All too often, a farm s success is measured exclusively in economic terms. It s a job we know how to do. Net income, net worth, debt to equity, return to investment, and profitability are great tools to use to determine the financial health of the business.
Yet we know that success is defined by more than simple economics.
For instance, when the Enterprise Council on Small Business asked Canadian business owners last year how they determine success, the response they got was one word: satisfaction.
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What makes satisfaction? There are a lot of contributing factors, of course, but for 41 per cent of owners in the council s survey, there was an important component: maintaining a healthy work/life balance.
Too many people think that success is wrapped up in things, says Ron Haynes, who has a degree in human resource management plus an MBA in marketing, and is currently a partner in a national building material company in the U.S. But the truth is, success is wrapped up in how you see yourself and how you re able to enjoy your life. To have a completely successful life along these lines, you ll need to consider these six components: peace of mind, health and energy, loving relationships, financial freedom, worthy goals, and personal fulfillment.
Based on this broader definition of success, the most successful farmers today may be the Hutterites. Not only does their business model make them incredibly efficient, but the social structure of the colonies nurtures their members with peace of mind, relationships, and personal fulfillment.
Gordon Tait is the director of Hutterite services with Meyers, Norris, Penny, a company that has acted as adviser to the Hutterite brethren in Western Canada for over 50 years. Today, MNP represents 90 per cent of all the colonies in Canada.
Tait sees a number of reasons behind the success of Hutterite farm operations. Hutterites have a very strong commitment to the colony, he says. They are hard-working and dedicated. They have significant farming skills, and each colony has a very diversified skill set.
Tait points as well to the fact that colonies are primarily focused on agricultural production, and that the size of each colony enhances efficiency and enables diversification. Hutterites are very adaptable and extremely efficient, Tait says. They have the ability to share and make decisions which benefit the entire community rather than an individual.
Plus, Tait adds, Their simple lifestyle and no need for personal assets reduces the resources allocated for personal needs.
To outsiders, a Hutterite colony may seem like a large industrial farm, but Tait believes Hutterites are probably the best example we have today of a family farm. If you consider the number of families living on a colony, each family is supported by only 400-800 acres.
By working together for the good of all, they reduce costs, Tait says. Whereas 10 non-Hutterite farms would require 10 full lines of equipment, the Hutterites willingness to share equipment and labour significantly reduces the machiney investment.
The business model of a colony requires specialization of labour. While on most farms the operator has to be a jack-of-all-trades, hiring off-farm for specialized work, a colony trains a specific member for each job that is needed to be done.
A colony will have an individual who is responcalving sible for cropping and someone else who is responsible for each livestock sector. As well, each colony will have a carpenter, electrician, heavy-duty mechanic, and any other trade that is deemed necessary. And if a colony doesn t know how to do something, they are not afraid to learn, says Tait. One of the most important aspects of colony life is passing on knowledge and experience to the next generation. Mentoring the young people in skills is very important in the Hutterite culture.
The desire to learn and improve farming practices has made Hutterites early adopters of new technology. While they reject many lifestyle devices found in most homes, if new technology will increase farming efficiency, Hutterites will be among the first to embrace it. Computers and cellphones are now common on colonies. The difference is, their use is restricted to the farm business rather than for personal enjoyment.
Yet technology has also reduced labour requirements, which has led to a need for diversification strategies on many colonies. Colonies have diversified into non-agricultural businesses ranging from metalworking or carpentry. This willingness to diversify even prompted MNP to undertake a study in 2009 looking at the possibility of pairing Hutterite colonies with local food processors. That study (The Hutterite Option, Resourcing for the Future) found nearly 50 per cent of both food processors and Hutterite colonies see value in working together to bring new products to market. It found that partnering with a colony could provide both parties with advantages in labour, capital, resources, and even production quality.
This diversification is partially driven by the need for a colony to be profitable, and while profitability is essential on all farms, it has some very concrete targets in Hutterite operations. Each colony must generate enough wealth to allow for creation of a new colony for the next generation.
Colonies split on average about every 20 to 30 years, and it takes a huge investment to build a 7,000 to10,000 acre farm from scratch, especially when you also have to build housing and provide all of the services needed for the 60 to 160 people who will eventually be living there.
The ability of Hutterites to continually expand operations all comes back to their goal of working together in peace and harmony, says Tait.
Tait believes all farmers can learn from the Hutterites. Sometimes, the lessons can be very concrete, such as the benefits of sharing equipment in order to reduce inventories. Or the lessons might be structural, such as tapping into economies of scale by purchasing inputs co-operatively and marketing production jointly.
Farmers could learn the benefits of strong leadership, good communication, and meeting together on a regular basis by looking at the Hutterite decision-making process, Tait says. But most of all, farmers could learn benefits that occur when the decisions are made based on contributing to the common good. CG
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On Manitoba s Starlite Colony, James Hofer lives and farms in a culture that emphasizes the common good. It turns out to be a culture that is also a successful farm business model.
Four rural mythsEven after a century, many outsiders still believe the myths and spread the old rumours about Hutterite colonies in Western Canada. MNP s Gordon Tait says it s time to set the record straight:
Myth #1
Hutterites have an unfair advantage because of the free labour.
Labour is anything but free on a colony, says MNP s Gordon Tait. The colony looks after every need of every individual including housing, education, and even medical. This is a very high cost, even with the simple lifestyle of the Hutterites.
Myth #2
Hutterites are massive landowners controlling huge tracts of land.
Hutterites own only about one per cent of the farmland in Canada, yet over 30,000 people live on the 340 colonies. In fact Hutterites farmers own and manage very little land on an acre-per-person basis
Myth #3
Hutterites don t pay income tax.
Hutterites actually pay a significant amount of tax, Tait says. In 1961 the income tax act was changed and a section was added specifically addressing Hutterite colonies. The Hutterite community likely pays more income tax than the average business person or farmer.
Myth #4
Hutterite colonies are self-sufficient.
Colonies are far from self-sufficient,” Tait says. They are huge contributors to the agricultural economy, buying equipment, inputs, and supplies from local communities and marketing both raw commodities and processed products. It is estimated Hutterites are responsible for 10 per cent of the agricultural economy in Alberta.
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By working for the good of all, they reduce costs. Gordon Tait
