Case Study 5: Grains
About the farm:
Mike came into farming through drinking beer. Through his work in the hotel and restaurant industry, he saw a need and a market for better beer. Mike's 10 years of growing and experimenting with different varieties wheat, barley, spelt, and oats has made him a regional authority on grain.
Mike stands out among the other farmers in this survey because he does not own any of his means of production except the seed and some malting equipment. The land, and almost all the equipment he uses are loaned to him by others. He doesn't pay for the land because he feels that the return from farming for him is simply not enough. This arrangement doesn't give him the long-term tenure he would like, but presently his landlords are content with tax benefit in exchange for the 20-acre lease. As for machinery, Mike trades his skills and time with friends who own the equipment he needs for his operation.
Most of his energy in the past 10 years has been spent experimenting and building seed stock. This type of farming doesn't look very good on paper, especially because he has experienced some years with significant crop loss. However, he feels that the knowledge and experience he has gained during the years of trials will pay for themselves many times over in the errors he won't make when he's growing in large quantity. Moreover, much of the seed stock he has built up simply is not available in quantity anywhere else.
Farm Marketing
Mike enjoys the task of marketing, and since the word has gotten out about his grains, he finds there are more customers than he can supply. He has become friends with many of the brewers. He feels a social network is the only way to cultivate customers. There really wasn't a market, or an example of a local grain marketer to follow when he first started. His attempts marketing in the local paper were a waste of money.
He sells 5% of his production to a bakery with its own mill, and the rest to breweries. Since he is such a fan of high-end beer, he chooses to sell only to breweries where he can appreciate the end product. He feels the cross marketing is good promotion for his grain.
One marketing challenge he faces is the preference in the wheat and spelt marketplace for organic certification. Since he hasn't been farming in one spot very long, he says it's very hard to manage the weed 'seed load' in the soil with organic practices. He feels organic practices are important and achievable, but he's not ready yet.
As a way to add value to his production, Mike malts some of his grains. This basic soaking and drying technique more than triples the price he gets for his product. He has had to invest a substantial sum for the equipment, but the ability to malt has given him access to more high-end markets. He is experimenting with different techniques of soaking and fermenting grain.
One of the reasons he is getting a good reputation with customers is his high quality product. Mike is meticulous about cleaning and storage. He thinks that clean, mould-free grain is essential to being able to market to smaller, high-end destinations. He is also diligent about having his grains tested at a lab for Fusarium and heavy metal content, so he knows that his grains brew properly.
Seasonal Workload
Mike?s working season is about three months: July, August and September. In July, he harvests the grain with a combine. Other jobs this month include handling, sorting, cleaning, malting, storing and marketing. These jobs continue through August and September, when he is also preparing the fields and planting the grain which will overwinter and be ready for harvest the following July. In mid-spring he will make one tractor pass over the land with a herbicide to help the weed pressure, but otherwise the crop is left alone until harvest.
Limitations
There are no legal limitations to what Mike is doing, but the lack of agricultural infrastructure is a problem. He has had to source seed from far away and build his own seed stock because it hasn?t been available for purchase. Transportation for large quantities of harvested grain is a problem because there is no railway, and truck rental is very expensive. Mike is so creative and well-versed in what machinery can do for him that he is very likely to find solutions for the problems that he faces. He notes that there is a lack of processing facilities, so local markets for grain are limited. Mike feels that a stone mill or pasta mill would increase the options for value-added markets. He would like to see a mobile cleaning and milling facility available in his region.
Farm Finances
Mike?s business grosses about $18,000 per year and he?s able to net just over $10,000, which he feels isn?t so bad for three months of part-time work. His biggest expense is his labour. He feels there is a lot of potential for raising his income. This is mostly a factor of getting secure land tenure on suitable tracts of land, and on building up enough seed to use the land well. If Mike had more capital at the start, he would have gone bigger and he would have a larger grossing farm, but he has been forced to be conservative. Currently, he and his wife both have off-farm income, with about 85% of their income coming from off the farm. Mike carries $20,000 of debt because of an investment in malting equipment. A small percentage of his income comes from speaking about grains, and leading tours and workshops about grain growing.
Assets
Mike has invested $50,000 in malting equipment. Mike owns his own house, so he has been able to convert a large part of the garage and basement into a processing area. His seed stock is also a major asset, but it is hard to put a price on it because it has been so many years to build. Mike is well-positioned for success in the years to come.
Why this business works
Mike is able to keep his expenses really low through his trade arrangements and free leases, and he is able to compress his on-farm time into three months so he has time to get other work. Mike?s knowledge of his market and his commitment to high quality have given him a good reputation and a secure niche in high-end bakeries and breweries. The diversity of his crops and his ability to add value through malting give him greater marketing options.
written by Robin Tunnicliffe, edited by Barbara Joughin
Last Modified: September 23, 2014