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From the inside: Breaking through with the Kolks in Alberta

These days, when it’s so pricey to expand, diversification can look right for even the most dedicated commodity farms. As Alberta’s Leighton Kolk found, though, it takes some serious smarts. And courage

"We’ve always found we’ve had to take risks,” says Leighton Kolk. “The numbers have very seldom totally lined up.”

What do you get when you cross one of Canada’s most competitive farm regions and a producer who just can’t say no to a good risk. You get Kolk Farms.

It’s no joke, either. Leighton Kolk, a southern Alberta farm and feedlot owner, seems to have a knack for not only finding risk, but embracing it with open arms. He and his family are now into their third year of a relatively new-to-them business venture, a seed cleaning plant and retail operation. It’s yet another big step in diversification for the Kolks.

Like most every farmer in the area, what the Kolks know is that land comes with an eye-popping price tag. And even if a farm wants to expand, the ground just isn’t there.

More and more, in other words, the tools of the trade are sell-offs, mergers and acquisitions.

And that’s why, in 2019, even though things were clicking along quite well, the Kolk family determined a change was necessary.

That year they were running a 3,000-acre grain farm, primarily forages for their cows and a variety of seed crops, along with 15,000 head of cattle between two feedlots, one of which was rented on adjacent land owned by Haney Farms. The Haneys, longtime residents of the area with deep roots, had sold off most of their land in 2008, of which the Kolks bought a large portion.

Leighton Kolk had begun his agricultural career alongside his two brothers. They have now gone their separate ways after two friendly splits — first with Claude in 1992 and later with John in 2009 — and Kolk slowly plodded along, building back his land base and assets. Today, he operates the business alongside his wife Elinor and their three kids, Jordan, Megan and Devan.

Everyone contributes. Jordan is operations manager of the farm’s equipment and field production and also, as you’ll read, he manages the seed business. Devan works under the tutelage of his older brother on crop production while Megan manages the business’s HR, farm safety, animal welfare and employee training. Elinor takes care of facilities, rental houses and farmyard maintenance.

For Leighton, life is all cattle all the time, in addition to multiple external business ventures. That second bit, though, is quite a mouthful. Among his primary contributions to the farm business is taking aggressive, calculated risks, something that can be tricky when a quarter-section of land can be north of $2 million.

“I always tried to work through the numbers and ask, ‘Will this economically handcuff us if we make this move?’” he says. “We’ve always found we’ve had to take risks, and the numbers have very seldom totally lined up, but they’ve been close enough that we’ve taken a step forward each time an opportunity presented itself. You can burn a lot of capital in an intensive area like this, so you better have a plan.”

The 62-year-old thinks land acquisition in southern Alberta is generally not feasible unless it is tied to a value-add strategy, and it did not seem workable for the Kolks for several years throughout the aughts.

“I pretend to think I’m fairly young yet, and still have a growth mentality,” he admits. “My three adult children, all shareholders, have a fairly aggressive sort of approach to business and farming. The mentality of being in a growth sort of culture is definitely alive and well in our operation.”

With a free education in hard knocks, Leighton was keen to diversify in 2019, but this time within agriculture. “Over my 30-year career in ag, we’ve taken on things that had nothing to do with agriculture. Generally, I stubbed my toe or nose pretty bad on those.

“Even though the principles of business apply, there’s a whole new set of rules that I had to learn the hard way because I stepped outside the agricultural community.”

In 2014, he was a sizable investor in a paving and construction business that ultimately failed, and he is currently in a three-way partnership that builds senior and accessible housing complexes as well. 

For Kolk, his ag ventures, such as 50 per cent ownership in a local hog operation or co-ownership of a second feedlot in a different province, proved much more linear. Feeding hogs is different from feeding cattle, but only by degrees, not orders of magnitude.

“Production aspects, animal health, welfare, feed quality, accounting principle, they all applied fully so it wasn’t as steep a learning curve to step into 30,000 pigs,” he says, pointing to the family’s acumen at running grain mills and augers and maintaining buildings.

There’s a personality thing to consider as you listen to him talk, though. Leighton is self-deprecating. It can seem, when he gives historical accounts of business decisions, that he just did the things that were there, waiting to be done. But that’s not how Jordan sees it.

“My dad has a serious appetite for risk,” Jordan says plainly. “He’s been in cattle business for a lot of years and seen some crazy swings. I’m always amazed at his willingness to take on risk when things look shaky. The operation wouldn’t be where it is today if it weren’t for some big risks.”

“There’s lots of value being left on the table,” says son Jordan. It’s time to look harder at value-adding. photo: Chris Yauck

These days, too, Leighton is equally keen to get out of his own way and let others take ownership and prove an idea. For Jordan, it’s a great environment to thrive in.

“My dad’s been fairly good about letting us take on anything we think we can handle in terms of new projects or responsibilities,” says the 32-year-old. “He doesn’t hold the reins really tight. He is quite willing to give us space to figure it out.”

You want to what?

Over the years, neighbour Dick Haney would chat with Kolk. The two were amicable and shared a respect for one another beyond the rental agreement that saw Kolk feed cattle on Haney’s property. Then, in the early winter of 2019, Haney moved the conversation up a notch. He directly approached Kolk about the possibility of a sale.

It was way more than just extra feedlot capacity. Also on the table was Haney’s seed business, including a seed cleaning plant and retail operation complete with staff, customer lists, production contracts, office space, farm housing, a small portion of land and warehousing.

For Leighton, the first step was clear, and entirely consistent with his evolving management style. Knowing he’d lost and won over the years with business gambits, he got every family member around the table and asked if acquiring Haney Farms was the right move.

“It took a couple meetings with my wife, myself and our three children to talk through the ‘so what is our current mission and vision?’” he says. “It became clear that, no, this isn’t outside of it. The harder discussion was: Is this going to add value? Is it going to detract from energy we need to spend on? Who’s going to step up?”

Each family member had unique reservations that would gnaw at them over the coming months. Megan had concerns about getting into retail, a drastically different business than simply feeding and delivering cattle to a packing plant. Jordan’s apprehensions centred around seed contracts and the types of growers Haney serviced. And Devan wanted to know who would manage the seed operations, something the family had no experience in.

Leighton was preoccupied too. He had questions around staffing, management experience, financing and HR-related matters.

And Elinor wondered who would actually do the work, plain and simple. Best laid plans are one thing, but having people to execute on a vision is another.

Leighton listened. “There was a nervousness from my wife saying, ‘You’re a busy person, some of your children are very busy, they all have new families,’” he says. “She was being the practical one. Who’s going to do this? We’re not doing this half-assed if we are going to do this, so who’s going to commit?”

By May 15, after five months of discussion, the family decided that the opportunity — rife with business elements completely foreign to them — would be worth it in the long run, especially the feedlot permit for Kolk, who wants to increase his herd size to 20,000.

The deal was completed on August 1, 2019, partly because the land’s location could not be overlooked. Being next door was a massive advantage for freight, especially with trucking manure, hay and silage. 

The 5-1/2 full-time staff, including plant operators and a salesperson, were critical to the handoff throughout the early stages.

Since then, all but one of the staff have turned over. But as you can read here, that’s another part of the story that does not bother Leighton.

The culture of change

“In business, you have to brand it as your own if you start it or take over,” Leighton says. “There’s some things you have to consciously reject around culture.”

For Kolk, a firm believer in his self-styled “own it, run with it” approach, part of the job was to rebrand the seed business as K3 Seeds, but he also wanted to move ahead with his concept of empowering employees. It’s a strategy with little grey area, and he admits this management style can cause anxiety and that it’s not for everyone.

He understands it, but he also makes no apologies.

Up and running, with regular stumbles, the business got launched and the Kolks were full of nervous excitement. It was another calculated risk and diversified asset.

“Instead of having one major economic machine focused on beef production, this was an opportunity to have a different campus,” Leighton says. “I think it’s important, don’t put all your eggs in one basket and all buildings in one location. It’s still a fully different economic platform. Cattle prices can go up, cattle prices can go down. Crop prices can go down, our seed business can still be strong.”

The diversified business certainly proved a bright spot as the COVID-19 pandemic backed up animals for months at a time from their initial delivery dates. 

Just as happy for the Kolks were Dick and son Shaun Haney, who sold out. Shaun works off-farm and could no longer juggle two unique careers after a time. Nonetheless, he says he’s thrilled the neighbours have taken over and made it their own. 

“There seemed to be a real sense of eagerness and anticipation to tackle something new,” Shaun says of the deal. “I knew it was going to be in good hands.”

Shaun, who has known the Kolks his whole life, praised Leighton and suggested his lack of ego has contributed overall to a thriving family with multiple successful businesses.

“Leighton has always taken a real inclusive approach to his kids’ involvement in the operation. He’s done a real good job of getting them exposed to a lot of different things in business, not just the operational aspects of running a farm, but also the business side of it. I think that really shows.”

Five hours? Guess again

There’s danger, though, when you start a new business, especially the first time. Expectations may be sky-high. The Kolks, though excited, were more seasoned by 2019.

From Jordan’s perspective, a subtle, unspoken goal was just to survive. Leighton shared his son’s sentiment but knew the operation carried better ratios than their cattle.

“This will have better ROI than we are used to but at smaller dollar volumes, so we went into it with hopefully a five to seven per cent impact on what (we) were currently doing,” he says. “When you’re brand new, you don’t even know what benchmarks to set. We didn’t even know where the true margin was.”

And even though the first year wasn’t one for the record books, a funny thing happened. They turned a profit.

“It wasn’t like we won the lottery, but it wasn’t negative,” says Kolk. “I was expecting us to be under water the first year.”

It was a similar, muted optimism from Jordan after that first year, too, even though his initial 365 days were not without hiccups. For instance, he’d budgeted an extra five hours per week to work on K3 Seeds. Today, he realizes his estimation was off by about 100 per cent.

“In my mind, where we started, I thought I could do this with five hours a week, and it turns into 10. Am I robbing other parts of my business?” he wonders aloud. “That was one of my bigger blind spots, not understanding how much time commitment there would be to some of these. On the flip side, it’s made me shift some things off my plate that don’t necessarily need to be on there.”

Part of those extra hours included three additional weekly meetings, reviewing, ending and beginning contracts, and simply getting up to speed on a business that views handshake agreements as amateur. “We went from that to a very formalized contract structure on a lot of these clients,” Jordan says. “That was an eye-opener in terms of how some of the other larger companies approach business. You have to make sure your t’s are crossed and i’s are dotted.”

As he began to understand the unique demands of K3 Seeds, Jordan, an admitted introvert with a love of production and the technical side of agriculture, began to more effectively offload and delegate work.

Rather than slog through customer relations — not Jordan’s greatest strength or desire — the family eventually enlisted Klaas Slomp, a plucky ag industry veteran who happened to be Kolk’s squash partner 30 years prior.

A new sense of direction

As their insight into the seed business grew, the Kolks began to see it as critical to not simply be new managers of an existing business, but to actually carve out a niche. And carve they did.

“At the beginning, we thought we could be all things to all people, but we’ve started to say, ‘hey, we are going to focus quite hard on forage and feedlot customers and try to supply advice and data tailored toward that segment,’” says Jordan.

It has proven a shrewd decision, too. They live in an area where there are no fewer than 10 elite seed operations within a 100-kilometre radius, some offering the same services as the Kolks. To be yet another player in that market space could be ill-advised at best, so the family leveraged its decades of cattle experience and pre-existing relationships in the animal world — a logical step considering they live in the middle of Canada’s largest cow herd.

“We were one of the first to start using soft wheat for silage production, then hybrid rye and winter cereals,” says Jordan. “We had a bunch of experience doing that before we were ever in the seed business. We are getting quite a few calls on winter wheat and rye, how we managed it and used it in feedlot rations.”

Kolk now has set 2026 as the date the company will be “fairly successful” to provide livestock producers with crop solutions from B.C. to Manitoba and become known as the premier livestock seed company.

‘You can make a crazy idea work'

As the family moves into its third year with K3 Seeds, it’s with a sense of optimism and, hopefully, growth. If the first two years were holding the dam, year three is about enjoying the water.

“Now, we are working towards a bit of an expansion in the seed business again, trying to grow it,” says Jordan. “I’d assume in a year or two I’d be looking for another project, but that’s driven by having people around you can trust. If you grow through a few of these hurdles and go through the growing pains together, long-term that will build a better team and run a bit more autonomously.”

Leighton is happy the big learning curves have flattened out and believes K3 Seeds will continue to perform as a strong, diversified asset for years to come.

“When things aren’t so rosy on the crop side, you know the feedlot is there as an offset,” he says. “It is probably a pretty good way to diversify without getting really far out of our wheelhouse.

“It’s good to diversify, but to diversity 20 per cent off the line you’re heading is healthy. It makes you maybe think what you are doing right or wrong in your current operation. But if you do a 180 … you get a real sore neck because you always have to look behind and in front of you.”

Jordan has lived through those 180 moments as a child of Kolk, but now in managerial roles within multiple businesses, he believes an expansion, whether as K3 Seeds or not, was inevitable.

“There’s lots of value being left on the table by farmers because we don’t think we understand how to operate processing plants or do some of the marketing and product develop(ment), but that needs to happen,” Jordan says. “We like to say, ‘Hey, we are really good at growing a crop.’ There’s some truth to sticking to what you’re good at, but there’s opportunities in a space outside of just straight ag production. We were going to go down that road at some point, this was a pretty good fit and timely opportunity.”

And, as he’s learned from two years in a new role, the son who likes to say, “I have dirt flowing through my veins,” has come to believe that the only limiting factor is some good help.

“If you have access to the people, you can make a crazy idea work.”

About the author

Contributor

Trevor Bacque

Trevor Bacque is a freelance writer and journalism instructor. He has written extensively about agriculture since 2012 and is the current president of the Canadian Farm Writers’ Federation.

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