Stacked enterprise model: How to net $4K per acre

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by Victoria Lusk

vlusk@aberdeennews.com

The Northern Plains Sustainable Agriculture Society winter conference is underway in Aberdeen today and Saturday. Roughly 40 registrants attended a pre-conference workshop on Jan. 25 about how to net $4,000 per acre. It was led by brothers Blake and Blaine Hitzfield of Roanoke, Ind.

“Twenty years ago, we were farming 1,500 acres of row crops with a confinement hog operation and it was only supporting one income. As a matter of fact, Dad was also working off the farm at that point,” Blaine Hitzfield said, visiting prior to the session.

Now, Seven Sons operates on just 550 acres, but supports 10 full-time careers, he said.

“That’s the big transformation that happened on our farm,” he said. “And it’s growing and thriving for us now.”

It didn’t happen overnight, and it wasn’t without a learning curve.

The farm’s success was built on what Hitzfield calls a stacked enterprise model, which works in three different ways.

• First, “fixed costs” are examined.

“We look at them as overheads that aren’t fixed but can actually be reduced. We don’t even like to use the term ‘fixed cost’ on our farm because we know if we can do away with this machinery payment or even a farm payment … the focus there then is to free up capital resources for higher-value activities,” he explained.

• The second step is to examine ways to increase profit — not production — per dozen or per pig, he said. Seven Sons did this by lowering in input cost through grass-based agriculture.

• The final step is adding more profit per acre by increasing the number of enterprises that can use or “stack” on the same acre.

“We don’t focus on stacking until we have our overheads under control and until our unit of production is actually profitable, because it doesn’t help to do more of an unprofitable production,” Hitzfield said.

Ultimately, each animal is eventually going across the same land as the cattle. The pigs follow the cattle, the chickens follow the pigs, he said.

“We leverage the overhead cost of land. The highest cost any farm will ever have is land and labor,” he said, adding that diversification adds forgiveness.

The Hitzfields also planned to discuss how they use direct marketing, which they consider a separate enterprise. Marketing directly to consumers requires both visibility on the internet and accessibility for consumers, he said. Furthermore, it insulates the farm from commodity prices.

Seven Sons offers 100 percent grass-fed beef, pork, poultry, eggs, raw-milk cheese and more. It no longer grows row crops.

“The No. 1 reason we got out was because of how unforgiving it was with weather,” Hitzfield said.

“Our parents were the visionaries behind the idea,” he said. “They were inspired to focus on the health of soil, and that triggered a change in behavior.”

While a viable, profitable business model was key, the Hitzfield parents also wanted to ensure they had a farm to pass on to their sons, he said.

All seven sons now live within a 5-mile radius of the farm they all work on.

“Our parents had a belief that it is possible to build a farm and a business that can support the next generation,” he said. “Most of us had full-time income on the farm by the time we graduated high school. They inspired the entrepreneurial spirit, even as teenagers.”

The youngest Hitzfield is 19, the eldest 33.

“At least on our farm, we are working as hard as we can to decrease the average age of the farmer,” Hitzfield said. “The big thing is that we are all having fun. If you’re not, it’s not ultimately sustainable.”

Last year in Aberdeen

This will be the last year the NPSAS winter conference is in Aberdeen.

And there’s just one reason why.

“Space,” said Jill Wald, education and event coordinator with the Northern Plains Sustainable Ag.

“We just ran out of space. The hotel books up three months in advance, others are full,” she said.

This is its 39th year and it’s been in Aberdeen the past five or six years, Wald said.

It’s not just rooms. There are 55 vendors at the conference this year, with another 11 on a waiting list.

“We really love Aberdeen,” she said, “but if we want to keep growing our conference, we have to do it elsewhere.”

That’s why the event is moving to Fargo, N.D., at least for the foreseeable future.

“The only way we could stay in Aberdeen is if the Ramkota built on,” Wald said, “which is unfortunate because a lot of our attendees come from South Dakota.”

In fact, the majority come from the Dakotas, with others from Minnesota, Iowa and Wisconsin — and one from Germany, said Susan Long, office manager for Northern Plains Sustainable Ag, which is based in LaMoure, N.D.

The Northern Plains Sustainable Agriculture Society is a nonprofit, member-based organization that promotes sustainable food systems through education, research and advocacy, according to its website. The conference focuses on three things — soil, livestock and human health, Long said.

Vendors attend from all over the U.S. — the East Coast, West Coast, Texas — and a group travels from Canada every year, she said.

By Jan. 24, 450 people had pre-registered for the conference.

In the past, the conference has had as many as 700 attendees. Because people can register at the door, the numbers are right on track, Wald said.

Follow @vlusk_AAN on Twitter.