Farming in multiple locations spreads risk and can make people farm better.
“We had to improve our management skills and maintain them at a very high level to operate in multiple locations. But that in itself made us better farmers, better stewards of the land,” said Gregg Halverson of Black Gold, a farming operation based in Grand Forks, North Dakota.
It’s a two day drive from one end of Halverson’s farm to the other – 1,596 kilometres.
“It’s not something you want or need to do too often if you plan well and encourage your staff to do likewise,” said the potato farmer, speaking to a workshop held by Agri-Trend Agrology in Saskatoon.
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His Black Gold Potato Sales provides about 10 percent of the potatoes that are processed into chips in the United States. As a major contractor to Frito Lay, the company had to find ways to supply processing plants across the Midwest, south to Texas and Florida and east to North Carolina. The business also had to spread weather and other economic risks over as much land as possible.
“My grandfather planted 10 acres of certified seed potatoes in 1928. He was a pioneer in the Red River Valley and farmed at Forest River, (N.D.),” said Halverson.
After the Second World War, the family moved into the table potato business. By 1949, the farm had a wash facility and was planting 400 acres annually.
Herman Lay started marketing potato chips from his car in the 1920s and by 1961 had built a company large enough that it merged with Frito, then a corn chip maker, to form Frito Lay, a national snack operation. Beginning in 1959, the Halversons became a supplier to the industry with its then 600 acres of Kennebec potatoes.
The name Black Gold came because of the dark soil of the Red River Valley, the yellow of the potatoes and the purebred Black Angus cattle business the family started in the 1960s.
By 1985, the Halversons needed to expand their potato business and focus on customer service to support sales. They opened a seasonal office in Florida and a farm operation in southeastern Missouri.
“We’re now the largest potato farmer in Missouri. We showed them,” said Halverson.
They expanded to all potato growing areas including North Carolina, southern Texas, Iowa, Illinois, Michigan, Minnesota, Nebraska, Indiana and Wisconsin during the 1980s and 1990s.
Black Gold built all-weather grading and handling facilities, improved quality control and made the most of its assets. The company uses hydro-cooling and optical sorting to ship up to five semi-loads per hour from each farm, while maintaining quality standards.
Asset use for the company involves shipping its farming equipment, including planting, spraying and harvesting machinery, and its 35 tractors, by truck from farm to farm.
“The north-south seasons help us make the most of these expensive assets….We look for $3 of (annual) sales for every dollar of assets that we have,” he said.
“We document every mistake we make and make sure that we share those learning moments widely within the company so we don’t do it twice,” he said of his 80 staff.
The company relies on its culture of putting the potato buyer first, “even ahead of our short-term bottom line when necessary,” said Halverson.
He said any one of its quality control staff has the authority to shut a plant down if there is problem.
“We have an operational manual of procedures that we all follow closely. New employees can get up to speed quickly and for our (senior staff) it takes the stress out of decision making during busy seasons or when the weather or other issues turn against you,” he said.
The company has a policy of having a backup plan for production, transportation or other logistical failures to ensure that customers always receive product as contracted and to keep buyers aware of any issues that might be on the horizon.
“Should the market price rise during the season, too bad for us. We deliver consistency. Over the long haul it means we can charge a premium for that as one of our products,” said
Halverson.
“We run a very open operation. No surprises. The same goes for suppliers. We meet with John Deere to create a maintenance and (replacement) plan and discuss any improvements we want,” he said.
Despite all of the planning, wrecks still happen and some expansions fail. The company was “washed out of Louisiana” and failed at production in Mississippi.
Halverson said Black Gold has found that size is no substitute for competitiveness.
The company has to fight corn growers for rental land. Halverson pays up to 40 percent more than average for his rental land and 85 percent of the acres farmed by Black Gold are rented.
“It lets us cherry pick the best fields in an area and keeps landlords from looking elsewhere….We wear our sustainable land use policies proudly and market them up and down the supply chain,” he said.
“We create performance levels so high that they are barriers to entry for other growers who want to take a run at our markets.”
