them a marketing advantage if the quota system is dismantled in the future. BE AN INDUSTRY CATALYST As director on the county milk committee and on the board of directors for the organic coop, this dairy farmer believes in being a leader and a catalyst within the industry to help shape its future. He explains, Being on the organic co-op board is very important to the success of the business, it s working towards a place to market our product and that s the future of our business. 116

ADDITIONAL CASE STUDIES Mixed Farm and Seed Retail Business Ontario Many farmers across Canada have embraced diversification as a way to increase the profitability of their business. This Ontario farmer is highly diversified and finds looking at opportunities beyond primary agriculture and time management are keys to his success. Near Staynor Ontario, this farmer gets his income from several revenue streams with approximately 5% of it from cereal crops, 5% oilseeds, 10% hay and maple trees, 5% livestock, 35% hogs and 40% of his income generated by retail seed sales for a well known seed company. With so many different businesses, time management is critical. EXPLORE OPPORTUNITIES This Ontario farmer finds keeping a pulse on the latest technology and opportunities within the agriculture industry helps him be successful. You have to keep a pulse on some of the latest things in the industry, he says. It s exploring opportunities that is so important, it s another way to discover if you are growing or standing still, or going forwards or backwards. Currently, anaerobic digestors have gotten his attention and he s researching them as a possible future opportunity. Exploring the opportunities that are in the pipeline is a measurement of growth as well, he adds. SUSTAINABLE GROWTH It is through exploring and maximizing opportunities that this farmer has had very fast growth in the first five years of business and about 10% in the last three. New ventures have been the largest part of my growth, he says. We started the seed business in 1998 and added the pig barn in 2000. Growth from within his existing land base is important because acquiring more land is his biggest limitation. My land base is extremely limited here so I m not able to grow from a cropping point of view because I ll butt heads with my seed customers and land here is very competitive to rent or buy. 117

TIME AND CAPITAL MANAGEMENT The diversity is both a blessing and a curse, he says. My farm is not a routine operation, often my day is not routine. I try to preplan the day before and write things down so I don t miss anything, especially with the different directions and focuses. He suggests this highly diversified approach is not for everyone but that it works for his business. For the beef I sell it as sides, it s a small market and a small enterprise and that s not for everyone. Instead of generating maybe $1,100 for a steer we get $2,500 to $2,700 less the cost of dressing. This farmer s concluding words of farm finance wisdom: Too much borrowed capital is a caution, cash is a valuable commodity and there s never enough of it. 118

ADDITIONAL CASE STUDIES Dairy Farm Ontario Family is still a strong asset for many Canadian farms. This dairy credits family support, financial stability and mechanization as their farm s key strengths. Additionally, they note post secondary education as an important advantage. Near Embrun, Ontario this farming couple has had the challenge of managing a 150 head dairy, including heifers and young stock, for the past nine years. The family farm in its 99th year has a rich history, financial stability and the continued support of family members, giving this couple the upper hand on successful farm management. IMPORTANCE OF POST SECONDARY EDUCATION With formal post secondary education in agriculture and accounting this husband-wife team have the training and background to make sound production and financial decisions. I went to ag college and my wife took accounting in university which really helps, he says. Many young producers taking over the family farm find post-secondary education essential in bringing new ideas and knowledge to the business and as an opportunity to experience life off the farm. FAMILY SUPPORT AND NETWORKING FOR SUCCESS This farm family is involved in local and provincial groups including positions as 4-H provincial director as well as a member and leader, on the local DHI and Milk Producer committees, and French and English chapters of the Ontario Farmers Association. On reflection of their participation he comments, It s one of the best things for our farm s success. We use it to share what works well and new technology and it helps to know that we are not alone. The peer support combined with continued support from both her and his family is something they consider a tremendous asset to their farm business. BALANCING GROWTH, MECHANIZATION AND LABOUR Part of this farm s balanced approach to growth is benchmarking production so they know exactly where their business stands. We have benchmarks, for our herd we use DHI information and for our financials we use stats provided by our accountant that show how their other farm clients are doing, he says. They use a database of about 200 farms so it s a good measure. 119

From these benchmarks they can decide where growth is feasible and necessary. For many farms across Canada, a shortage of quality and affordable labour often negatively affects the businesses ability to grow. With an investment of a half million dollars in a new, free-stall milking parlour and using the latest industry mechanization technology, milking is now more efficient and they are less dependent on labour. That level of investment in infrastructure required a healthy financial situation and thanks to good management for the past 99 years this family farm can continue to grow. It s how we can support moves and have a cushion when we need it, he explains. Our bank rating is good and that helps us get low interest rates with the banks and a good price on equipment, they know they ll get paid quickly. 120

ADDITIONAL CASE STUDIES Potatoes PEI The reality is I can do everything I can on the farm but at the end of the day if I don t get the returns out of the marketplace to compensate for higher input costs I am spinning my wheels. This 4,000 acre Prince Edward Island farm is operated by three brothers. For the past 21 years the farm has primarily been both a seed and table potato operation with the addition of some diverse components. The brothers believe in growing what you can sell, find out what your customer wants, and attempt to get commitments for products before producing them. THE SECRET TO BEING SUCCESSFUL This operation has been successful by being flexible, they have diversified outside of potatoes and explored new markets for their products. They make sure they know what the customer wants and deliver it to them in the best possible way. They have expanded into many other sectors of the agriculture industry, 1% of the operation is hay crops, 3% oilseed production, 8% livestock (cattle), 10% cereal production, and 79% to potato production. They continue to explore new markets and try new ways to increase revenue including IP soybean production. The operation became vertically integrated with the addition of a trucking business. They transport their product off the farm and in the off season the trucks are available for hire providing additional income and using the equipment to its full potential. This strategy is also implemented when buying or renting new equipment such as tractors. They must be able to work well on all aspects of the farm. GROWTH The farm has grown from 300 acres to over 750 acres of potatoes alone. Economically speaking, growth on this farm comes down to returns. Return from potatoes depends on what happens in the rest of the country and the global market. Wet conditions in 2005 resulted in huge yield losses in Manitoba that could not have been predicted. In turn it caused increased demand for PEI potatoes and increased their revenue. 121

GOOD MANAGEMENT With this partnership everyone is equal. One person doesn t make the decisions, being team players, they talk and reach a consensus. As one brother explains, You may not like the outcome but each person has one vote and each brother brings something to the table. Each brother has his own responsibilities on the farm, which helps to prevent conflict in the management of the operation. Involvement in farm organizations provides a link to the people and issues concerning their industry. One brother is actively involved with the Potato Producers Association, PEI Potato Board, PEI Federation of Agriculture, and the Horticulture Council. This brings an outside view onto the farm and its practices, keeping the brothers current with the market, issues affecting the industry and in touch with fellow producers. MARKETING RISK To spread their risk this operation grows and markets seed, table stock and processing potatoes. Table and seed potatoes are marketed through the PEI Potato Dealers, a licensed dealer system allowing the partners to spend more time growing and producing their product. The dealers provide information to growers such as preferred variety, packaging details, and what the consumer wants in the table market. This allows them to deliver the right product. Processing potatoes are grown on contract with a processor. For the past 3 years non-gmo soybeans have been grown through IP contracts. Markets for this product include Japan and Germany. One brother is going to Germany to investigate this opportunity first hand, they like to know more about a market before selling into it. Communication with each other has been and will continue to be a key factor in the success of this operation as the brothers continue to explore and take advantage of new market opportunities. 122

ADDITIONAL CASE STUDIES Vegetables Ontario For 30 years this Ontario farm has grown 750 acres of vegetable crops. This operation continues to flourish because of diversification in five commodities and a few non-agricultural ventures. Making careful decisions about commodities, finances and management helps the operation to grow, expand and become more efficient. FINANCING GROWTH The family makes sure they do not fall into the trap of bigger is better, they make investments in growth only when they can afford to do so. They explain that it is important to know and understand exactly what your expenses are and what exactly you are losing or gaining. This way you can alter your operation or behaviours accordingly. With today s economy it is hard to see where growth does or doesn t occur. Although production efficiency has increased, prices have dropped so drastically that the growth of the operation has stayed flat for the past three years. As an example broccoli has dropped from $15 in the 1980 s to $6 a box because of foreign competition and no subsidies. MANAGEMENT AND MARKETING This father -son team share the roles of financial manager and operations manager. These roles were assigned based on each individual s strengths and now everyone is essential in completing tasks efficiently and effectively. The family is very selective when it comes to outside advice. They seek advice from accountants, lenders, lawyers, marketing, financial and production consultants when planning and making decisions on the farm. An example of this is their hands-off approach to marketing their broccoli crop. They ensure they provide a quality product while a global dealer looks after selling directly to distributors, retail stores and restaurants. They are one of the few vegetable operations that sell enough volume to be in the top third of the market. This was achieved by changing sellers. While they do not change often and are very loyal to their seller, they found the move necessary to grow the business and get the best price. 123

NETWORKING Involvement in farm associations, lobbying groups and networking with peers continues to be important to the success of this operation. This involvement serves as a valuable source of information. The father explains You learn a lot from all networks and it s important throughout your career to act as a sponge, absorbing all the information you can. It is important to be involved in the decision making process that will affect the success of your operation. 124

ADDITIONAL CASE STUDIES Dairy Operation Quebec This dairy-focused operation has been in business for 16 years on approximately 750 acres. While the majority of their revenue comes from the dairy, they have diversified to a smaller extent into hay, cereal and livestock production. They use available information resources to assist in making decisions and work together to achieve the best solution. GROWTH This partnership measures growth from the total milk sales, BCA of the cows, classification of the cows and acres cultivated on the farm. Based on revenue, the farm has grown consistently through the past three years. While their goal is steady growth, they like to have controlled growth rather than rapid increases. MANAGEMENT AND MARKETING To make sure the business is cost efficient the operation compares its financial and business benchmarks to the BCA (through Valacta), their classification with Holstein Canada and group analysis through Syndicat de gestion agricole, resources available to industry members. This husband and wife operation utilizes outside advisors for advice and information. These advisors include the Groupe conseils agricole du Temiscamingue, a nutritionist, a veterinarian, Valacta units for breeding recommendations and an accountant for year-end. The milk produced is marketed though the federation and the milk board. Cattle that are sold are enhanced with classification and sold through private treaty. Quality is their main strategic vision. By raising cattle with better pedigrees, it is easier to sell to other dairy producers. 125

ADDITIONAL CASE STUDIES Hog Operation Ontario This farming operation is run equally by two brothers. One brother has day to day responsibility for the hog production while the other is responsible for the cereal crops. They make the large decisions such as expansion and equipment purchases together. Their family has been farming for generations and they have recently made a major capital expenditure by adding a large sow barn. They also do custom work to supplement their income during downturns in the market. GROWTH AND MARKETING This farrow-to-finish hog operation has grown between 20% and 30% over the past three years. Every year they review each commodity operation and analyze how it is contributing to the success of the whole business. The brothers own shares in the Progressive Pork Producer Co-operative, so the operation does not have to market the hogs on a day to day basis, but sells directly through the co-operative. They have a long-term contract to deliver a certain number of hogs per year with the cooperative. They sell hogs every week of the year and surplus grain is sold using the cost of production as a starting point for the sale. TECHNOLOGY AND DIVERSIFICATION Technology is critical for the workings of this operation. These methods include artificial insemination of sows, on-farm mixing and delivery of feed, computerized ventilation systems for hogs, automated feeding systems, and computerized record keeping. A laboratory analysis for swine diseases with vaccines for livestock is important to have to keep the herds healthy and productive. Traditional diversification is a small part of this farm s operation that includes some cereal and oilseed production. Another way this farm diversifies their business is by offering shop repairs, some trucking and custom corn drying. 126

ADDITIONAL CASE STUDIES Potato (Greenhouse) Ontario This combined potato and greenhouse operation continues to succeed through a commitment to diversification. After 16 years, their son returned to the farm with a marketing degree and a new approach to the family operation. This farm family sees diversification and education as the keys to their success. GROWTH AND DIVERSIFICATION On the potato side of this family operation growth is measured by comparing current numbers to those of the previous year. Participation in a cost of production study with a group of potato producers provides another means of comparing costs as well as providing opportunity to discuss new ways to improve profitability. When the son returned with his marketing degree, the company diversified by opening a greenhouse for cut flower production. Being diversified is important to the company s continued success. This operation s diversification includes potato production (82%), cereal production (12%), oilseed production (5%), and greenhouse / nursery products (1%). MANAGEMENT AND MARKETING Father and son manage the farm and greenhouse respectively, sharing information and advice. This sharing of ideas and information allows both the farm and greenhouse to flourish. The full-time employees are supervised by the father and are expected to have the same level of commitment. With this expectation the employees are given their own responsibilities that results in a more positive work environment. With the father s involvement as a director of the Potato Board and in the Cost of Production Group, the operation stays current with changing trends in the market and is constantly building networks. The potatoes are marketed directly though the processor while corn is sold though Cargill and their local elevator agent. Forward contracts are used with the grain and oilseed products while the flowers are either sold to a distributor or exported. The operation continues to look to the future for more opportunities such as ethanol production. 127

ADDITIONAL CASE STUDIES Fruit and Maple Syrup Nova Scotia This 90 year-old farm in north Nova Scotia is being run by a fourth generation farmer. The diversified operation got out of cattle production (perhaps later than they should have) and is now primarily a strawberry and blueberry operation. They also have a start-to-finish maple syrup operation as well as some forestry and grow a small amount of cereals and hay crops. The producer attributes learning from his father, his experience on the farm and his degree at an agriculture college as the keys to his success. Diversification and having value added products and services have also contributed to the growth of the farm. MARKETING AND ADDING VALUE This producer knows how to market his products to get the best price. While most growers are selling their strawberries to a wholesaler, he has made a deal with SuperStore to provide berries directly to the store, two to three hours after picking. He can ask a higher price and the store has fresh from the farm produce. The maple syrup operation is a start-to-finish business, and he sells the final product right on the farm or through local markets. Premium packaging, the new product lines of maple cream, sugar and butter and the well respected brand name that his family has built give him a strong foothold in the market. He also has set up deals with non-profit organizations to sell his products as part of their fundraising campaigns. NETWORKING This producer has developed a number of connections with associations and industry groups, as well as personal contacts with former classmates from agriculture college who are now involved in various aspects of agriculture. He feels these contacts are an important component in his success, and recommends that all producers take advantage of the knowledge and information sharing opportunities these associations provide. 128

BUSINESS STRENGTH AND GROWTH Success is measured by improved production rather than by increased income for this farmer. He is seeing growth in berries and syrup, but is finding this is now restricted by outside factors such as availability of labour and government requirements for labeling of food. He carries very little debt which gives him a strong equity position. He has been able to buy equipment outright and purchased some supplies, such as packaging, in advance, in bulk, taking advantage of reduced pricing and lowered costs. Another key to success for this producer is diversification. While the majority of his business is in strawberries and blueberries, he also sees important income in his maple syrup business. The blueberries go directly to a processor, his oats and barley crops are grown to provide cover for the blueberry crop and the grain is sold, creating yet another revenue stream. 129

ADDITIONAL CASE STUDIES Greenhouse Operation Ontario This highly motivated and specialized greenhouse owner-operator describes himself as moving in the fast lane with a business that has grown 20 per cent a year thanks to an unshakeable focus on growing and marketing one, and only one, product. CvS put all his proverbial eggs in one basket. When he and his wife bought their greenhouse business at Delhi, Ontario, seven years ago they started out growing sweet peppers as the previous owner had done for many years. That did not work out, CvS says, because of rising natural gas prices and low prices that resulted from foreign imports. They decided to make a major business shift and grow only one type of flower, Anthuriums. This decision was based on the fact that this product was not grown in Ontario at that time. Their dedicated focus on growing and selling this decorative flower to high-end customers through wholesalers in Ontario has been a key to success. CvS says: Stay focused on what you want to achieve. Move ahead and don t get sidetracked. Follow what you think is best for you. That has worked for us. This profitable, specialized operation is based on CvS s guiding principle: keep things simple. He measures growth by comparing the amount of flowers picked and shipped to the revenue coming in. Since the flowers are grown year round, he takes a read on growth and profitability several times a year. The business has only one competitor in eastern Canada. Anthuriums are also grown in British Columbia. If demand for this product keeps growing, CvS says the future looks bright for his horticulture business. Its strong equity position comes in handy when talking with bankers, many of whom, CvS says, know very little about the horticulture flower business. If I want to expand this year, I won t have to rely on the banker s understanding of the flower business. The equity position speaks for itself. MARKET SAVVY Developing markets and finding buyers have been the biggest challenges to growth. CvS s marketing intelligence, and diligence, has resulted in growth. The business high growth rate is partly attributable to keeping the quality of the product 100 per cent guaranteed. The 130

competition from foreign countries Costa Rica, Hawaii and Jamaica has a hard time delivering the quality we offer, says CvS. And because every order is picked only when ordered, we can guarantee a fresh product. Casey Greenhouses Anthuriums are marketed through wholesales and are also sold to highend flower stores as far away as Winnipeg. Their upscale marketing strategy includes packaging each flower in a plastic bag. The stems are put in small water tubs and are then taped to a carton box with a print of an Anthurium flower on it. They have tried a different way of presenting and packing Anthurium arrangements (a big seller in Europe), but after several meetings with wholesale businesses in Ontario, they knew that their timing was a bit off for local markets. However, they believe these markets may be more receptive in the future. Their local customer base has presented other challenges. Local businesses who buy the product, says CvS, have had little to no experience arranging Anthuriums in a bouquet. They stick to carnations, roses and baby s breath, he says. We want to work with them on this. RACE AGAINST THE CLOCK In the fresh flower business, timing is everything. At Casey Greenhouses it s always a race against the clock. The staff must be constantly aware of time running out not only on shipping orders but on the flowers themselves. CvS says the fact that they have three full-time, paid employees rather than 50 makes coordination of the operation and timing of the flower picking and shipping easier. This is also where the informal, family atmosphere and shared sense of responsibility for the business pays off. During busy times like Easter and Mother s Day the staff members know not to be away. I don t have to tell them. They know they are needed on a fulltime basis. I am very lucky with that, he says. He treats his staff as he would like to be treated. I work with them not over them. Arrangements with the three staff members are conducted informally with verbal agreements on jobs descriptions wages and the like. To benchmark wages, he gets in touch with friends in another region and finds out what they are offering. He hasn t had problems finding and keeping skilled labour, but says he will consider applying for skilled immigrant labour should the need arise. 131

CvS makes most of the management decisions himself often after collaboration with his wife and staff members. He does not use external advisors. He says the Ontario horticulture industry isn t particularly collaborative; it s more of an everyone for themselves approach but in Europe there are clubs that meet every three weeks or so. In his off hours, CvS likes to put in some couch time with a good book and maybe watch some TV. As a near-perfect example of a busman s holiday he says he also likes to garden around the house. The pressures of the business don t resonate in his lifestyle. He says he regularly sleeps 11 to 7, and with fair regularity can sneak in some patio time with a cup of coffee and enjoy Nature. CvS says if he were starting out again and had it to do over, he would start up a brand new operation with all the challenges of starting a business from scratch. Even with a strong equity position, market savvy and years of success, CvS says he s not in it solely for the money. It s something I like doing. I m not in it to get rich. 132

APPENDIX IV: INTERVIEW QUESTIONNAIRE 1. KEY SUCCESS FACTORS What in your mind are the one or two key reasons that you have been successful? If you could have done one or two things differently over the years that you believe would have made you more successful, what would they be? 2. GROWTH What tools do you use to measure growth on your farm? In top-line revenue terms, how much has your business grown in the past three years? (% Or $) How have you grown your business acquisition, growth from within the business, new ventures, other? Compared to your neighbours/peers, how would you rate your growth faster than most, about the same as most, or slower than most? What has been the biggest challenge to growth that you have had to overcome? 3. COST MANAGEMENT Do you have external financial and business benchmarks to which you compare your business? Where do you get this information? What benchmarks do you use to measure your farm business? What is the ratio of fixed to variable expenses on your farm business? 133

4. MANAGEMENT OF THE BUSINESS Describe your management style? Director The most autocratic style, the Director assumes he or she knows everything they need to know to make a decision and makes it alone. Fact Finder Also an autocratic style, the Fact Finder doesn t share the problem or seek advice from others, instead he or she collects the information they think they need to make a decision and make it alone. Investigator A more inclusive style, the Investigator will choose select stakeholders and ask their advice, taking their opinion into account when making a decision, but still making it alone. Collaborator Still more inclusive, the Collaborator shares the problem with all stakeholders, seeking their input but reserving the right to make the final decision. Teamer The most inclusive style, the Teamer seeks complete consensus when making a decision. Describe your management team? How do you define roles and responsibilities? What are some of the biggest management challenges you face? How have you overcome these challenges? Do you have outside advisors? Who and what role do they play? Have you ever considered adding additional advisors, even a Board of directors? 5. RELAXATION How do you relax? How often do you relax? Why is it important that you relax? Do you take holidays? When, how long and how often? Do you think vacation time is good for your business? If so, how? 134

6. MARKETING EXCELLENCE How do you market your product? Do you sell in the top third of the market? If so, how? How do you know? If you sell in the top third, is this a change from the past? What caused this change? Do you enhance the value of your product in any way? How? How much additional value do you believe you attain as a result? 7. NETWORKING / PEER INTERACTION Are you involved in any network or peer interaction? If so, describe the group, commitment, and location. How important is this to the success of your business? How do you use this to your benefit? 8. TIME / LOGISTICS MANAGEMENT How important is time management? Provide an example of why time / logistics management is important. What is your farm doing to enhance time / logistics management? 9. FINANCIAL STABILITY How would you describe your financial where-with-all (stability)? Strong equity position? Average equity position? Low equity position? How important has a strong financial position been in the success of your farm business? How do you use your financial position to your benefit? i.e., negotiating with bankers, in purchasing inputs, etc. 135

10. DIVERSIFICATION Would you describe your farm as a diversified business? Explain. How important is diversification to your success? 11. ADDITIONAL QUESTIONS Are there other questions you think we should have asked you related to your success? What would they be? 136

APPENDIX V: LES MEILLEURES PRATIQUES DES PRODUCTEURS D ÉLITE 137

LES MEILLEURES PRATIQUES DES PRODUCTEURS D ÉLITE Phase II Août 2006

Table des matières SOMMAIRE EXÉCUTIF.............................................................. 3 RÉSUMÉ DES PRINCIPALES CONCLUSIONS INTRODUCTION.................................................................. 7 MEILLEURES PRATIQUES........................................................ 9 La gestion des coûts............................................................... 9 La croissance de l entreprise....................................................... 9 Produire davantage............................................................... 10 Technologie...................................................................... 10 L excellence dans la mise en marché................................................. 11 Les liquidités..................................................................... 12 L établissement de relations....................................................... 12 La formation continue............................................................. 13 L équipe de gestion est clairement définie........................................... 13 La gestion du temps et de la logistique.............................................. 14 La capacité d adaptation.......................................................... 14 L analyse comparative............................................................. 15 La gestion du risque.............................................................. 16 Les conseillers externes........................................................... 16 La gestion du personnel........................................................... 17 Prendre le temps de penser........................................................ 18 Résumé......................................................................... 18 La différence entre l Est et l Ouest.................................................. 19 APPENDICE I : ÉTUDES DE CAS................................................... 21 APPENDICE II : QUESTIONNAIRE DE L ENTREVUE................................. 33 Saskatchewan Agrivision Corporation inc., 2006 1

Sommaire exécutif LES MEILLEURES PRATIQUES DES PRODUCTEURS D ÉLITE DE L EST DU CANADA Principales conclusions Phase II La Phase II du projet sur les meilleures pratiques des producteurs d élite s est appliquée à identifier les meilleures pratiques utilisées par les producteurs d élite de l Est du Canada. Dans le cadre du projet, 156 entreprises agricoles de différents secteurs furent analysées. Les gestionnaires qui connaissaient le succès, répondirent à un questionnaire détaillé traitant de leurs pratiques de gestion. Par la suite, un groupe de producteurs d élite fut identifié et chacun fut l objet d une interview. Celle-ci a permis de recueillir des détails plus poussés sur la gestion d une entreprise agricole. Les producteurs d élite se distinguent de la moyenne par leur concentration sur ce que l équipe du projet appelle «la règle du 20 %» soit : le revenu qu ils retirent de la vente de leurs produits se situe dans les 20 % du groupe de tête par rapport à celui reçu par les autres entreprises agricoles de leur secteur. En même temps, leur coût de production, comparé à celui des autres entreprises agricoles de leur secteur, se situe dans les derniers 20 %. Sous l angle de la gestion des coûts, les producteurs d élite les gèrent bien car ils calculent précisément leur coût de production et ils attachent une très grande priorité au contrôle des coûts fixes. Ils y arrivent en portant une grande attention à la maîtrise de leur «coût de production par unité» ce qui améliore leur retour sur investissement. Les décisions sont prises à la suite d une recherche sur le sujet et ils se fient à un calcul précis des projections de profitabilité pour augmenter l efficacité et la croissance de l entreprise. Du côté des revenus, les producteurs d élite ont fait croître leur entreprise plus rapidement que la moyenne de l industrie. Le plus souvent, ils y sont arrivés par l acquisition de terres et/ou par l implication dans un nouveau secteur qui, habituellement, est connexe à l exploitation de la ferme. La croissance, tant du point de vue de la taille que de celui de la profitabilité, survient dans le secteur primaire. Les producteurs d élite génèrent aussi plus de revenus en obtenant de meilleurs rendements ou de meilleurs gains en provenance de leurs avoirs. Qu il s agisse de la terre ou des animaux, la qualité de leurs avoirs, en regard de tous les secteurs de production et de toutes les régions géographiques, est plus élevée que la moyenne. Ils recherchent des méthodes nouvelles et innovatrices afin d améliorer leur taux de production. Les améliorations en ce qui a trait à la qualité et à la production de produits de «marque» représentent deux méthodes utilisées pour augmenter la valeur et le revenu net. Saskatchewan Agrivision Corporation inc., 2006 3

L excellence de la mise en marché constitue un facteur des plus importants pour l atteinte de revenus constamment plus élevés et pour le maintien de leur statut de producteur d élite. Leur désir d obtenir des revenus élevés pour leurs produits distingue les producteurs d élite de ceux qui font la moyenne. Ils renforcent leur veille stratégique en marketing en restant à jour sur l information disponible et en maintenant un solide réseau dans l industrie. Grâce à l Internet, à leurs liens à des courtiers, des mises à jour par courriels et autres sources, ils surveillent et capitalisent sur les occasions qu offre le marché. L utilisation de technologies comme les ordinateurs, le GPS, la nouvelle génétique peut être reliée à leur performance plus élevée et à la plus grande efficacité de leur ferme. Les producteurs d élite évaluent les avantages et les coûts de la nouvelle technologie et ils l adoptent seulement lorsque des résultats positifs sont assurés. De bonnes liquidités permettent à ces producteurs de profiter des occasions et de traverser les périodes de turbulence économique et environnementale. Les producteurs d élite entretiennent des relations d affaires pour le long terme. Ils ont une bonne et étroite relation d affaires avec leurs banquiers, leurs comptables, leurs avocats. Ils considèrent ces relations comme autant de moyens d augmenter leurs connaissances. Ils établissent des contacts avec les gens qui partagent les mêmes intérêts. Ils sont impliqués dans les organisations locales, nationales, et même mondiales. La plupart des producteurs d élite possèdent une formation postsecondaire et ils continuent de profiter de toutes les occasions d apprendre. Ils profitent aussi des occasions de parfaire leur éducation par le biais des nouvelles technologies de communications. Les saines techniques de gestion de ces fermes permettent aux membres d une équipe efficace de travailler ensemble. Chaque employé ou membre de la famille est au fait des buts de la ferme. Les rôles et les responsabilités sont clairement définis dans le but que tous, employés et membres de la famille, profitent des compétences de l équipe. Les producteurs d élite améliorent la communication dans l entreprise par la tenue de réunions formelles et informelles. La gestion optimale du temps tient une place prépondérante. Les producteurs d élite recherchent des méthodes et des outils pour les aider à diriger leur entreprise plus efficacement et plus profitablement. L analyse comparative fait partie intégrale de beaucoup de programmes de gestion d entreprises agricoles. On s en sert pour mesurer la performance et fixer les objectifs. Les producteurs d élite s adaptent rapidement aux changements du marché. Pour plusieurs, leur capacité d adaptation a mené à la spécialisation ou à la diversification. Les producteurs d élite cherchent aussi, et ils analysent, les nouvelles occasions d augmenter leur revenu et de répartir le risque. Souvent, ils sont capables d anticiper les changements du marché. Saskatchewan Agrivision Corporation inc., 2006 4

Les producteurs d élite sont visionnaires et recherchent différents outils de gestion du risque. La plupart du temps, ils sont au courant des affaires, des programmes et des politiques ayant un impact sur leur industrie. Les producteurs d élite apprécient leurs employés. Ils travaillent étroitement, et souvent, avec les membres de la famille et les employés. Ils mettent l accent sur les bonnes relations de travail avec les employés et intentionnellement, ils prennent les mesures pour promouvoir l esprit d équipe. Très souvent, ils sont d excellents communicateurs. Les producteurs d élite évitent l épuisement au travail. Ils comprennent qu ils doivent trouver des façons de relaxer et de se ressourcer. Souvent à contre cœur, ils prennent le temps de se ressourcer mentalement et physiquement. Au plan national, le projet sur «Les meilleures pratiques des producteurs d élite» démontrent définitivement qu il existe beaucoup de similarités entre les pratiques de gestion de ces producteurs, qu ils proviennent de l Est ou de l Ouest du Canada, et ce peu importe le secteur, la taille de l entreprise et la quantité produite. Saskatchewan Agrivision Corporation inc., 2006 5

Introduction Les producteurs agricoles du Canada font face aux pires temps auxquels l industrie n a jamais fait face. Ceux qui peuvent survivre à ce genre de période sont vraiment des professionnels exceptionnels et de grands sages. Ce rapport est un résumé des principales conclusions de la phase II du projet nommé : «Les meilleures pratiques des producteurs d élite». Cette phase consistait à identifier les pratiques de gestion utilisées par les producteurs d élite de l Est du Canada 1. Complétée en 2003, la phase 1 du projet a étudié les pratiques des producteurs d élite de l Ouest du Canada 2. Définir ce qu est un «producteur élite» constitue un exercice très subjectif. En 2006, l équipe dirigée par AgCoach Insights, un projet conjoint entre AdFarm et le groupe Pike Management, a opté pour les points suivants en tant que critères de sélection d une entreprise menée par un «producteur élite» : 1. L entreprise agricole doit avoir été en activité pour au moins dix ans. 2. La source principale de revenu avant et après la «crise des entreprises agricoles» provient de la ferme. 3. La ferme doit avoir généré un revenu brut moyen de plus de 250 000 $ pour chacune des années allant de 2002 à 2005. 4. Le taux de croissance, tel que mesuré par le revenu brut et le revenu net avant la dépréciation et les taxes (RNADT) est substantiellement plus élevé que la moyenne de l industrie pour le secteur agricole. 5. Toutes les formes de structures de propriété, propriétaire unique, partenariat, société ou coopérative, étaient admissibles. La première étape du projet d analyse incluait 156 fermes qui correspondaient aux critères et consentaient à partager leurs pratiques de gestion en remplissant un questionnaire détaillé 3. Ces producteurs représentaient une gamme étendue de productions agricoles incluant la production animale, les cultures commerciales, et l horticulture. La seconde étape du projet comportait des entrevues personnelles en profondeur avec un groupe de producteurs d élite qui fournissaient plus de détails et d autres précisions sur leurs pratiques de gestion. À partir de ces deux étapes, les «meilleures pratiques» furent identifiées. Alors que certaines conclusions sont évidentes, d autres contredisent les pratiques traditionnelles et offrent pourtant des aperçus intéressants. Saskatchewan Agrivision Corporation inc., 2006 7

Un élément prépondérant semble différencier les producteurs d élite des producteurs moyens. Les producteurs d élite se concentrent de façon inhérente à ce que l équipe du projet appelle «la règle du 20 %» soit : le revenu qu ils retirent de la vente de leurs produits se situe dans les 20 % du groupe de tête par rapport à celui reçu par les autres entreprises agricoles de leur secteur ET leur coût de production, comparé à celui d autres entreprises agricoles de leur secteur, se situe dans les derniers 20 %. Le résumé suivant sur les conclusions clés souligne les meilleures pratiques, de même que quelques autres «meilleures pratiques» qui complètent et renforcent l entreprise agricole. Veuillez noter que dans ce rapport, les auteurs ont utilisé de façon interchangeable les termes «producteur d élite», «agriculteur d élite» et «meilleur producteur». Les trois termes décrivent les individus qui dirigent les opérations de quelques-unes des meilleures entreprises agricoles du Canada. 1 L Est du Canada regroupe des producteurs dont les entreprises sont situées en Ontario, au Québec, et dans les Provinces atlantiques. 2 L Ouest du Canada regroupe des producteurs dont les entreprises sont situées en C.-B., en Alberta, en Saskatchewan, et au Manitoba. 3 Voir l appendice I Saskatchewan Agrivision Corporation inc., 2006 8

Meilleures pratiques Les producteurs d élite mettent de l avant les pratiques suivantes. Certaines sont évidentes, d autres peuvent contredire la tradition. LA GESTION DES COÛTS Les producteurs d élite connaissent leurs coûts de production, non pas approximativement, mais exactement. Ils les connaissent sur une «base unitaire» et ce pour l ensemble de la ferme. Ces producteurs se font un devoir de tenir des dossiers sur les finances et la gestion de leur entreprise. Ils utilisent un système pour le faire efficacement. Les producteurs d élite se concentrent tant sur les coûts fixes que sur les coûts d exploitation. Ils accordent une grande priorité à l optimisation leurs coûts fixes en les répartissant sur plus d acres, plus d unités de culture ou plus de têtes de bétail. Les producteurs d élite révisent régulièrement leurs coûts, selon le type d entreprise cela peut au mois, au trimestre ou au semestre. Il n est pas rare que des consultants participent à ces exercices. Les comparaisons des coûts se font par rapport à des points de référence de l industrie. Ces exercices procurent une information de grande valeur. Les producteurs d élite prennent le temps d effectuer des recherches au sujet de leurs coûts et de leurs décisions. Ils recueillent de l information de différentes sources et comparent les soumissions. Beaucoup utilisent la «planification par scénario» comme outil pour confirmer leurs décisions. Ils prennent cette approche pour planifier les projets d envergure comme la construction d une nouvelle grange, l achat d une terre ou d un nouvel équipement, de même que pour les dépenses d exploitation comme l achat des intrants. Les projections de profitabilité à court et à long terme servent de base aux décisions concernant la vente et la production. Les producteurs d élite utilisent cette information dans la gestion de leur entreprise. Il s agit d une composante vitale pour accroître l efficacité et soutenir la croissance. LA CROISSANCE DE L ENTREPRISE Qu elle soit un moyen de répartir les coûts fixes ou une stratégie pour freiner leur augmentation, la croissance de l entreprise est un moyen qu utilisent beaucoup de producteurs d élite. La croissance se concrétise soit par : l achat de terres ou une acquisition, l implication dans un nouveau secteur, l intégration verticale, ou par la croissance à l intérieur de l exploitation existante. La réduction du «coût de production par unité» et l amélioration du retour sur investissement (RSI) constituent les motifs de base responsables de la croissance de l entreprise. Saskatchewan Agrivision Corporation inc., 2006 9

Les producteurs d élite semblent avoir fait croître leur entreprise plus rapidement que la moyenne de l industrie. Dans la plupart des cas, la connaissance et non la mode a incité les producteurs à faire croître l entreprise. Choisir le moment opportun pour croître semble être aussi important que la croissance elle-même. Dans la majorité des cas, les producteurs d élite ont été capables de synchroniser la croissance pour profiter des faibles coûts et/ou des cycles favorables. PRODUIRE DAVANTAGE Tous les types d entreprises des producteurs d élite produisent davantage avec leurs avoirs que le producteur moyen. Que ce soit en litres de lait, en boisseaux à l acre ou en livres par veau, les meilleurs producteurs obtiennent de meilleurs gains. Leur capacité à produire davantage provient de plusieurs facteurs. Le tout débute par la qualité de leurs avoirs, qu ils s agissent des animaux ou des terres, la qualité passe au premier rang. De plus, ils ne lésinent pas sur les intrants pour obtenir un meilleur gain de leurs avoirs. Les producteurs d élite sont très curieux, ils recherchent constamment des méthodes nouvelles et novatrices. Ils recherchent et évaluent les nouvelles technologies qu elles soient du domaine de l alimentation, de la maladie et/ou de la gestion des parasites. Ils cherchent toujours de nouvelles manières de produire davantage à partir de leurs avoirs précieux. TECHNOLOGIE Les producteurs d élite utilisent la technologie comme un outil pour mieux réussir, mais ils ne se sentent pas obligés d acquérir la dernière invention pour le simple plaisir de dire qu ils l ont. D un point de vue technologique, certains de ces producteurs pourraient être classés «innovateurs», mais probablement que la majorité sont des «adopteurs précoces». S ils peuvent voir un avantage positif dans l adoption d une nouvelle technologie, ils l utiliseront. Sinon, ils l oublient. Les ordinateurs occupent une place prépondérante dans la plupart des entreprises des élites. Presque tous utilisent un ordinateur pour gérer l aspect financier de leur exploitation et près de la moitié s en servent pour la gestion de la production. Les ordinateurs jouent un rôle important dans la gestion des équipements. Leur influence va du contrôle de la température dans les bâtiments et les entrepôts, au GPS (Global Positioning System), en passant par la conduite automatisée sur les équipements jusqu aux systèmes d alimentation automatisés. L Internet fait aussi l objet d une plus grande utilisation chez ses entreprises que chez celles de taille moyenne. Les agriculteurs d élite mentionnent l accessibilité facile et rapide à l information, que Saskatchewan Agrivision Corporation inc., 2006 10

procure l internet, sur le marché et sur la production. Ils utilisent aussi le courriel pour communiquer mondialement et pour faire des contacts. Ces producteurs utilisent la technologie agronomique pour améliorer continuellement l efficacité de leur ferme. Les producteurs du groupe de tête des secteurs de la production animale et des cultures commerciales ont adopté la génétique nouvelle pour améliorer la qualité, la production et l efficacité. La technologie a donc joué, et continue de le faire, un rôle important dans la performance des entreprises agricoles en tête de peloton. Les meilleurs producteurs atteignent des coûts moindres et une profitabilité accrue grâce à l adoption et à l application de la nouvelle technologie. L EXCELLENCE DANS LA MISE EN MARCHÉ La mise en marché des produits agricoles se fait différemment selon le secteur. Dans certains secteurs, la mise en marché demeure la responsabilité du producteur. Dans d autres secteurs, les producteurs délèguent cette responsabilité. Dans tous les secteurs, l atteinte de revenus supérieurs pour leur produit ou leur denrée est extrêmement importante et constitue un point majeur pour différencier les élites de la moyenne. L excellence dans la mise en marché se définit comme : «l obtention d un revenu moyen supérieur à la moyenne pour leurs produits». Pour y arriver, les producteurs d élite utilisent une des tactiques suivantes : Ils accordent une très grande priorité à la veille stratégique, les agriculteurs d élites comprennent très bien les marchés mondiaux et les prix. Grâce à l Internet, à des bulletins et à des experts en marketing, ils lisent et suivent l évolution des situations du marché de beaucoup plus près que le producteur moyen. Ils produisent sur contrats et profitent des marchés à terme pour capitaliser sur les occasions qu offre le marché, et pour atténuer le risque. Ils améliorent la qualité de leur produit. Par exemple, les producteurs de poulets et de lait mettent en place des programmes d alimentation spécialisés qui leur rapportent une prime sur leur produit (production d œufs Omega 3). Ils participent à des partenariats qui leur permettent d apporter leur produit plus directement au consommateur. Par exemple, ils détiennent des actions dans une usine de transformation.ils vendent leur produit par l intermédiaire de commerces locaux, de marchés publics ou par vente directe à la ferme. Saskatchewan Agrivision Corporation inc., 2006 11

Ils différencient leur produit en lui rattachant une «marque» distinctive qui leur permet d en obtenir un meilleur prix. Cela peut inclure des marques de produits individuels ou des catégories de marques comme : «bœuf naturel». Les producteurs d élite utilisent les méthodes de marketing et les canaux qui fonctionnent le mieux pour eux. Ils savent que leur temps vaut de l argent et ils visent les méthodes de marketing les plus efficaces. LES LIQUIDITÉS Une entreprise sans difficulté de capital est une entreprise en santé. Une ferme qui possède les «liquidités» pour soutenir son exploitation et son plan d affaires se trouve dans une bien meilleure position et est bien moins vulnérable que celle qui manque de capitaux. Dans presque tous les cas, les producteurs d élite sont très au fait des décisions qui auront un impact positif ou négatif sur leur fonds de roulement et sur leur bilan. Presque toujours, ils ont une bonne et étroite relation d affaires avec leur banquier. Le genre de relation où, tant le producteur que le banquier, comprennent les buts de la ferme et ce qu il lui faut pour progresser. Ils utilisent aussi des outils et des pratiques éprouvés de gestion du risque. De l assurance aux pratiques agronomiques, ils gèrent de façon à limiter les impacts négatifs sur le fonds de roulement et le bilan. Leurs solides moyens financiers permettent aux producteurs d élite de profiter des courtes périodes où des occasions se présentent, et de traverser les périodes de bouleversements économiques et environnementaux. Cela leur procure aussi une plus grande paix d esprit. L ÉTABLISSEMENT DE RELATIONS Les producteurs d élite accordent une grande importance à l établissement de relations d affaires de longue durée, particulièrement celles qui leur fournissent un lien à l information. Jusqu où le producteur ira-t-il pour y arriver? Cela dépend du secteur. Beaucoup de producteurs dirigent des groupes et des organisations aux niveaux local, provincial et national. En plus d établir de solides relations avec leurs fournisseurs clés, leur banquier et leurs fournisseurs d intrants, les producteurs d élite cultivent aussi celles avec les gens qui influencent le secteur comme les représentants du gouvernement, ceux de l industrie, et les chercheurs universitaires. La création de liens par l interaction avec d autres personnes qui partagent un intérêt commun représente un très grand attrait pour ces producteurs. Ils en profitent pour discuter d affaires avec leurs pairs et les principaux prescripteurs. Ils recherchent constamment de l information nouvelle dans les secteurs du marketing et de la nouvelle technologie. Une information qu ils peuvent appliquer pour améliorer leur efficacité et leur profitabilité. Saskatchewan Agrivision Corporation inc., 2006 12

Ces relations servent de lien aux producteurs pour élargir l étendue de leur connaissance au-delà de leur région immédiate. Ces producteurs peuvent prendre un recul pour penser en dehors des sentiers battus. Ils voient une valeur dans leur capacité d utiliser leurs relations pour trouver et établir des liens à l échelle mondiale. LA FORMATION CONTINUE Les producteurs d élite croient fortement à la formation continue. La majorité d entre eux possèdent une forme quelconque d éducation postsecondaire et profitent des occasions pour en apprendre davantage. Elles leur fournissent une source de stimuli extérieurs auxquels ils accèdent par le biais de programmes visant le certificat ou un diplôme de formation professionnelle. La formation en ligne et les colloques d une durée d une journée constituent d autres moyens d y arriver. Les producteurs du sommet de la pyramide recherchent les conférences et les symposiums qui traitent de leurs champs d intérêts. Ils considèrent qu il vaut la peine de prendre du temps pour profiter des occasions d approfondir leurs connaissances et parfaire leur éducation. Dans les régions rurales, les technologies de l information et des communications présentent de nouveaux moyens d avoir accès à l éducation et les producteurs d élite en profitent. L Internet et les technologies plus avancées comme les téléconférences, les vidéoconférences, et les séminaires sur le Web rendent plus accessible et plus efficace la quête de la connaissance. La formation ouvre la porte non seulement à la connaissance, mais elle offre aussi l occasion d établir de nouveaux contacts, de connaître qui sont les principaux prescripteurs et quel genre de recherches s effectuent présentement. Dans la plupart des secteurs, l établissement de nouvelles relations peut conduire à la participation d essais en recherche et développement. Les producteurs d élite des secteurs de la production animale et des cultures commerciales trouvent souvent que l établissement de nouvelles relations offre un meilleur accès à la nouvelle génétique. L ÉQUIPE DE GESTION EST CLAIREMENT DÉFINIE Comme pour toute entreprise qui réussit, la ferme florissante exige une saine gestion. Les plus grosses entreprises ont la capacité de répartir les responsabilités entre différents individus alors que la majorité des tâches doivent être effectuées par une ou deux personnes sur les plus petites fermes. Qu il y ait quelques-uns ou plusieurs dirigeants, il est essentiel pour le succès de l entreprise d avoir une équipe de gestion qui travaille à l unisson à l atteinte des buts fixés. Là où les responsabilités de gestion sont partagées, il existe une nette division entre les rôles et les responsabilités. Une personne peut s occuper des cultures, l autre du troupeau, une autre encore de l aspect financier. Peu importe les subdivisions, les entreprises de tête tirent profit des compétences de chaque membre de l équipe et chacun s épanouit dans le rôle qui lui convient le mieux. Il existe Saskatchewan Agrivision Corporation inc., 2006 13

rarement une entente écrite en ce qui a trait aux responsabilités de chacun. Cela s avère particulièrement exact chez les fermes familiales. Une bonne communication constitue une partie intégrale du succès de ces équipes de gestion. Des rencontres régulières de l équipe sont prévues à l horaire pour assurer une circulation efficace de l information et une prise de décision sans heurt. Une bonne communication semble mener à une plus grande efficacité et une meilleure profitabilité. Chez les entreprises familiales, cela permet aussi de maintenir de meilleures relations. LA GESTION DU TEMPS ET DE LA LOGISTIQUE Les producteurs d élite reconnaissent la gestion du temps comme un point crucial du succès. Ils reconnaissent que la gestion efficace de leur temps est un défi qui exige un travail constant pour l améliorer. La gestion efficace du temps favorise une plus grande efficacité et une meilleure profitabilité pour l entreprise. Les producteurs d élite adoptent rapidement les nouvelles méthodes et les technologies qui facilitent leur gestion du temps et améliorent leur efficacité au quotidien. Les téléphones cellulaires sont courants et les «Blackberries» sont fréquemment utilisés. Les producteurs d élite savent comment les utiliser efficacement sans en devenir esclaves. La gestion d une grosse entreprise peut devenir un cauchemar logistique surtout aux moments les plus achalandés de l année. Les producteurs d élite comprennent l importance de la logistique et ils possèdent la capacité et les compétences pour gérer en tenant compte de son impact. Ces compétences semblent prendre une importance croissante et les producteurs d élite cherchent plus de soutien pour améliorer ce point. Les producteurs d élite considèrent qu accroître l efficience de leur entreprise leur permet d avoir plus de temps pour eux-mêmes. Ils optent pour utiliser ce temps de différentes façons. Certains en profitent pour consacrer plus de temps à la famille, d autres élargissent leur cercle de relations et/ou enrichissent leur éducation. LA CAPACITÉ D ADAPTATION Diversifier ou se spécialiser? Cette question hante les producteurs depuis des générations. Il semble qu il n y a pas une bonne ou une mauvaise réponse, cela dépend du dirigeant, de l entreprise, et de la situation. Toutefois, ce qui semble constant parmi les producteurs d élite, c est leur capacité à s adapter aux occasions que présente le marché, et de le faire au bon moment. Les producteurs d élite sont flexibles et semblent s adapter plus rapidement aux occasions et aux situations, de même qu au rythme où elles surviennent. Saskatchewan Agrivision Corporation inc., 2006 14

Pour certains, cela signifie se diversifier en démarrant une nouvelle entreprise. Par exemple, un producteur de porc qui voit une bonne occasion de se lancer dans la culture en serre. D autres prendront l avenue de la spécialisation comme le producteur aviaire qui se lance dans la production d œufs Omega-3, ou le propriétaire de serres qui opte pour une seule sorte de fleurs. Pour d autres encore, cela signifie de profiter des occasions qui payent mieux aujourd hui comme cultiver ses propres aliments au lieu de les acheter, vendre directement dans des marchés publics ou à des magasins et à des restaurants locaux. D autres encore consacreront un pourcentage de leur superficie cultivable à la production et à la vente de cultures à identité protégée. Les producteurs d élite cherchent et analysent les occasions qui augmenteront leur revenu et répartiront leur risque. La majorité d entre eux cherchent l avis de conseillers externes lorsqu ils prennent ce genre de décision. L ANALYSE COMPARATIVE Les producteurs d élite comprennent leur entreprise. Ils connaissent leur profil financier et celui de leur production. Ils utilisent l analyse comparative pour comparer la performance de leur entreprise à celle de leurs pairs. L analyse comparative les aide à identifier les forces et les faiblesses de leur entreprise, de même que les points qui requièrent une amélioration. Cela leur permet aussi de se fixer des buts et d améliorer leur niveau de production. Historiquement, l analyse comparative a été utilisée pour comparer les rendements, le nombre de porcelets/truie, le revenu par tête, la production par vache, etc. De nos jours, les producteurs d élite portent l analyse comparative à un niveau plus sophistiqué. Certains se comparent à la performance mondiale et la plupart à l échelle provinciale et nationale, tous le font sous des perspectives financière et de production. Les technologies de la communication ont amélioré la capacité des producteurs d accéder à l information. Les producteurs d élite trouvent aussi que l analyse comparative rend la profession de producteur agricole plus intéressante. L entreprise agricole est considérée non seulement comme une entreprise parmi d autres, un centre de profit et/ou une façon de vivre. Elle ressemble aussi à quelque chose comme une joute dynamique où les producteurs peuvent être en concurrence avec eux-mêmes et leur performance passée. De plus, l entreprise permet de se comparer et d être en concurrence avec d autres localement, aux plans national et international. Saskatchewan Agrivision Corporation inc., 2006 15

LA GESTION DU RISQUE Bien qu ils soient des entrepreneurs par nature, les producteurs d élite préfèrent limiter le risque partout où c est possible. Dans le cadre de la gestion de leur entreprise, ils utilisent différents outils de gestion du risque. Ils gardent aussi l œil ouvert à la recherche d outils nouveaux et meilleurs à inclure dans leur stratégie de gestion du risque. Les producteurs d élite reconnaissent qu en agriculture, la température constitue une variable imprévisible. Ils planifient et sont prêts à relever les défis reliés à la température lorsqu ils se présentent. Pour répartir leur risque en ce qui concerne les cultures, ils souscrivent à une assurance, et ils varient les dates d ensemencement. Les producteurs d élite se servent au maximum des outils de gestion du risque offerts sur le marché, mais grâce à leur expérience et à leur intuition, ils portent la gestion du risque à des niveaux supérieurs. Ils analysent les risques associés à l achat ou à la location de terre et d équipement, à la signature de contrats de production et de mise en marché, et ceux reliés à l intégration verticale. Ils incorporent à leurs plans de production des variétés de cultures ayant des dates de maturité différentes. Ils considèrent l achat de contrats de mise en marché comme une stratégie pour diminuer et gérer le risque. Les producteurs d élite sont très au fait des politiques et des programmes gouvernementaux. Ils sont aussi très au courant des pourparlers sur les échanges commerciaux et des actions qui peuvent affecter leur entreprise. Ils reconnaissent que beaucoup de marchés dépendent de ce qui se passe au niveau mondial et non pas seulement aux niveaux provincial et national. Qu il s agisse de légumes ou de fleurs vendus en Ontario, de bœuf vendu au Japon, ou de pommes de terre exportées sur le marché américain, ils prennent soin de rester à jour sur ce qui se passe et ils planifient en en tenant compte. LES CONSEILLERS EXTERNES La soif de connaître est un dénominateur commun chez les producteurs d élite. Ils réalisent que l information représente un point clé pour réussir dans l exploitation d une entreprise. Ils savent combien bénéfique peut être l information provenant de consultants dont la compétence est reconnue. La façon d acquérir cette information varie. Ils peuvent profiter des services qu offrent les fournisseurs comme les vétérinaires, les nutritionnistes ou les agronomes consultants. Beaucoup retiennent les services de professionnels comme les comptables, avocats, conseillers financiers, et dans certains cas, ceux de consultants en production. Certaines entreprises agricoles, grosses et petites, commencent à mettre en place un conseil d administration ou un «conseil de sages» qui inclut un ou deux individus respectés qui peuvent fournir un éclairage différent sur leur entreprise. Même si cela implique le partage d informations Saskatchewan Agrivision Corporation inc., 2006 16

traditionnellement considérées secrètes, les entreprises agricoles qui consultent à l externe trouvent que cette initiative porte la gestion de l entreprise vers un niveau inédit, plus professionnel. Dans tous les cas, les producteurs d élite pratiquent une méthode systématique pour obtenir et pour compiler l information obtenue des conseillers externes. Il peut s agir de rencontres personnelles, d abonnements à des bulletins et des documents à lire, ou encore par des mises à jour par téléphone et/ou courriels. Ils réalisent l importance de l information et demeurent ouverts à toutes les sources. Ils comprennent aussi qu en tant que chef de leur entreprise, il relève de leur responsabilité de prendre les décisions finales sur leur ferme. LA GESTION DU PERSONNEL Les producteurs d élite sont aussi de bons gestionnaires du personnel. Ils apprécient leurs employés qu ils soient des membres de la famille ou des engagés. Bien des régions vivent une compétition farouche pour de la main-d œuvre de qualité et les producteurs d élite comprennent le besoin de maintenir de bonnes relations de travail et de créer un environnement de travail agréable. Ils travaillent fort pour développer loyauté et confiance. Ils trouvent que la bonne gestion du personnel mène à une plus grande efficacité et à une meilleure efficience. Cela aboutit aussi sur moins de temps d arrêt, de même que sur une réduction potentielle des coûts. Cette compréhension permet aux producteurs d élite de mieux réussir à attirer des employés de qualité. Ils entretiennent une réputation de bon employeur et possèdent un taux élevé de succès en ce qui a trait à la rétention des employés. Les ententes verbales avec les employés sont choses communes. Toutefois, ceux qui ont plus d employés ont souvent des ententes écrites. Ils payent les employés convenablement et certaines entreprises ajoutent des incitatifs comme des ensembles d avantages sociaux et des primes. Sur la ferme, les membres de la famille incluant l épouse, les parents, les frères et sœurs, de même que leurs enfants constituent souvent une source importante de main-d œuvre. Les rôles et les attentes de ceux-ci sont soigneusement définis et leur contribution est reconnue et appréciée. Les producteurs d élite trouvent que la communication est essentielle pour attirer, retenir et gérer le personnel. Les producteurs d élite sont de bons communicateurs. Ils y parviennent par des rencontres planifiées, des listes détaillées de «tâches à faire», par l écoute et par l interaction avec leurs employés. Bien que chacun connaît et respecte l autorité hiérarchique, les producteurs d élite cultivent un environnement où un réel esprit d équipe domine. Saskatchewan Agrivision Corporation inc., 2006 17

PRENDRE LE TEMPS DE PENSER De nos jours, les producteurs d élite prennent le temps de penser. Quand et comment ils y arrivent varie selon l individu. Il peut s agir d une journée de congé pour aller à la pêche, lire, faire une promenade ou même conduire le tracteur. Pour beaucoup d entre eux, il peut s agir d une vacance planifiée loin de tout, pour une semaine ou deux. Ces vacances un peu plus longues sont souvent synchronisées avec des évènements ayant trait aux affaires pour obtenir le meilleur des deux mondes. Il s agira d un temps pour refaire leurs énergies, une chance d établir de nouveaux contacts et d accroître leurs connaissances. Les producteurs d élite trouvent que le temps passé loin de l entreprise leur permet de voir les défis et les occasions sous un angle différent. Cela favorise aussi la pensée positive et revigore le meneur. Alors que les voisins peuvent voir avec envie ces «vacances», les producteurs d élite y voient l importance d investir en eux-mêmes. Ils prennent en ligne de compte les bénéfices à long terme de prendre le temps de penser tant sur le plan personnel que pour l entreprise. RÉSUMÉ Les producteurs d élite du 21e siècle affrontent les défis qui se présentent à eux. Ils accordent de la valeur à la formation et cherchent continuellement à en connaître davantage. Ils sont de bons communicateurs et cherchent à établir des relations qui les assisteront dans l amélioration de leur entreprise et de sa profitabilité. Ils savent jusqu à quel point la concurrence fait partie de l industrie. Ils protègent et facilitent la venue de tous les avantages concurrentiels. Ils adoptent rapidement les nouvelles méthodes et technologies, mais avant de prendre une décision, ils analysent soigneusement la valeur que celles-ci apportent à l entreprise. Ils reconnaissent l importance pour leur entreprise d utiliser des techniques de gestion du risque. Ces producteurs d élite recherchent et prennent en considération l information provenant de conseillers et d autres sources extérieurs. Ils profitent de toutes les occasions d établir de nouvelles relations. Les producteurs d élite comprennent bien leurs coûts de production et se concentrent pour les minimiser. Du même souffle, ils cherchent activement et utilisent des stratégies de mise en marché leur permettant d obtenir pour leurs produits des prix parmi les 20 % supérieurs. Toutes ces décisions et ces pratiques leur permettent de faire croître leur entreprise, d augmenter leur profitabilité et de renforcer leur réputation de «meilleurs de la classe». Saskatchewan Agrivision Corporation inc., 2006 18

LA DIFFÉRENCE ENTRE L EST ET L OUEST La phase 1 du projet intitulé : «Les meilleures pratiques des producteurs d élite» s est concentrée sur l identification des meilleures pratiques de gestion utilisées par les producteurs d élite de l Ouest canadien. La phase II a étudié les pratiques des producteurs d élite de l Est du Canada. Existe-t-il des différences entre les pratiques utilisées par les agriculteurs qui réussissent bien dans ces régions? Une comparaison effectuée par l équipe de la phase II indique qu il existe beaucoup plus de similarités que de différences. En fait, les meilleures pratiques utilisées par les producteurs d élite des deux régions sont presque entièrement les mêmes. Toutefois, trois aspects apparaissent légèrement plus courants dans l Ouest que dans l Est : La taille semble être plus importante dans l Ouest. Cette observation peut être due au fait qu un plus grand pourcentage des participants à l étude effectuée dans l Ouest, dirigeaient des entreprises céréalières et de bovins. De plus, l étude fut complétée au cours d une période où les marges étaient minces ce qui fait que le volume devenait essentiel. La participation à des programmes d identité préservée (IP) fut signalée, par un certain nombre de producteurs de l Ouest, comme étant un outil vers une plus grande profitabilité alors que les producteurs de l Est n en parlèrent pas autant. Les déplacements. À ce sujet, les producteurs d élite de l Ouest semblent davantage accepter d avoir à voyager sur de longues distances pour recevoir des trucs et de l information de qualité et pour établir des contacts avec leurs pairs. À nouveau, il convient de signaler que les pratiques de gestion utilisées par les producteurs d élite de l Ouest et de l Est du Canada sont très similaires. Saskatchewan Agrivision Corporation inc., 2006 19

APPENDICE I: ÉTUDES DE CAS HUGUES DENIS QUÉBEC......................................................... 23 BERNARD ET NICOLE DION QUÉBEC............................................. 27 21

Hugues Denis Québec Ce producteur laitier est passionné par son métier. La réputation internationale du troupeau laitier Ayrshire de cette famille est la preuve que leur stratégie de croissance soutenue a bien fonctionné. La passion d Hugues Denis pour son entreprise laitière, c est aussi un grand respect pour l héritage agricole de sa famille. Cette ferme laitière, héritée de ses parents, est en opération depuis 50 ans. En 1988, Monsieur Denis et son frère ont formé une corporation familiale. Depuis, ils ont développé leur entreprise pour qu elle devienne profitable et capable de supporter deux familles. Le troupeau laitier est constitué de 80 vaches Ayrshire de premier choix et de 90 animaux de remplacement. Monsieur Denis indique que leur entreprise laitière a cru à un taux annuel de 10 à 15% depuis trois ans. La croissance est déterminée de deux façons. «La croissance économique est évaluée par les résultats de l analyse de Valacta (anciennement le PATLQ) qui mesure la performance de notre troupeau et aussi à travers les analyses économiques de la Financière agricole du Québec, une organisation gouvernementale québécoise» Les partenaires analysent aussi les données économiques de leur entreprise grâce aux données financières fournies par les comptables et les consultants. Le rapport de leurs frais fixes sur leurs frais variables est présentement de 50/50. «En réduisant nos coûts de production et en étant plus efficaces, nous avons été capables d obtenir un taux de croissance qui nous satisfait» nous dit Monsieur Denis. «Notre plus grand obstacle à cette croissance a été une réduction des revenus. Nous avons du apprendre à être plus efficaces pour survivre». 23

HUGUES DENIS QUÉBEC Monsieur Denis explique que leur stabilité financière est «sous la moyenne», principalement à cause des investissements qui ont été réalisés depuis quelques années. Cependant, Monsieur Denis explique que cette stabilité financière sous la moyenne n a pas limité la croissance. «Les prêteurs nous connaissent bien et ils connaissent aussi le programme d investissement que nous suivons. Notre situation financière nous permet d être dans une bonne position pour négocier avec les banquiers et la Financière agricole du Québec». Les partenaires ne comparent pas leur opération à d autres; une approche collaborative a cependant bien servi les intérêts de leur entreprise laitière. «Mon frère et moi partageons les responsabilités de gestion, ce qui fonctionne très bien puisque les deux familles doivent vivre des revenus générés par notre ferme». Les responsabilités sont définies formellement. «Mon frère est responsable de la machinerie, des comptes payables et il prend l initiative des travaux aux champs» nous dit Hugues Denis. «Je suis responsable de la gestion du troupeau, tout en aidant pour les activités aux champs durant le printemps. La comptabilité est la responsabilité de l épouse de mon frère». AJUSTEMENTS JOURNALIERS La gestion du temps fait partie des défis dans l industrie laitière. «On doit connaître les activités de tous, à tous les jours. Nous avons nos affectations et nous devons tenir les autres informés de nos progrès lors de notre rencontre hebdomadaire du lundi matin. Gérer une ferme laitière implique des ajustements journaliers, en fonction de la température par exemple». La mise en marché du lait est effectuée par la Fédération des producteurs laitiers et par les coopératives. En plus, Monsieur Denis vend des animaux et des embryons à d autres producteurs. L entreprise est reconnue pour son expertise et pour la qualité de ses animaux. «Notre réputation nous aide à vendre nos animaux, et nos animaux sont connus» nous dit Monsieur Denis, qui est aussi un directeur du syndicat local de l UPA. «Je travaille aussi au Salon international laitier de St-Hyacinthe. C est important pour nous puisque cela nous aide dans la vente de nos animaux et des embryons». L entreprise a déjà exporté des animaux mais ils ne peuvent plus le faire depuis l arrivée de la «maladie de la vache folle». Ils ont analysé la situation et concentrent maintenant leurs efforts et ce, avec succès, sur la vente d embryons pour l exportation. Saskatchewan Agrivision Corporation inc., 2006 24

HUGUES DENIS QUÉBEC Hugues Denis indique que les transferts d embryons ont permis de faire de leur troupeau un des meilleurs troupeaux Ayrshire au Canada. Les visiteurs locaux, nationaux et internationaux ont fait connaître et diffusé leur excellente réputation partout dans le monde. ADOPTION DES MÉTHODES MODERNES «Cela nous fait plaisir de recevoir des visiteurs sur notre ferme. Nos programmes d alimentation sont modernes. Nous utilisons l approche de la ration totale mélangée. Cette méthode prend moins de temps et est très efficace.» Ils sont aussi très précis dans leurs programmes de fertilisation des champs et utilisent les analyses de sols pour ajuster ceux-ci. Ils innovent aussi en échangeant des champs avec les agriculteurs voisins qui cultivent des pommes de terre et qui peuvent ainsi incorporer ces champs dans leurs rotations. La ferme laitière en profite aussi. «En faisant ces échanges, nous pouvons épandre tous nos fumiers légalement et ainsi augmenter la qualité de nos champs» nous dit Monsieur Denis. «Cette pratique nous a aussi permis de bénéficier des pratiques et de l expérience des autres». Tout le monde sait qu une ferme laitière demande beaucoup de temps, 24 heures par jour et 7 jours par semaine. Malgré les obligations journalières, Monsieur Denis explique qu il reconnaît l importance de prendre du temps pour être en famille. «On prend des congés lorsque nous en avons besoin. Si on ne le faisait pas, nous deviendrions.fous! Nous avons engagé un employé cette année, et ceci devrait me permettre de prendre un peu plus de congés». L optimisme règne dans cette entreprise. Monsieur Denis dit qu il croit pouvoir faire croître l entreprise au même rythme, soit de 10 à 15% annuellement. S il avait su, explique-t-il, il n aurait pas attendu si longtemps avant de commencer à investir dans celle-ci. Leur entreprise est quand même rentable, en croissance et tout indique que l avenir est prometteur. «Nous voulons laisser à nos enfants une entreprise rentable, comme nos parents l ont fait pour nous». Le futur semble prometteur pour l industrie laitière et pour cette famille qui démontre une passion marquée pour leur entreprise laitière, mais aussi pour leur mode de vie. Saskatchewan Agrivision Corporation inc., 2006 25

Bernard et Nicole Dion Québec Une crise sanitaire a presque eu raison de cette entreprise familiale. C est à ce moment qu on a décidé de mettre l emphase sur la bio sécurité tout en diversifiant les sources de revenus à travers une plus grande intégration et en identifiant plus rapidement les opportunités offertes par les nouveaux produits à valeur ajoutée. En 2002, l entreprise c est retrouvé avec des pertes financières importantes suite à l apparition du circovirus ce qui fût éprouvant pour l entreprise. Suite à ces événements, Bernard et Nicole Dion ont décidé de diversifier leurs sources de revenus et de se spécialiser dans la production de porcs à valeur ajoutée. Aujourd hui, le couple gère la ferme J.P. Dion et Fils Inc. de Saint- Liboire qui comprend une maternité de 320 mères, une pouponnière de 1200 places et un engraissement d une capacité de 1300 porcs. Ils produisent des cochettes hybrides de remplacements, des verrats de races pures pour des centres d insémination et un engraissement qui inclut la production de porcs riches en acides aminés oméga-3. Bernard Dion indique qu il y trois raisons majeurs derrière le développement de l entreprise. Premièrement l entreprise c est intégrée verticalement et se spécialise maintenant dans la sélection génétique et la production d animaux de remplacement qui sont vendus à des producteurs commerciaux. L entreprise est donc fortement impliquée dans les programmes de sélection nationaux car l entreprise est reconnue pour la qualité de son travail à ce niveau. Les critères de sélection génétique utilisés par le couple sont très précis et ceux-ci ont permis à l entreprise de développer des nouveaux marchés. Le troupeau de la ferme est reconnu comme étant un des cinq troupeaux les plus performants de la province. 27

BERNARD ET NICOLE DION QUÉBEC Deuxièmement, afin de réponde aux exigences futures des consommateurs, ils se sont associé avec des partenaires stratégiques qui avait développé les aliments et les méthodes de production pour obtenir un porc possédant un taux plus élevé d oméga-3. Ils sont aussi les fournisseurs officiels de la génétique qui permettra la production de ces porcs ayant un trait génétique spécifique ce qui nous ramène vers leur expertise en sélection génétique. Troisièmement, ils font leur propre mise en marché ainsi que la vente des animaux produits. Ils mettent à profits la réputation de l entreprise, les références obtenues et différentes certifications comme outil de mise en marché. La ferme est certifié ISO 140001 (Organisation Internationale pour la normalisation Système de gestion environnementale) et CSA Z771 (Association canadienne des normes Système de gestion environnementale pour la production porcines) et au début de 2006 a reçu sa certification Canadienne sur le Bien-être animal. À sa connaissance, M. Dion confirme que son entreprise est la seule qui a obtenu la certification ISO 14000 et CSA 771. Même si ces certifications ne garantissent pas des prix plus élevés, elles donnent plus de crédibilité à l entreprise. Le sérieux démontré par ce travail de certification a permis d obtenir des contrats de R&D avec différentes compagnies. Ces recherches portent sur la sélection génétique, les pratiques de gestion et l alimentation. Les Dion sont souvent les premiers à faire l essai de nouveautés. Les contrats de R&D leur permettent d être à l avant-garde des nouvelles pratiques ou des nouvelles technologies avant que celles-ci n apparaissent sur le marché. Ils sont aussi intéressés dans les nouvelles techniques de reproduction et ils accordent beaucoup d importance à leur troupeau virtuel qui les aide à prendre des décisions plus rapidement au niveau de la sélection génétique. «Même si les gains de productivité et les gains en poids journalier sont importants, aujourd hui l emphase de la sélection génétique porte sur la qualité de la viande» mentionne M. Dion. GESTION DE L INFORMATION ET ÉTABLISSEMENT DE POINTS DE REPÈRES La gestion de l information est primordiale au succès de l entreprise. Les Dion utilise l informatique pour la gestion des données financières ainsi que des données de production et de sélection génétique. Ils utilisent plusieurs programmes informatiques pour ce faire. L informatique est aussi utilisée au niveau de l alimentation et des contrôles environnementaux. Saskatchewan Agrivision Corporation inc., 2006 28

BERNARD ET NICOLE DION QUÉBEC Ils reconnaissent l importance d établir des points de repères pour évaluer leurs travaux. Les Dion consultent les statistiques de production des années antérieures, le budget d opération ainsi que des données de productions provinciales. M. Dion est membre de Réagi-Porc un club d encadrement technique. En effet, au Québec il n y a que 46 producteurs d animaux de reproduction. Certains producteurs participent à ce programme de gestion d entreprise. Ils fournissent des données, des ratios et autres informations sur leur production. Ces informations sont regroupées et compilées pour ensuite être renvoyer à chacun des membres de façon à lui permettre de ce comparer au groupe. Les Dion consultent régulièrement leur comptable et ils gardent un œil attentif sur les états financiers avec une emphase particulière sur les revenus mensuels et les marges de profits. Le ratio dette sur équité est aussi suivi de près étant donné qu ils ont perdu énormément d équité lors de la crise sanitaire de 2002. Il y a une gestion serrée des coûts fixes et variables. L alimentation représente au moins 50% des coûts de production. Ils travaillent donc de près avec leur nutritionniste afin de réduire les coûts tout en améliorant les taux de conversion et les taux de gain journalier. De bons états financiers ont certes une grande importance mais les Dion reconnaisse l importance d une bonne planification stratégique. À chaque année, ils prennent le temps de s asseoir avec leurs partenaires afin d établir les tendances et l évolution de celles-ci. À partir de ces rencontres, ils établissent des objectifs et développe un budget détaillé adapté à ces objectifs. Un autre conseiller important pour l entreprise est le vétérinaire. Non seulement aide t il à contrôler les pertes attribuables aux maladies mais il travaille aussi en étroite collaboration avec les Dion pour prévenir l apparition de ces maladies dans le troupeau. C EST EN ÉQUIPE QUE L ON RÉUSSIT M. Dion se considère comme un joueur d équipe dans son processus décisionnel sur la ferme. Il consulte son épouse Nicole et son fils Michael ainsi que les trois employés à plein temps qui travaillent pour l entreprise. Les décisions sont normalement prises par consensus. Bernard agit à titre de directeur général tandis que Nicole s occupe de la comptabilité et est responsable de la maternité. Michael s occupe de la logistique, des livraisons et de la production. Les employés ont différentes tâches opérationnelles qui assurent un fonctionnement tout en douceur. Saskatchewan Agrivision Corporation inc., 2006 29

BERNARD ET NICOLE DION QUÉBEC Deux des trois employés permanents travaillent pour les Dion depuis plus de 10 ans. En plus de ces trois employés, il y a un employé saisonnier. Ils ont des ententes écrites avec chacun des employés pour ce qui est des descriptions de tâches. De plus, des rencontres d évaluation sont effectuées sur une base régulière. Afin de garder leurs employés, le salaire est établi sur la base des qualifications, l expérience et des besoins de chacun. «Des échanges fréquents et le respect mutuel sont importants pour nous, tout comme la formation continue» mentionne M. Dion VENIR À BOUT DE LA MALADIE Le plus grand défi auquel la ferme a dû faire face est le maintien du statut sanitaire et de bio-sécurité. «Nous avons dû revoir toute notre gestion, nos pratiques de production ainsi que nos procédures afin de réduire et d éliminer les risques d introduction de maladies» indique M. Dion. Ce fût un élément déclencheur pour notre certification ISO et CSA même si celles-ci nous ont grandement aidé dans notre mise en marché et la diversification de nos activités en ouvrant la porte à des travaux de recherches scientifiques. LE RÉSEAUTAGE EST IMPORTANT POUR L ENTREPRISE Bernard Dion insiste sur l importance du réseautage dans le succès de son entreprise. Il est Président du Centre de développement du porc du Québec (CDPQ) et de la Société des Éleveurs de Porc du Québec (SEPQ). Il est aussi le premier vice-président de l Association canadienne des éleveurs de porcs. Son implication dans ces organisations lui donne accès à de nombreux nouveaux contacts afin de le tenir au fait de tout nouveau développement au niveau technologique. Même si cela veut dire qu il doit travailler de plus longues heures au bureau ou sur la ferme, M. Dion voit de nombreux avantages à s impliquer dans ces organisations. Il accepte de donner de son temps car l entreprise y trouve son compte mais c est aussi important pour son propre développement personnel. Afin de mieux gérer son temps, il a commencé à déléguer des tâches et des responsabilités à son garçon et à ses employés. Saskatchewan Agrivision Corporation inc., 2006 30

BERNARD ET NICOLE DION QUÉBEC M. Dion a appris qu il pouvait avoir confiance dans son équipe. L année dernière, lui et sa femme sont allés visités leur fille Nancy en Australie. Ils ont été partis pendant trois semaines et c est la première fois de sa vie qu il partait pour une si longue période. Cela a été une bonne expérience pour eux mais aussi pour leur fils et les employés qui étaient restés pour s occuper de la ferme «Il faut absolument apprendre à relaxer car en agriculture le stress est toujours présent que ce soit au niveau financier, sanitaire ou commercial» explique M. Dion. «Il faut réussir à relâcher la pression dû à ce stress constant». M. Dion et son épouse ont commencé à s allouer du temps pour relaxer et cet été ils se sont inscrits dans une ligue de golf locale. Il est évident qu en agriculture on fera toujours face à de nombreux défis, mais M. Dion est près à y faire face. Il aime agir et prendre des décisions qui augmenteront la profitabilité de la ferme familiale. Il vise la perfection et veut fournir aux consommateurs ce qu il recherche soit un produit de très haute qualité. Un des objectifs de M. Dion et de la Ferme J. P. Dion et Fils est de devenir un chef de file en production porcine au Québec. Il semble qu ils sont sur la bonne voie. Saskatchewan Agrivision Corporation inc., 2006 31

APPENDICE II : QUESTIONNAIRE DE L ENTREVUE 1. LES FACTEURS CLÉS DU SUCCÈS Selon vous, quelles sont les 2 raisons principales de votre succès? Au cours des années, si vous aviez pu faire 1 ou 2 choses différemment qui vous permet de croire que vous auriez eu encore plus de succès quelles seraient-elles? 2. LA CROISSANCE De quel outil vous servez-vous pour mesurer la croissance sur votre ferme? En utilisant vos ventes brutes comme référence, de combien le chiffre d affaires de votre entreprise a-t-il grossi au cours des 3 dernières années? (% ou $) De quelle façon avez-vous procédé pour faire grossir votre chiffre d affaires par acquisition, par croissance interne, par l exploitation d un nouveau créneau, ou autre? En comparaison à vos voisins/à vos pairs, comment voyez-vous votre croissance plus rapide que la plupart, à peu près la même chose que la plupart, ou plus lente que la plupart? Quel a été le plus gros défi à la croissance que vous avez eu à relever? 3. LA GESTION DES COÛTS Avez-vous des repères financiers ou d affaires auxquels vous pouvez comparer votre entreprise? Où obtenez-vous cette information? Quels repères utilisez-vous pour mesurer votre entreprise? Quel est votre ratio de coûts fixes par rapport aux coûts variables? Saskatchewan Agrivision Corporation inc., 2006 33

4. GESTION DE L ENTREPRISE? Décrivez-nous votre style de gestion. Directeur Le style autocratique. Le directeur pense qu il connaît tout ce qu il y a à savoir pour prendre une décision et il la prend seul. L enquêteur Aussi un style autocratique. L enquêteur ne partage pas le problème avec d autres, non plus qu il recherche leur avis. Au lieu de cela, il recueille l information dont il croit avoir besoin et prend la décision seul. Investigateur Un style plus ouvert, l investigateur choisira des intervenants de qualité et demandera leur avis, en prenant leur opinion en ligne de compte au moment de prendre une décision que toutefois, il prendra seul. Collaborateur Encore plus ouvert, le collaborateur partage le problème avec tous les intervenants en recherchant leur avis, mais en se réservant le droit de prendre la décision finale. L homme d équipe Le style le plus ouvert, l homme d équipe recherche le consensus lorsqu il prend la décision. Décrivez votre style de gestion? Comment définissez-vous les rôles et les responsabilités? Quels sont les plus gros problèmes de gestion auxquels vous faites face? Les avez-vous relevés? Avez-vous des conseillers externes? Qui sont-ils et quels rôles jouent-ils? Avez-vous déjà songé à en ajouter d autres, à avoir un conseil d administration? 5. LA RELAXATION Comment vous détendez-vous? Le faites-vous souvent? Pourquoi est-ce important pour vous de relaxer? Prenez-vous des vacances? Quand? Pour combien de temps? À quelle fréquence? Croyez-vous que le temps consacré aux vacances profite à votre entreprise? Si oui, pourquoi? Saskatchewan Agrivision Corporation inc., 2006 34

6. L EXCELLENCE EN MARKETING Comment faites-vous la mise en marché de votre produit? Vendez-vous au tiers supérieur du marché? Si oui, comment le savez-vous? Si vous vendez au tiers supérieur, est-ce un changement par rapport au passé? Qu est-ce qui a causé ce changement? Ajoutez-vous de la valeur à votre produit de quelque façon que ce soit? Comment? Combien croyezvous que cette valeur ajoutée vous rapporte? 7. L ÉTABLISSEMENT DE RELATION/L INTERACTION AVEC LES PAIRS Faites-vous partie d un réseau ou d un groupe où vous êtes en interaction avec des pairs? Si oui, décrivez le groupe, l engagement et le lieu? Quelle importance revêt cette implication en ce qui a trait au succès de votre entreprise? Comment y trouvez-vous votre compte? 8. LE TEMPS ET LA LOGISTIQUE Quelle est l importance de la gestion du temps? Donnez un exemple démontrant pourquoi la gestion du temps et la logistique c est important? Que fait votre entreprise pour améliorer la gestion du temps et la logistique? 9. LA STABILITÉ FINANCIÈRE Comment décririez-vous vos moyens financiers (votre stabilité)? Une position financière forte? Une position financière moyenne? Une position financière faible? Quelle importance cette forte position financière a-t-elle eue dans le succès de votre entreprise? Comment bénéficiez-vous de votre position financière? Par exemple, lors de négociations avec les banquiers, lors de l achat de vos intrants, etc. Saskatchewan Agrivision Corporation inc., 2006 35

10. LA DIVERSIFICATION Décririez-vous votre entreprise comme une entreprise diversifiée? Expliquez Quelle importance tient la diversification dans votre succès? 11. QUESTIONS ADDITIONNELLES Croyez-vous qu il y a d autres questions que nous aurions dû vous demander concernant votre succès? Quelles seraient-elles? Saskatchewan Agrivision Corporation inc., 2006 36

NOTE to Reader The Best Practice of Leading Farmers Project will continue over the coming years. If you have comments and suggestions, or if you are interested in participating in this innovative project, please contact the Saskatchewan Agrivision office. We welcome your comments and critiques on this Best Practice Report. Making Transformational Change in the Business of Agriculture SASKATCHEWAN AGRIVISION CORPORATION INC. 502 45th Street West, Second Floor Saskatoon, SK S7L 6H2 Canada Tel: 306-384-4491 Fax: 306-244-4497 Email: info@agrivision.ca Web: www.agrivision.ca