So You Want to Be a Grass Farmer – Part 3

The Business of the Business. One of the biggest issues we faced in selling our beef directly to the public was finding an abattoir that knew what they were doing and were honest. We had several negative experiences, including improperly cut carcasses and even stolen beef. It was nearly impossible to find an abattoir who knew how to cut a carcass into steaks and roasts and not into some unidentifiable mass of meat. We spoke to a number of other producers and all had the same experience. A horrible commentary on the industry and lack of oversight. Yet, from the first, the demand for our product was unbelievable.

We began by conducting a blind taste test of possible breeds. Friends and family overwhelmingly chose the grass finished Devon over Angus, Hereford, Galloway, and Dexter. Our customers were in full agreement regarding the superior taste of the Devon. We were approached by farmers markets across D.C., Virginia, and by the mid-Atlantic regional director of Whole Foods several times to provide them with a steady supply of good, organic beef. While we are not certified organic, we do practice organic methods of raising our beef.

We had more direct customers than we could supply and a waiting list of customers. We even found a restaurant that wanted the entire carcass – not just the higher end steaks if we could deliver animals on a semi-regular basis. All of our marketing efforts were selling direct to customer that we knew and through word of mouth. We did no advertising other than a few brochures and a passive, informative web site.

Here is where many folks will fall asleep – the business of the business. Before we did anything, we did a complete cost-benefit analysis of the entire operation. This included calculating return on investment and the pros and cons of our options. We weighed having a stocker operation, a cross-bred herd beef business, a pure herd beef business, a mix of pure and crosses, and a mix of pure Devon beef and pure Milking Devon.

Initially we started out with the crosses to see if we would be happy being in the cattle business with a minimal investment. When we discovered we loved it, the beef Devon and Milking Devon business model was what provided the right mix of seed stock production, beef sales, and value added products for our customers and ourselves. This may not be what works for someone else – you have to look at what you enjoy, what makes money in your particular demographic area, and how much you want to invest in any particular aspect of the cattle business.

We’ve been criticized many times for being middle-aged folks from the city/suburbs who wanted to “try their hand” at farming. But we reject the idea that we are “hobby farmers”. That implies lack of rigor and planning without any thought to profitability. We are quite serious about our business. But, being intelligent business people, we also recognize that until you have a solid business, you still need an influx of cash to sustain everything. Hence, we still do part time consulting for large defense firms in the D.C. metro area. One of the luxuries of a second source of income is that we are not tied to the cattle market. We can afford to be picky about some production standards. We can afford to withhold animals from the market in a drought or breed inferior stock just to keep up with the numbers game. We are able to create a very tight and refined business model that is all about quality and profit with minimal inputs.

Adjusting our business model and re-stocking. Due partly to the abattoir challenges, we re-evaluated our business model at the beginning of year three (2008) and decided to make a shift to a seed stock operation with beef sales secondary. We needed pure stock to support a breeding operation so we planned on selling a handful of crosses and begin by purchasing one or two pure registered animals. To our surprise, we sold our entire herd of Devon crosses to a single buyer. We even sold an old cow that, in some respects, was the best cow of the herd. She was in great body condition, an attentive mama, and was also seen to nurse three calves simultaneously.

We now had a small stash from the sale of our Devon crosses to purchase some nice pure blood animals. We also had a very wet spring and grass was growing like crazy. In spite of the year-long drought in 2007, our pastures were recovering remarkably well. The removal of a dozen animals for a couple of months allowed the pastures to rest and make a dramatic comeback. Now we needed to restock! After selling all of our Devon crosses we were left with four horses, two beef steers, and a Milking Devon and her heifer.

It was exciting to be able to be in a position to purchase animals again. When we revised our business plan, we again did a full cost benefit analysis. We chose our specializations carefully and, at the same time, diversified part of our operation to include value-added products. Some of the most successful names in business like Warren Buffett and Gordon Ramsey advocate the KISS method – Keep It Simple, Stupid! There is wisdom in doing one thing and doing it very well. Also, we wanted to establish and grow a solid business based on value and ethics. Long term investment and profitability are the hallmarks of a well-run business. Chasing the latest fad or dabbling in multiple enterprises is a recipe for disaster.

We had learned some valuable lessons in our previous buying experiences that we wanted to apply to our pure Devon purchases. We found our initial efforts were frustrating. Very few animals available, the prices seemed inflated prices on some, the quality was poor on others. Record keep was often shoddy or non-existent.

Fortunately, contacts within the NADA led us to other opportunities. At this point, we were very wary and had in our minds exactly how we wanted a transaction to take place. The referrals we received were wonderful. We had contracts, inspected the animals before final payment and taking them home, and verified their ear tags, tattoos and lineage. We initially purchased two fine cows and two heifer calves from a farm in New York. Their temperaments were very laid back and calm. When introduced to our little herd at home, they got along great from day one.

We also purchased a nice little heifer from another breeder in Virginia who was building a very fine herd for herself. That was also a professional transaction. One final purchase of another cow/calf pair, again in New York, finalized our restocking program. We ended up with a terrific little herd with three adult pure bred beef Devon cows and five heifers. The adults would be breed-able this winter; their daughters will be ready next year. We should be able to grow a significant seed stock business within a couple of years.

Our business model is focused. We will only breed to top bulls of correct frame size. Animals that don’t measure up will be finished as beef, regardless of whether they are heifers or steers. We will not sell inferior animals as seed stock, as we’ve seen practiced elsewhere, and taint the gene pool with lesser animals. We feel this is a disservice to the breed. This way, we will maintain our organic beef business on a smaller scale and also practice a high-end, quality seed stock business.

Our dream has taken some twists and turns. We didn’t know at the beginning of this journey where we would end up, but the enjoyment has been in the journey, not just the destination. For us, the dream has come true!

Summary.

The obstacles we initially faced were:

• A broken down farm with no infrastructure or fencing
• Breeders with poor records and mineral programs
• Criticism for being “city kids” trying to be cattle people
• Buying animals that were in poor health
• Learning curves on nutrition, veterinary medicine, homeopathy, breeding
• Deficient pastures and soil conditioning

How we overcame those obstacles:

• Rebuilt the farm from the ground up and developed all of the necessary infrastructure for a cattle operation
• Developed a reliable network of cattlemen (and women!) that we deal with exclusively
• Developed an eye for good cattle and understanding of proper genetics
• Learned all we could about the Devon breed and cattle in general
• Researched, studied, and attended conferences and meetings with other successful farmers that helped us overcome our lack of “hands-on” experience. Fortunately, being successful in other business areas, usually translates into success in new areas and it did

What we’d recommend to someone else thinking of this lifestyle:

• Research, research, and more research
• Interview as many successful people as you can in what you want to be involved in
• Never stop learning or keeping an open mind. One long-term cattleman told us how fortunate we were because we didn’t have to unlearn 25 years of “this is the way we’ve always done it”.
• KISS – keep it simple! Don’t fall for fads but build a solid business based on solid business principles. Do one thing really well before you branch into new areas
• Try it on a small scale with less expensive animals first; maybe even renting land rather than making a huge land/farm purchase
• Have a backup plan – we set aside a tidy sum in the event we failed so that we could recover and go back to what we were doing before farming
• Be sure you have income before quitting jobs and totally changing your way of life
• Make sure both you and your spouse are equally passionate about what you are doing; huge change puts a tremendous strain on a marriage and if one of you isn’t as excited as the other, it spells trouble
• Simply avoid those who are negative and backbiting – they are totally counterproductive to your success. There will always be someone more successful, more wealthy, etc. than you are so don’t worry about it - just forge your own path. Don’t let people discourage you; hold to your convictions.
• As they say, grace is what you demonstrated after you fall and how you get back up – very few people in life understand what graciousness really is

Best of luck to you! We wouldn’t change our lifestyle for anything. We simplified and semi-retired at age 45 and 50. We still have part time consulting opportunities with our own corporation. We control our destiny and have found happiness. And, that’s the best of all worlds! Success and best wishes to you!

You can contact Linda by writing Linda@northamericandevon.com

Web Resources -

VA Cooperative Extension Service Tax School, www.tax.vt.edu

Books -

One Page Business Plan by Jim Horan

22 Immutable Laws of Branding by Al Ries