Size isn’t always the answer: One Earth
Posted Nov. 27th, 2014
Fixing flaws at ground level | New leader says farm proves big doesn’t guarantee profits
Bigger isn’t always better when it comes to grain farming, says the head of a company that used to bill itself as the largest farm in Canada.
Mike Beretta, chief executive officer of One Earth Farms, says the business model is far more important than the scope of a company.
He said One Earth Farms was never profitable, even in its heyday when it was leasing 250,000 acres of mostly First Nations’ farmland in Saskatchewan and Alberta.
“Last year, when we decided to exit our cropping operations , (it) was one of the better crop years, price- and yield-wise, in a long time, and One Earth still managed to lose money,†he said.
“We couldn’t make money even in a good year.â€
Beretta said some members of One Earth’s board of directors told him shortly after he took over as CEO in 2013 that the mega farm was failing because it wasn’t big enough.
“There was always this notion that eventually a certain number of acres will make you profitable,†he said.
“We actually will have better returns this year on 4,000 acres than we ever did in all our other cropping operations, so I don’t believe it’s just a scale thing.â€
Beretta isn’t surprised to hear a similar rationalization offered for the failure of Broadacre Agriculture, a big Saskatchewan grain operation that was granted creditor protection by the Court of Queen’s Bench of Alberta Nov. 4.
Gary Pike, chief executive officer and one of the founding shareholders of Broadacre, said his company would have survived if only it could have accessed the capital to buy more land.
“We’ve been undercapitalized from day one,†he said.
The goal was to farm more than 200,000 acres, but by the time the firm was placed under court protection, it owned 9,000 acres and leased another 56,000 in Saskatchewan.
“We knew we had to be larger to carry some of the overhead we had, and we were unable to raise capital. That’s really the key issue,†said Pike.
He blames the province’s restrictive land ownership rules for preventing Broadacre from accessing much-needed capital from Canadian pension funds that were eager to invest in the company.
Pike said the land laws are holding back the province’s agriculture sector, noting that foreigners are allowed to own other natural re-sources.
“The only area that is really capital starved is primary agriculture,†he said.
Beretta doesn’t think more land was necessarily the solution, at least it wasn’t in the case of One Earth Farms.
The company has exited the grain business with the exception of 4,000 acres just outside of Edmonton and is instead focusing on selling natural and organic meat.
He believes One Earth’s problems stemmed from a flawed foundation.
“If you don’t have the right culture and people, things can go awry,†said Beretta.
“I’m very big on culture and people and relationships and partnerships, and the way One Earth had created it, it was strictly an employee-based scenario and there was little tied to performance.â€
A sense of entitlement permeated the business, which doesn’t work well for a company that was operating on a scale of One Earth Farms.
“It’s like pouring gas on a fire.â€
Beretta took the company in a new direction. One Earth got out of its leases and redeployed the capital tied up in buildings, equipment and crop inputs into the cattle industry.
It has 35,000 head of mostly Angus cattle. A lot of the cattle are placed with Canadian ranchers rather than leasing land and hiring employees.
One Earth used the capital from its failed grain venture to acquire a federally inspected slaughter plant, beef brands, a catering business and a baby food company.
“We’ve managed to turn the company around. This year we actually are in the black, and we’ll be finishing the year in the black, which is a far cry from previous years,†he said.
Beretta has no interest in making One Earth the biggest cattle operation in Canada.
“We’ve proven that doesn’t guarantee profits,†he said.
One Earth would have ended up in the same mess as Broadacre if it had continued to pursue the size-matters approach to farming, he added.
“The problem is in that whole logic. We managed to figure that out a little earlier than them.â€
Posted Nov. 27th, 2014
Fixing flaws at ground level | New leader says farm proves big doesn’t guarantee profits
Bigger isn’t always better when it comes to grain farming, says the head of a company that used to bill itself as the largest farm in Canada.
Mike Beretta, chief executive officer of One Earth Farms, says the business model is far more important than the scope of a company.
He said One Earth Farms was never profitable, even in its heyday when it was leasing 250,000 acres of mostly First Nations’ farmland in Saskatchewan and Alberta.
“Last year, when we decided to exit our cropping operations , (it) was one of the better crop years, price- and yield-wise, in a long time, and One Earth still managed to lose money,†he said.
“We couldn’t make money even in a good year.â€
Beretta said some members of One Earth’s board of directors told him shortly after he took over as CEO in 2013 that the mega farm was failing because it wasn’t big enough.
“There was always this notion that eventually a certain number of acres will make you profitable,†he said.
“We actually will have better returns this year on 4,000 acres than we ever did in all our other cropping operations, so I don’t believe it’s just a scale thing.â€
Beretta isn’t surprised to hear a similar rationalization offered for the failure of Broadacre Agriculture, a big Saskatchewan grain operation that was granted creditor protection by the Court of Queen’s Bench of Alberta Nov. 4.
Gary Pike, chief executive officer and one of the founding shareholders of Broadacre, said his company would have survived if only it could have accessed the capital to buy more land.
“We’ve been undercapitalized from day one,†he said.
The goal was to farm more than 200,000 acres, but by the time the firm was placed under court protection, it owned 9,000 acres and leased another 56,000 in Saskatchewan.
“We knew we had to be larger to carry some of the overhead we had, and we were unable to raise capital. That’s really the key issue,†said Pike.
He blames the province’s restrictive land ownership rules for preventing Broadacre from accessing much-needed capital from Canadian pension funds that were eager to invest in the company.
Pike said the land laws are holding back the province’s agriculture sector, noting that foreigners are allowed to own other natural re-sources.
“The only area that is really capital starved is primary agriculture,†he said.
Beretta doesn’t think more land was necessarily the solution, at least it wasn’t in the case of One Earth Farms.
The company has exited the grain business with the exception of 4,000 acres just outside of Edmonton and is instead focusing on selling natural and organic meat.
He believes One Earth’s problems stemmed from a flawed foundation.
“If you don’t have the right culture and people, things can go awry,†said Beretta.
“I’m very big on culture and people and relationships and partnerships, and the way One Earth had created it, it was strictly an employee-based scenario and there was little tied to performance.â€
A sense of entitlement permeated the business, which doesn’t work well for a company that was operating on a scale of One Earth Farms.
“It’s like pouring gas on a fire.â€
Beretta took the company in a new direction. One Earth got out of its leases and redeployed the capital tied up in buildings, equipment and crop inputs into the cattle industry.
It has 35,000 head of mostly Angus cattle. A lot of the cattle are placed with Canadian ranchers rather than leasing land and hiring employees.
One Earth used the capital from its failed grain venture to acquire a federally inspected slaughter plant, beef brands, a catering business and a baby food company.
“We’ve managed to turn the company around. This year we actually are in the black, and we’ll be finishing the year in the black, which is a far cry from previous years,†he said.
Beretta has no interest in making One Earth the biggest cattle operation in Canada.
“We’ve proven that doesn’t guarantee profits,†he said.
One Earth would have ended up in the same mess as Broadacre if it had continued to pursue the size-matters approach to farming, he added.
“The problem is in that whole logic. We managed to figure that out a little earlier than them.â€
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