Integration Key To Family Farm’s Success

When BSE hit the cattle industry in 2003, it left many people wondering what to do with their cattle, especially those animals that were ready for a market that no longer existed. For the Spenst family farm south of Winkler, Man., it forced them to look for non-traditional markets. In 2005, they opened Spenst Brothers Premium Meats in Winkler, and drew on the financial principles learned on the farm to make it work.

Inventory farming, having a plan to get along and make decisions, knowing costs and making sure each steps fits into the plan are all part of this mixed farm s artillery to make it dovetail with a successful retail business.

Brothers Paul and Garreth Spenst and their father Garry raise feeder cattle, crop 1,500 acres of land south of Winkler and make hay bales on 250 acres, off the beaten path north of Plum Coulee. In addition, the family also runs a multi-million dollar meat store and processing plant at Winkler, started up in 2005, as their response to the BSE disaster of 2003 that threatened to take down their feeder and grain farm.

SPECIFIC ROLES

While all three farm together using much of the feed for the 600 and 1,200 pound heifers sent through their Winkler store, each is in charge of a specific part of the business. Garreth is the meat cutter expert, heading up that department, making sure the customer gets the best product each time. He also handles any production issues. Paul looks after the front of the store, and the dad, Garry, makes sure the animals get the best feed, care and housing back at the farm.

As mentioned, the three work together and own shares in the incorporated meat store, Spenst Brothers Premium Meats, but run the farm together as individual farmers. This makes it easier to move some of the farm income around to where it s needed most.

Paul says he s often asks how he makes working with his brother and dad work. We get along, says Paul, as he hauls home a load of carcasses processed at a local plant, about 60 km north of Winkler. It s not perfect, but we have a system for dealing with issues that arise.

He says it s understood that the sons need to take over the business eventually, and as dad gets comfortable with a certain aspect and the boys can handle it, dad backs away. But for now if we have an issue, we call dad, says Paul. We find out what dad thinks, we bounce it off each other, and make decisions together.

He gives an example where earlier this year, with business increasing significantly to at least 3,000 pounds of hamburger weekly, lifting that four times a week to make burgers was too much for Garreth. We decided as a group to install new lifts, to make batches of patties 200 pounds at a time, with no lifting whatsoever, he says.

FINANCIAL MANGEMENT

As every good farmer knows, it takes good financial skills and planning to make it in today s robust but volatile farm and world economy.

It isn t every day three cattle and grain farmers start a meat processing shop, but many of the basic management principles apply whether it s a meat shop, feedlot, grain farm or a mixture of all three.

While they have a good idea of what it costs per acre to produce a crop, at the store they know exactly what it costs them to make a pound of hamburger or sausage. The two brothers developed a software program at the store requiring 15 to 20 entries a month that gives them their costs per pound, which is extremely helpful when deli and meat product prices fluctuate significantly. The entries include the prices they pay that month for pork, what they pay the farm for hanging cuts of beef, and includes break downs for each cut.

If a sirloin tip roast sells, I know to the penny what the WHEN ARE LAND PRICES TOO HIGH?

Creek Farm, north of Westlock, says, We found that just farming and enjoying the life, we were going broke. We had to get more land; then it started going up.

Koch says, I think if you own a good solid base that s basically debt free you have all kinds of leeway as far as a land purchase goes. But he cautions, If you ve got payments on land already, payments that would equate to rent or better, it s pretty hard to go out and buy something that is going to cost you $120 per acre in payments. One screw up and it s gone.

The Kubinecs too have some words of caution. Even if a farmer thinks they can afford to pay for a piece of land, they need to assess their risk. Sometimes a land purchase can be too risky. We don t know what the prices will be in 15 years, Maureen says.

It still does boil down to each individual, Kubinec says. Maybe you ve had three generations of people farming behind you, and if it s beside you, you won t care what it costs, but if you re a young person just starting, you have to be careful, he says. It could be the top of the bubble and if it breaks you ll be in trouble.

The demand for land is not just local it s global. Browsing the internet I found a site encouraging the Chinese to buy Canadian farmland: http://chinalandinvestments.com. Canada is the ideal country for investing in farmland for many reasons, it says. (For more on non-farmer land ownership, see next month s issue ofGrainews).

No one knows what will happen to land prices. If that quarter for half a million is beside yours and you have the means to purchase it, we ll all think you re crazy. But maybe a few years down the road we ll wish we d bought it. Or as one farmer said: I would walk away if someone offered me enough. Maybe it s time to be the seller, not the buyer?

MarianneStammusuallywritesfromWestlock,Alta.,butwrotethisfromSwitzerlandwhereshe sspendingtimewithfamily

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