Producers must be open to change
Anyone making a living farming today is a successful businessperson.
Being good at production isn’t enough. You must innovate and adopt new technology, improve efficiency and manage budgets and risks on a scale unimaginable even a couple of decades ago.
The danger is that it’s easy to become complacent.
In a rapidly changing world, sticking to the same practices, even the ones that got you to where you are today, can cost you money.
That’s why Milligan Bio-Tech decided to rethink just about everything it does.
Milligan is the brainchild of a group of farmers from Foam Lake, Sask., who set out two decades ago to build a biodiesel plant that would use non food-grade canola, which generally earned them little or nothing.
They faced many technical challenges but bigger financial ones. The market for biodiesel remained tiny until last year, when government mandates requiring diesel to have a two percent biofuel blend began coming into effect. Staying in business required creativity, and the company relied heavily on byproducts such as a diesel fuel conditioner and penetrating oil.
“Co-products sort of carried the company in the early days,” said chief executive officer Joe Holash, a chemical engineer and executive recruited two years ago.
“But now with government mandates in place, there is strong demand for biodiesel.”
Biodiesel production was just 500,000 litres annually when Holash joined the company, but this year its 20-million litre plant is going flat out. Managing that growth was his No. 1 priority, but he also cast a fresh eye on the byproduct business.
What he saw was a marketing team that had worked its butt off to generate the sales that had been vital to the company’s survival. The effort was great, but the rewards were unequal.
“We were doing a lot of running around,” said Holash.
“We would sell a few bottles at a trade show or to garages in all sorts of small communities and that sort of thing.”
It turned out that 15 percent of customers generated 80 percent of byproduct sales, but the revamp wasn’t as simple as reducing in-person sales calls for small accounts and spending more time servicing larger ones. Holash encouraged his sales team to look with fresh eyes at what they’d been doing.
One of the things they noticed was pretty obvious: you need to sell a lot of small cans of penetrating oil to generate the revenue you get from one big barrel of a newer Milligan byproduct, a biodegradable tar and oil remover.
So they targeted large paving and oilfield companies, and today the company can’t keep up with demand, “which is a nice position to be in,” says Holash.
But if this sounds easy, don’t be fooled, he quickly adds.
“Anyone who has been successful in growing a business can easily develop these biases and filters that get you locked into a path,” he says.
“Good businesspeople recognize that, which is why they bring in new blood and make a real effort to be open to change.”
Family farms aren’t going to go out and recruit a new CEO, but they can hire advisers or, better yet, give another family member authority, especially the heir apparent, over some part of the business such as marketing, finances or long-term planning.
Being open to change means looking dispassionately at what you do and asking why you do it that way, says Holash.
“When something has worked for you, it becomes part of your culture and so you may not look at it objectively.”
It doesn’t have to be a radical overhaul. After all, Milligan still sells byproducts. It just does it differently — and more profitably.