Presentation given at Grey Ag Services March 2017, providing basic start-up business strategy and considerations regarding starting a farm in Ontario.

1. Starting a Farm
in
Ontario

2. Being an Entrepreneur is like eating glass
and staring into the abyss of death
2
Elon Musk

3. 3

4. Am I suited for farming?
 Why do I want to own and/or operate a farm in Ontario?
 What are the pros and cons of me starting a new farm?
 Do I have the personal and business skills to take on the challenges
and opportunities that are required?
 If not, am I willing to seek out the necessary advice and skills?
 Does my personality suit the farming lifestyle?
 Am I prepared to lower my standard of living to start the farm?
 Am I prepared to work long hours and weekends to make ends meet?
 How will I handle the seasonality of the work?
 Is this the right time to start a farm (based on my life and the industry?)
 Have I discussed my idea or proposed plan with an advisor and
considered their advice?
 Does family and friends support my farming idea?

5. being your own boss is
GREAT
you get to
CHOOSE
which 18 hours a day you work 5

6. You miss 100%
of the shots
you don’t take.
Wayne Gretzky
6

7. New Farm Business Structures
• Partnership
• Corporation
• Joint Venture
• Cooperative

8. New Farm Business Structures
• Partnership: A partnership refers to a relationship where two or more
persons carry on a business with a view to make a profit.
Advantages Disadvantages
Income splitting Legal liability for other partners
Intergenerational business
transfer
No protection from personal tax
rates
Lower costs (than corp.) More complex (than sole prop.)
Capital gains exemption ($750K) Recordkeeping requirements
Easier to dissolve
Tax deferral provisions
(asset transfer without immediate tax*)

9. New Farm Business Structures
• Corporation: A corporation is a separate legal entity, which means it
can do anything a person can.
Advantages Disadvantages
Lower tax rate than personal Complex structure/requirements
Faster repayment of debt (tax) Loss of cap. gain exemption
Liability Tax and shareholder costs
Perpetual succession Loss for personal tax benefits
Flexibility
Personal cap gains exemption
utilization

10. New Farm Business Structures
• JV: The joint venture can be used to test a business relationship or
allow a child to gain management experience and ownership in
business assets. A joint venture, while not defined in the Income Tax
Act, generally refers to a business structure that closely resembles a
partnership but lacks one or more of the essential elements of a
partnership.
Advantages Disadvantages
Cap assets shared High potential for disagreement
Assets owned individuals, can be
rolled
Can be interpreted as partnership
and negative personal tax/liability
implications
Labour/management shared No independence from JV partner
Dissolution is simple Loss for personal tax benefits
Low est. costs
Allows next gen. to dev. experience

11. New Farm Business Structures
• Co-operative: A co-operative is a business organization owned by the
members who use the services of the co-operative. Control rests
equally with all members and surplus earnings are shared by members
in proportion to the degree they use the services.
• Basic Principles:
– Voluntary and open membership
– Democratic member control
– Member economic participation
– Autonomy and independence
– Education/training/information to members
– Cooperation amongst cooperatives
– Concern for community
• For-profit, or not-for-profit models

12. Business Plan
1. Strategy
– Building your business in an intentional way; continuously planning,
monitoring, and assessing the abilities and needs of the business to
meet its goals.
2. Production
– What will influence how you will grow your product? Is it cost effective?
3. Marketing
– Do people want your product? How will you sell it?
4. Benchmarking and Growth
– What is success? How do you know? What is your growth plan?
5. Human Resource
– What capacity do you have? Do you need? How will you manage?
6. Financial
– What is your budget? Must haves, nice-to-haves, can’t haves?
7. Social Responsibility
– Is my plan sustainable?

13. Ways to Sell Your Product
• Marketing Boards
• Direct Marketing
• Value Added Ventures

14. Marketing Boards
• Corporate bodies representing producers of one or more
specific agricultural commodities.
• Boards of directors are elected by producers.
• Authorities are delegated to each board by Provincial
Commission to regulate production and/or marketing of those
commodities. This includes the authority to set a mandatory
licence fee for producers, with the fees used to finance the
activities of the board.
• Marketing authorities vary widely among boards in the degree
to which they control how producers sell their commodities and
how companies who purchase raw agricultural commodities
(i.e. food processors, dealers) source and purchase their
requirements.

15. Direct Marketing
Unlike traditional methods of selling products, such as wholesale
into the marketplace, direct farm marketing allows for greater
control by the producer, including the ability to be a price maker -
not a price taker.
Forms Of Direct Farm Marketing
• Opportunity to choose the type of operation they wish to pursue
based on their product mix, skills and market access.
• The most popular types of direct farm marketing include:
– on-farm activities (roadside stands, farm markets/shops,
pick-your-own operations and community-supported
agriculture)
– off-farm activities (vendor at farmers' markets or selling
through online sales and direct delivery)

16. Value Added Ventures
• Producing and marketing a real or perceived quality
attribute
– Organic, natural, “low-phosphorus fed swine”, free-run eggs
• Bundling products
– Pasture and woodlot: selling beef and flavoured wood chips for
grilling
– Produce baskets
• Enhancing return per product unit through
processing
– Baking, butchering, beeswax candles

17. A brand is no longer what we tell
the consumer it is – it is what
consumers tell each other it is.
Scott D. Cook
CEO, Intuit

18. Step 1:
Vision

19. 19
Building Sustainable Strategy
Used with Permission: www.the naturalstep.org

20. Modified Maslow’s Law
Growth*
Tension/
Stress
Actualization
Esteem
Culture
Safety
Basic Operation generating revenue,
paying bills
Consistent revenue/profit,
risk mitigation
healthy workplace,
work-life balance,
viable
confidence, brand
recognition
creativity, problem
solving, innovation

21. Modified Maslow’s Law

22. Step 2:
Focus

23. 23
Building Sustainable Strategy
Used with Permission: www.the naturalstep.org

24. What gets measured, gets managed.
Peter Drucker
Father of Management Theory
24

25. Materiality & Benchmarking
• Materiality: What is relevant to
your vision?
• Benchmark: What can I
realistically measure?

26. Develop SMART Goals
•Define goal
•Who is involved? What is being accomplished? Where is being done? Why am I doing
this? Which resources do I need?
Specific
•Can I track progress and measure outcome?
•How will I know I reach my goal?
Measurable
•Is it reasonably likely to be accomplished?
Attainable/Achievable
•Does it contribute to my Vision?
Relevant
•Does it have a time limit?
Timely

27. Example
Objective Key
Performance
Indicator
Performance
Measure
Goal Actual
Environment Energy
Consumption
Water Quality
Energy Use
(kWh)
Nutrients in
waterway
X
Y
Social Improving
Community
Family Health
Adopt Road
Sponsor Team
Sunday Dinner
Y/N
Y/N
45
Economic Production
Efficiency
Business
Continuity
Annual Yield
Prod. Efficiency
Actual Growth
Rate
Z
+2%
3%

28. Take Steps to Meet Goals

29. Step 3:
Continual Improvement

30. There is nothing so useless as
doing efficiently that which should
not be done at all.
Peter Drucker
30

31. Understanding “Lean”
• Concept focused on the removal of waste from the
production process
• Waste: Anything that consumes time or
resources but does not add value to the
product/service, as viewed from the perspective of
the customer.

32. Types of Waste
1.Unevenness in a process
– Stopping and starting process or variable volume process
rather than a smooth and constant process
– Leads to time and energy waste
2.Overburdening or placing too much upon one thing
– Where a process/machine is pushed to perform above its
capacity
– Leads to broken machines and potentially poor quality
products
– Can be a reaction to #1…

33. Understanding “Lean”
• Concept focused on the removal of waste from the
production process
• Waste: Anything that consumes time or
resources but does not add value to the
product/service, as viewed from the perspective of
the customer.
• Customer: the receiver of product from a process.
Most of the time you are your own
customer!
• Defines value through Value Stream Mapping

34. 34
Defining Value

35. Martin Dairy Farms Case Study
• Dairy farm (calf production process)
• When asked to define value for customer, Martin looked closely at the
calves' weight.
• Saw that the customer (the "heifer production" line) demanded calves
grow to 100 kg at 8 weeks old.
• But they had never weighed the calves. (They had focused on mortality
rate alone.)
• Getting a handle on the process from the customer's point of view was
an eye opener.
• They found, too, that the heifer production process didn´t need so
many calves.
• They had been pushing all the calves from the milk production through
just because they were used to doing so.
• Martin changed to meet the needs of the customer by sorting calves
out early in the production line and more careful planning.

36. Recap
• Setting a Vision
• Focussing on SMART goals and Performance Measures
to reach them
• Plan-Do-Check-Act to achieve continue improvement
– increased profits, work-life balance, and resource
protection
• Understanding production processes and who your
customers are
• Are your customers “pulling” the product, or is it being
mindlessly “pushed”?
• Where is your waste?

37. OMAFRA Resources
 Starting a Farm in Ontario
 Business Resource Guide for New Farmers
 Cost of Production Models
 Growing Your Farm Profits (GYFP) Workshops
 Agriculture Information Contact Centre

39. The best way to predict the future
is to create it.
Peter Drucker
39