A Profitable Farm Business is a Sustainable Farm Business - Part 1
In this episode, we sit down with Tom Bennett of Bennett Farms (MI) to discuss the importance of driving profits to build a sustainable business model. Tom shares why Farm profitability should be the main focus of Farmers looking to scale operations.
This is the first episode in a two-part conversation with Tom. Bennett Farms is a pastured-poultry Farm located in Edwardsburg, MI. Tom serves thousands of customers in Michigan, Illinois, and Indiana.
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Rory Loughran: Hey everyone, I just wanted to jump in at the start of the episode here and let you all know that this is actually part one of a two part series with Tom Bennett. The conversation was really great.
Uh, we just went a little along, so we decided to chop it into two separate parts. So tune back in next week and we'll be releasing part two. But, without further ado, here's the part one.
Welcome to the Direct Farm Podcast. I'm Rory, your host for today's episode. We've got a great conversation for you today with one of our farm advisors, Tom Bennett from Bennett Farms, located in Michigan.
Welcome back, Tom. It's great to have you here again.
Tom Bennett: Yeah. Thanks for having me.
Rory Loughran: I know you, you've been on the [00:01:00] podcast quite a few times now, but to start out, could you tell us a little bit about your farm what you raise, where you're located and maybe just some of the history of your farm.
Tom Bennett: Yeah. See we went full-time as in farming in 2018, but we started our farm in 2010, 2012 more as a hobby farm, and then it just evolved to where 2016 we started selling a lot of meats direct to consumer. And then 2018 it became a full-time thing. We do pasture-raised pork, chicken, and Turkey. And it's all non gmo, antibiotic free.
We do farmer's markets and online sales primarily. Yeah, that's where we're at now
Rory Loughran: And I know you, you might have talked about this on the podcast before, but could you talk about why you decided to choose. Pork and poultry specifically, like what made you, you were coming into this without much of a farming background. What made you choose those product?
Tom Bennett: To start making money as quickly as possible. So the turnaround time on chicken and pork is pretty fast relative to beef. And it takes a lot less land as far as, with pork and chicken. We're doing rotational [00:02:00] grazing methods, so we're moving the pigs every two weeks, chickens every day.
And so on a smaller land base, you can do a lot more pounds of meat by doing pork and chicken . And beef, we still want to get into beef someday, but it's such a long game. If you're, wanting to get into, like breeding up your own herd and every, it could be five years before I consistently had enough beef to supply my customers.
So we're gonna start dabbling in it pretty soon, but just as a, adding some stocker cabs when we can. But it's yeah, that's beef's a big boy game. So we'll get there someday. But yeah, pork and chickens kept us super busy. That's all we sell.
Rory Loughran: So the kind of the topic for today's podcast that I wanted to dive in with you it actually kind originated from a connect session that you were hosting a few weeks back. And for those that don't know, connect is a weekly they happen twice a week. They're open kind of q and a sessions for farmers to attend.
They're free where you can go in and talk to our farm advisors like Tom. And in, in that virtual call that you were last hosting far, like the sustainability of a farm business was like the central topic, I would [00:03:00] say to that call that people were asking you questions about and that you were speaking.
And I think a lot of times when we think of sustainability around farms, we think of how you're raising products, how you're maintaining your land. But in this context it was a little different. Could you maybe explain what you meant by the sustainability side of farm business.
Tom Bennett: Yeah. And farming, we all love the part of, planting the dirt and the husbandry of the animals. But I think that some farms forget or don't put enough emphasis in making sure that they're profitably sustainable from an economic standpoint. You can be doing the best practices in the world as far as regenerative, organic and all these things, but if your farm doesn't last because you're not making money and you're not profitable you're not doing any good.
In order to do good, you need to be profitable and sustainable that way as well. And so I'm always telling farmers when I'm talking to, Like for every book that you read about agriculture, you need to read a book about business or a book about sales. Maybe even read two [00:04:00] books about business and sales for every one that you read about agriculture, because you know your chickens, your pigs.
Anybody can raise a chicken or a pig. It's not that hard. Once you figure out the few basic things you gotta learn to do that the animals want to stay alive, so they're gonna help you out. But the only way your farm can stay alive as a business I is on you. No, no one's gonna help you but you.
You really gotta focus on that more than I think a lot of people realize that they're gonna have to focus on it or wanna focus on it. And so yeah, I'm always preaching that as far as that goes. And it, I don't have a lot of time to read books per se, like as far as physical reading.
Like I don't have time for that. It's, but I do have a lot of time when I'm doing deliveries or on the road driving. I drive a lot so I have a subscription to Audible and I listen to a hundred books a year, on audio. And so you can really consume a lot of knowledge that way with an audiobook subscription.
Even a lot of public libraries nowadays have digital free [00:05:00] online subscriptions where you can listen to books. So I highly recommend that, if you ever have time where you're not doing anything, turn off the radio. The Christmas music's not gonna help you, or your business. Just put on something educational that maybe is outta your normal comfort zone and learn something new.
Rory Loughran: Yeah. And I like that you went straight to how you can of make that fit. In your daily life too, because I think that is oftentimes the next roadblock for folks is, I don't have time to read or I don't have time to do these things. But if you're making deliveries, if you're having to drive a tractor, just do chores.
You can throw the headphones in and maybe learn something. So why, have you always prioritize this business side of your farm? It sounds even when you were choosing pork and poultry that you were thinking, okay, I want products that I'm gonna be able to turn around relatively quick and can utilize my land to the best or most efficiently.
Why is this something you've always of made a priority?
Tom Bennett: Because, I, my time is the most valuable thing that I have. We go out and we make [00:06:00] money so we can spend money to buy more time back. We spend money on things that make our life easier so we can get more time. So I wanna make sure that when I'm. Wasting my time on something that it's gonna be profitable because I walked away from a lucrative off-farm job to do this.
And, the thing was with the people around me, my family, my immediate family and my household was like, look, I want to farm, but I'm not willing to be poor to farm. I'm like, I'm not gonna, I'm not gonna make my family go without things because I want to be a pig and chicken farmer.
So if I'm gonna do this, I need to figure out how to make money doing it, as much money as I was making with my time, working for someone else, or more ideally. So that's where I came. I came into this knowing. I had to make money. And it's not always all about, some people think money's evil and whatnot, but it's necessary.
Like you've gotta have money to stay in this thing. And I look at money as a way of keeping score. Like your business is a game. It's a long term game. And the way to keep score [00:07:00] is with dollars, if you're up or you're down or you're winning or you're losing by how well you're financially doing.
So it's, when I'm chasing like targets and sales, it's not even as much for the money. Or we have a really good week in sales, like I'm not excited. Because of the thousands of dollars, that I have come in, I'm excited because it shows that our business did well that week. Like that's what excites me is like to see our sales grow.
It's really, it's not about the money, it's about, providing more high quality food to more people. But the money just tells me that we're doing a good job. I guess that's a way to put it.
Rory Loughran: Yeah, it's like your, it's, that's your benchmark in terms
Tom Bennett: That's how we keep scores. Yep. And so that's, I can compare it versus last year, how are we doing? And it's a, it's really the only metric you have to keep score on how you're doing.
Rory Loughran: Yeah. And I think and this was something you talked a little bit about in that connect call, but that. Do you feel like this is something that kind of oftentimes gets pushed a little bit to the back burner for farms in terms of [00:08:00] making this priority for focusing on having a sustainable business?
Tom Bennett: Yeah. Unfortunately it is. I think a lot of people just accept the notion that. We're gonna have to work for free for years. I see so many farms that aren't paying themselves and they're working for free. I'm probably one of the very few handful of people at a farmer's market that actually is earning like a full-time income from doing that or giving myself a salary.
So many of 'em are just wasting their weekends at farmer's markets, not paying themselves, putting it all back into the. And and they're psychologically, they're like, okay, we're billing and maybe you'll have to do that in the first six months or maybe while you're a hobby farm, but once you get serious about it, like you've gotta start making money or you gotta fix something.
If you're not making money, if you can't take a salary from it, then you're working for free and something's broken. Like you've gotta figure out, if you are a beginning farmer and you just bought a new Kubota tractor and a utility side by side, you are wrong. Like you don't, I still don't have that [00:09:00] stuff because I don't need it.
Only spend money on things that are gonna make you more money. Okay? So I've got a Ford eight in tractor that costs about 1500. It does everything I need it to do. When it breaks, I go buy another one for $1,500. I've got a line of 'em. I don't even bother to fix 'em cuz they're so cheap to buy.
It's not even worth fixing, so why would you buy a side by side for $25,000 when you can buy a Ford Ranger or pickup for 2000? There's things that you need to be smart with your money and not get too far over leveraged in debt.
I think with our farm. I was conscious of that in the beginning. And I think the most debt we ever had at any given time on our farm was about $60,000, which to start our business to grow our business. Everything we've done, cause we cash flow most things, it's month to month cash flow is what keeps us going.
So we don't have to take out any big loans or things like that. But there's some people that's one Kubota tractor can be 60 grand. so I looked at it like that, like when I had $60,000 in debt, in different [00:10:00] areas. When I started at the farm overall, I had building and walkin freezer and I had these things that I just couldn't pay for out of pocket that day, you know, I feel anxious about it, but then I'm like, wait a minute, that's like. It's one tractor, I just built like at the time we're, almost doing a half million dollars a year in sales and it only took me 60 grand in startup costs to do that. That's not that bad when you look at it in the big scheme of things, but stay away from that stuff.
One of the things that really helped us is a book called Prophets First by Mike Malowitz. It's it's a cheesy marketing book. The first few chapters you're like, oh, this is one of those, loud like guys, but it does have some really good stuff in it. And we implemented that system a couple years into our farming and it changed everything.
We went from worrying about finances all the time to not having to worry about finances anymore, just by, it, you'll see what I mean, once you start listening to it by the time you get to chapter four and five. But that's worth, its time taking a listen to.
Rory Loughran: I was curious too. I think you made a really good point there. [00:11:00] Spending money on things that make you money and improve your business. What are some other examples maybe for folks that in ways that you've applied that philosophy to your farm? I know you mentioned tractor and stuff there, but what are some other things like that?
Tom Bennett: We spend money when we have to on things like delivery vehicles. On things like we're looking at buying some chicken tractors that next, this coming season to get away from the ones, the smaller ones that we're using.
Cause we're, we did 6,000 birds this year. We're gonna do 10,000 birds next year. So we're looking at some some chicken tractors that are much larger. They're expensive though. They're $24,000 a piece, but they're solar powered. They're automated, so there's a lot of savings we're gonna have in labor and in death loss of chickens because they're much more effective. So we'll spend money on stuff like that. It's trying make it a game of trying to see how long you can hold onto your money. You know what I mean? Just keep it as long buy things that are only necessary [00:12:00] or that you can utilize, to, to generate more income.
Rory Loughran: Yeah. I guess this kind of plays into that in terms of, Only spending things that, that you need to, but as your farm grows, as you look to add new delivery routes or new products, I know you mentioned you guys might start to look into beef in the future. How do you apply this same business sustainability perspective as you look to make those decisions?
What is even some of the pre-work you can do to figure out is this next venture that we want to add or this thing we want to include in our business. Is it viable? What are some of the kind of steps you do beforehand to look into that?
Tom Bennett: I look it up, it's all done in the office as far as on paper. Right now I've got wholesale accounts, emailing me weekly, like wanting products from us, and I've been turning them down because it doesn't pencil out. If we can sell it, if we're selling everything we can produce as fast as we can produce at retail, why would I wanna sell a hundred pounds of bacon, to a, another online retailer, at wholesale, or I'm not making nearly as [00:13:00] much money, and so just.
As you look to add things, make sure that financially you're not just growing for the sake of growing. It's not about how much money you make, it's about how much money you keep. So keep an eye on that, it's yeah, we still, we got a lot of room. We can grow in wholesale but we can't really grow there until we have excess product that we don't need for retail.
On farmer's markets, when we look at adding a new farmer's market we know how much that market needs to do in sales on a daily basis in order to support the wages of the worker that we're sending there fuel, all these costs that we have associated. So if that market's not performing, to making the farm money.
Then we'll cut it at some point. We'll usually stick out the season just to see if we can build some customer base. But if not there's always more markets that are better. We'll switch, don't, just don't go down with the ship,
There's lost opportunity cost, especially if you don't have, 13 part-time people like we do.
You might only be you and your husband or your [00:14:00] significant other, and you guys can only do two markets a week. Make sure you're doing the best two markets that you can. And if you have to drive two hours to a farmer's market, you can do a farmer's market in your hometown and maybe sell $700 worth of stuff.
Or you can drive almost two hours to a major metropolitan area and do $4,000 to $5,000 in sales in the same amount of time of that day. And you're like I'm not driving two hours. You ain't gonna drive four hours round trip extra for an extra $4,000. That doesn't make sense. Sometimes it's worth it to to get in your car and drive to that major city that's got 7 million people in it.
Traditionally, historically, the outlying country areas have always fed the big cities. They don't produce any of their own food. Everything that's ate in that city is brought in, so you're just continuing a time honored tradition of us rural folks feeding the cities and taking their money back out of town with us,
Rory Loughran: Yeah, . That's actually something I've heard you mention a few times cause I know. You drive a pretty long ways for your processing as well. Could you maybe explain like [00:15:00] your thinking behind that and how that also plays into how you wanna run a sustainable business?
Tom Bennett: Yeah, so our processor's a little further away than we like just from a local like carbon footprint standpoint. But the processor that we had in Michigan that was U S D A for poultry, this is poultry only. Our pork is still here in Michigan. But They were crazy expensive. It was almost like if I was getting a bird cut up, if I was getting a whole bird processed, it was six 50 a bird.
Okay. And that's just a whole bird. That's your basic, just slaughter. And then if I'm getting it cut up and things like that, and the drumstick dies, it was getting up into the 12, $13 per bird range. That was crazy. And we're not even talking like boneless, skinless or any value added products or anything like that.
They didn't even offer ground chicken. So we finally found a processor that we'd heard good things about in Ohio. It's three and a half hours each way. But our processing cost is like a fourth of what it used to be like. [00:16:00] It's at least a half to a fourth. It's probably a fourth. So we're saving like $20,000 a year just on chicken processing by driving three and a half hours every 21 days, eight times a year.
Awesome. That's $20,000 worth of free money cuz our other processor was an hour away anyway, so this is only adding, five hours of driving times four. It's 40 hours. 40 hours for $20,000. Yeah. And and we didn't drop our chicken prices cause our customers were already used to 'em being what they were before we switched processors.
So we just, it kept us from having to raise our chicken prices and we probably won't have to raise 'em for quite a while because of that. We're able to just keep all that extra money down so you know that we've made an extra 20 grand this year just by finding a better processor and they do a better job.
It's kings and sons poultry in Ohio, and they actually process chicken from people as far away as North Carolina, Kentucky. Like I see license plates from all over the East coast in their parking lot in the morning. They do, they can do up to 900 birds an [00:17:00] hour. I can't say enough great things about 'em.
And They do a good job. So if you're within six hours of them and you're, do you need to do big batches. That's another thing, like you can become more, more profitable by, why would you do 10 batches of 200 birds like over the course of a year? If you're doing that, build more chicken tractors and do two batches of, what would that be?
Two batches of 500 or two batches of a thousand, whatever. Do less batches of birds do more in a batch instead of spreading it out. That's a lot less trips to the processor, a lot less trips to the feed mill. Your costs are gonna be higher for those two times, but, because you don't want to drive to Ohio to have your chickens processed if you've only got a hundred birds.
In fact, if it's under 200, there's an additional a hundred dollars line fee just to stop and start the line for your birds. So you wanna do as many as you can at once. And that's another thing, like we bought chicken crates because of this going to Ohio thing. I had to spend $5,000, $6,000 on chicken crates last year.[00:18:00]
I would've loved to have rented chicken crates from someone, around me, to share 'em with another farmer. But nobody had that. So when I spent all this money on chicken crates, I became the guy that now rents chicken crates to other farmers. I got other farms in my area that do what I do.
They even some of 'em go to the same processor and I rent out my chicken crates for $250 a piece, for the day or two days, whatever long. They just get on the schedule, make sure it's not when I'm using them. But those chicken crates, after I ran 'em out 30 times, they were free. So you can do little things like that.
Rory Loughran: Yeah, that's genius. Finding ways to, to make the money back on it as
Tom Bennett: well.
Yeah. There's no reason to leave them sitting in the, on the farm for, 300 days a year that they aren't used.
Rory Loughran: I think something Tom that you're always so good at and I'm always really impressed by is just how well you know all your numbers too. And being able to have that information. You just have it like in your brain ready to go. But I was wondering if you could maybe just too talk about the importance of knowing that and the importance of that for all your numbers, for all your product.
All your kind of different inputs why is that [00:19:00] important to you? Why should, how can other farms work on that or improve that and maybe what are the first steps in figuring out all those numbers for your different products and costs and things like that?
Tom Bennett: Um, I just I'm the one that pay the bill. I pay the bills around here, so like I know when that feed got delivered This morning, I just had seven tons of feed dropped off like an hour ago and I'm looking at the feed bill, calculating it, seeing if I'm paying less or more than I did last week, so I'm watching what my feed's doing per pound, the non GMO feed.
So I know all those numbers because I I feel that I need to know those numbers, like profitability wise on pork and chicken. That's what's, the animals are most important.
Yes. Okay. We're here for the animals, we wanna do a great job. But they've got that, like we've already taken care of that. We know what we're doing on that. That's pretty much solved. Like we, we've gotten as good as we're gonna get, for the most part at raising pigs and chickens on pasture. So now you've got all this, now you need to focus on your business.
If there's any question that you can [00:20:00] ever think to ask yourself that you don't know the answer to, go find the answer, so I work through all of my costs on things before they are on the ground, before they start, becoming raised. Like I'll, I'm getting ready to order all my chicks for next year and do all that scheduling probably today or tomorrow.
And I'm gonna call several chick suppliers cuz I'm. Don't be beholden to one supplier. Like they all are gonna sell you the same Cornish cross chicks. There's not really a lot of difference in quality from the Cornish cross. Most of 'em are coming from commercial hatcheries anyways. So I'll call around to four different hatcheries to line up my 10,000 chicks for next year.
And I'll, I'll bounce 'em off each other Hey, this company's telling me a buck five. I would love to use you guys cause I had problems with their shipping. But I'm not gonna switch if there's nothing in it for me. Can you guys do, a buck even? And they're like, let me check, and then they'll get back to me and it's boom, I just saved, a thousand bucks by asking for 4 cents off a chick.
Or whatever it is. The math on that is [00:21:00] probably wrong, but it's . I see 10,000 times, 10,000 times, maybe 5 cents a chick, 500 bucks. So I save 500 bucks, in three minutes just by getting 5 cents off per chick. So it's things like that. I know 'em because I have to know 'em. Like I'm not just the farmer, like I'm the cfo, the ceo the chief marketing manager multimedia, Instagram guy.
Like I do everything. Yeah, that's why I know it. But it's important. If you don't know that stuff, like you're gonna have problems cuz you're not gonna be able to, when a chef calls you and they're like, Hey I want to get pork belly, what can I get it for? You're going to be so excited to get like new business.
You're gonna sell yourself short and actually sell it for less than it's cost and you to produce it just cuz you're so excited to get into that restaurant. Like to where I know if they call me, I know right now what I have to sell pork belly for by the pound. For me to make money on it and be worth [00:22:00] delivering, and I actually have a sheet for that.
I work through I have an entire price list of everything we sell, front and back right here next to my desk.
Rory Loughran: And how often are you updating.
Tom Bennett: a couple times a year, sometimes I'll, normally in January I'll go through. Raise all my prices by 15 cents, 10 cents.
Just something that people won't even hardly notice. And you'd be surprised with as much meat as we sell, if you just add a dime per pound to everything across the board, like flat, like that can be many thousands of dollars an additional profit, january typically, but if I run into something like middle of the year where our butcher changed costs on like making links or something like that for our pork.
And they just bumped it up 25 cents. Then I'll go in there and I'll bump it up 35 cents like today. I won't wait on that. But just maybe a couple times a year I'll take a look at it.
Rory Loughran: Yeah. For if somebody was listening to this and they're like, oh man I don't know these numbers. I haven't done the math on all this. What's how do you go through, like what's your process? Do you just look at every single input that's going [00:23:00] into raising a complete chicken that's ready to be sold?
What's a process for that?
Tom Bennett: Yeah. You, yeah, you have numbers on all that stuff. So I know like on chicken, I'm paying, and I had it, I did this a couple years ago where I, when I was first getting all these numbers back in 2018, I actually, like with a pig, for example, I'd sent, I had one pig I told my butcher was like, don't mix this up with other pigs.
Like I need to do, I need to lay this pig out every single package on the table, this is an average representation of normal pig. And assign values to each product to get all the pieces on the table to equal $1,100, or 1200, whatever my margin was that I wanted to make on a hog. So then I could be like Bacon's worth a little more, so I'll make that this, but these hawks are worth less.
But then, to get to this amount that's, I signed everything of value. It might take you an hour. You just gotta do that once. Once you do that, once you know the proportion, you have a starting point. As far as cost go, yeah, we, we know it takes 880 pounds of non GMO feed to raise a pig from a 50 [00:24:00] pound feeder to a 285 pound market weight pig.
It's just about what? It always is gonna be about 850 pounds, somewhere in there, 850 to 880. So then we calculate that by our feed cost. We know what that is, we know how much a feeder piglet cost us. We got straw a few times a year. We've got, we're gonna lose a certain amount of our pigs when they're, piglets.
So we, we work that in. We got, all these things. And so that's how we just sit down with a piece of paper and go through the life cycle of your animal and think about every cost that you're gonna incur along the way. Now, I don't include. so on a pig, for example, when we sell a whole pig retail, like in cuts Susan buys a pork chop, Jake buys a bacon, whatever, we sell a whole pig.
We're gonna collect about $1,100 to $1,200 on that pig. In general. And I know that it costs me 450 to raise it, that four 50, that's my input cost for feed butchering and the feeder piglet, [00:25:00] like the baby piglets. It's not including like labor, it's not including, farm insurance. It's not including fuel to the butcher.
All that other stuff is paid for with the other, $750 profit on that pig. So I know what my cost to do the piglet was and my cost to sell it. My cost to pay my employees, that's all coming out of that 750, after the
Rory Loughran: Yeah, no, I think there's always more that plays into that than maybe people realize. And even knowing those additional costs, I think how you have that broken out, these are the direct costs through the direct inputs to bringing a hog from a feeder piglet to at your farmer's market table.
Knowing those and then keeping those separate then maybe from all those. Those constant costs, like you said, labor and things like that. But still being aware that those are a factor, you want that to play into make sure once those costs are applied as well, are you still profitable? Is a good part of it too.
Hey everyone, I just wanted to jump in at the end again and remind you that this is part one of our interview with Tom. So [00:26:00] we'll be continuing the conversation next week. Uh, so make sure to tune back in for part two. Thanks.
I want to extend my thanks to Tom for joining us on this week's podcast episode here at Barn2Door we're humbled to support thousands of farms across the country, including Bennett Farms. If you would like to connect with Tom and other farm advisors, you can attend those Barned Door Connect sessions that we mentioned. You can register for those weekly sessions barn2door.com/connect. And for more information on Bennett Farms, you can follow them on their Instagram at Bennett Farms Michigan.
Thank you for tuning in. We'll see you next week.