Working on your farm management skills is like exercising… it pays big benefits, but it’s easy to push it off for another day. Only one-third of producers use business advisors or risk management tools, and fewer still do HR, succession, or strategic planning.
To help make your farm more profitable (and your life more enjoyable), this ongoing series from Glacier FarmMedia combines expert advice with insights from farmers who have gone down this road.
Nixon Honey is an example of a business that has diversified and changed with the times.
“Today we run 8,500 to 9,000 hives — we provide hives for pollination for hybrid canola seed production services in southern Alberta,” said Kevin Nixon, who started beekeeping with his father in 1998 with about 400 hives.
The family started farming in the Lethbridge area, but had land in Innisfail and moved its commercial honey farm to Red Deer County because there were fewer beekeepers.
Rick Dehod, a farm financial specialist in Edmonton, doesn’t know Nixon personally but has heard about him and his business. He said Nixon sounds like a perfect example of an entrepreneur who has diversified.
“Alberta producers are innovative and they look for opportunities, and they need to survive in a competitive market,” said Dehod. “Those who seize opportunities do well.”
Pollinating crops, particularly canola in southern Alberta, has been a profitable business, but “it is a lot of work,” he noted.
And the honey business has had its share of ups and downs.
“In the mid-2000s, honey prices kind of crashed. There was a lot of Chinese honey coming into North America,” said Nixon.
“Basically, in China, they put bees in a big warehouse and feed them sugar,” noted Dehod.
The problem was compounded because consumers didn’t know they were buying foreign honey because the label typically said it was “Canada No. 1” (even though that’s supposed to mean the honey originated from “the nectar of blossoms or from secretions of or on the living parts of plants”).
“Canada No. 1 White is just a grade,” said Nixon. “It doesn’t mean that it’s a product of Canada, but on the front of every jar, it has that grade and we feel that’s misleading. The consumer sees ‘Canada No. 1.’”
While the origin of the honey is on the back of the label, “it’s still not what it is being claimed as, and that’s where we see the problem,” he said.
In response to this problem, the Nixons decided to sell at local farmers markets and they also started packing their own honey.
“We started really small scale, and every year, it seemed to double,” said Nixon, who is also chair of the Canadian Honey Council. “It was no problem moving it. It was farmers markets and pretty local community and then reaching out to some of the grocery stores that would deal directly with the producer. There’s been the big push with local programs, and things like that for grocers too, to support that type of relationship.”
But that shift also requires a continuous investment in the business, as well as working closely with retailers, he noted.
“Production is not an issue, (but) it takes a lot of people to consume a million pounds of honey,” he said. “It’s taking guys away from the bees to pack honey and the priority needs to be the bees. It’s a balancing act.”
Nixon Honey is an excellent example of how to diversify a business, but other farm businesses looking to do the same should always remember that growth needs to be underpinned by a solid business plan, said Dehod.
“We heard a lot about that last year on the five per cent rule: How do you decrease costs by five per cent? How do you increase production by five and do you increase price? If you do that exponentially, that’s all profit,” he said.
Farmers “who really know their cost of production do well,” and that usually means using accrual accounting rather than operating on a cash basis, he added.
“If you don’t know if you’re making money, and don’t know where you should invest your money, it’s pretty hard to seize those opportunities,” said Dehod.
And when assessing the prospects of an opportunity, search for mentors or potential partners, he said.
“Part of it is being a good listener, and asking and being curious. That helps you. If you’re curious or looking for opportunities and willing to seize them, then you’re going to do well.”