Heglar Creek Farms, based near Raft River, Idaho, encompasses 5,000 acres of crops, 11,000 beef cattle, 2,000 dairy cows, about 600 acres of turf grass (sold to the housing market), an electric business, a trucking business and a dairy supply company.
Nathan Garner is in charge of the farm’s 5,000 row-crop acres and after 2020 will be an owner. As he looks to the future, his goal is to make the farm more efficient while continuing to seek out worthwhile opportunities.
While expanding its businesses has been critical for the success of the farm, it doesn’t mean the farm partners jump on just any opportunity. It takes research and a plan.
“Each business we entered depended on who worked for us,” explains Garner, who says the farm employs 130 people. “We found a good person to be in charge of the feedlot, so we could make good money there. He suggested buying all the bull calves from local dairies.
“When we saw an opportunity to enter the sod market, it opened the door for another family to come back,” he adds.
The electric business was the brainchild of yet another member of the younger generation, as was the robotic dairy business. Each expansion is a matter of growing to continue providing new opportunities for the next generation, while maintaining a positive bottom line.
“We don’t diversify unless we can be one of the best in whatever that business is,” Garner says. “That means we hire the best person possible—if it’s family that’s great, but ultimately you have to find the person who will make you money.”
A diversified business has both pros and cons. While it can add financial cushion in tough years, it can also be a farm’s downfall, if not properly researched. Carefully weigh your options and consider both best- and worst-case scenarios before investing.
“Examine and document the risks and benefits of the project,” says Moe Russell, president of Russell Consulting group. “The dangers to watch for in diversifying are: Don’t get into a business you don’t know much about, unless you can learn in a very steep learning curve, and be willing and able to hire talent and experience you don’t have.”
- Do your homework. Consider the potential return on investment and the downside risk if the project doesn’t go as planned.
- Talk to others. Identify neighbors or others who have taken this kind of risk—learn from their experience. You could go in with a leg-up or know to avoid an opportunity altogether.
- Have an exit strategy. Not every opportunity will work out, and you should know how to get out quickly if things turn south. Depending on the business, this could include outsourcing labor to run the project, alternate uses for inputs or liquidation.