The idea of investing in primary agriculture might sound like a cruel joke to many farmers. Who in their right mind would put their money into the business of growing food?
However, imagine that your farm was listed on the stock market and you had to answer to investors. What would they want from you? What would they want you to do differently?
Leo Benne can answer that.
Back in the 1980s, he and his father Jack spotted a golden opportunity in the vegetable greenhouse industry. The business was poised to boom and the Bennes knew that greenhouse operators could save big bucks – as much as $40,000 an acre – by buying established seedlings from specialized plant propagators.
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Their business grew quickly. In 1988, they built a 2.5 acre propagation greenhouse, North America’s first and, in only a decade, tripled its size. However, it still wasn’t fast enough, so in 1999 they went public. Last year, the company, Bevo Agro Inc., sold about $20 million worth of tomato, cucumber and other seedlings, and that was before the completion of an 11.5 acre expansion last summer that gives them an astonishing 34 acres of state-of-the-art greenhouses near Langley, B.C.
Outside investors hold nearly two-fifths of the company’s 24 million shares and in 2003, a private investment company put $5 million into the company. So you’d better believe that Benne and his father have plenty of people watching them.
And “them” is the key word here. It wasn’t a grand vision or the promise of big profits that brought investors on board, Benne said. It was the experience and expertise of his father, himself and their staff.
“I think anyone investing in a farm-type enterprise would first look at the management,” Benne said.
“Farming is more than just machines and widgets. In farming, you’re dealing with all kinds of things that are out of the control of the farmer Ð things like weather, diseases and pests. The quality of the farmer’s management can reduce the impact of those things.”
So if lesson No. 1 was that management is more important than assets, the balance sheet, growth prospects and all the rest, what was lesson No. 2? Simple: you’d better have a plan if the key management personnel get hit by a bus.
Not long after going public, a bus in the form of pneumonia hit Leo and put him in the hospital for a couple of weeks. Jack, with help from the assistant grower and secretary, stepped into the breach, but it was a scramble.
“They were trying to run things and there was no system for doing that, because I had always done it in my head.”
The need to lessen the reliance on Leo and his father led to lesson No. 3. Once they created procedures, manuals and checklists and delegated duties, Bevo Agro operated more efficiently.
That means Benne has more time to do what the investors want him to do: manage. That’s been especially key in the past year. For just as Bevo was undertaking its most ambitious expansion ever, the value of the Canadian dollar soared, which was a major blow for a company that sells nearly half of its production south of the border. Benne will still log his fair share of time in the greenhouses this year, but he knows his priority.
“My job is to work on the business instead of just working in the business.”
It’s natural to assume that if your farm had investors, it would be all about profit. The surprise is that it would be all about you.
Glenn Cheater is editor of Canadian Farm Manager, the newsletter of the Canadian Farm Business Management Council. The newsletter as well as archived columns from this series can be found in the news desk section at www.farmcentre.com. The views stated here are for information only and are not necessarily those of The Western Producer.
