May 30, 2018
“More than 95% of your organization’s problems derive from your systems, processes and methods, not from your individual workers. Improving systems takes a concerted, well-planned, usually cross-functional effort led from the top of the organization. Without conscious attention to systems, you will focus on people. Your people are doing their best, but their best efforts cannot compensate for your inadequate and dysfunctional system.” – Peter Scholtes
Our objective to make bovine agriculture “manageable” concerns the ease of running a dairy and beef operation.
There are three key aspects that make the SAS System manageable:
- Outsourcing primary feed production
- Reduced workload
- Management ease
By taking a “systems approach” to dairy and beef production, it is possible to develop a manageable farming system capable of scaling.
Outsourcing Primary Feed Production
One of the greatest differences between the SAS System and conventional dairy farms is the outsourcing of primary feed production.
We define primary feed production as the growing of cereal crops and fibre feeds (hay and straw) on agricultural land.
Producing livestock feed is one of the core activities on a conventional dairy farm. Under the SAS System, this enormous chunk of the dairy farm workload is eliminated.
The SAS System feed procurement model involves the use of forward contracts to buy barley grain and fibrous feed from growers and merchants.
Once these primary feed ingredients are delivered to a SAS System, they undergo a period of “secondary feed production” – primarily involving the conversion of barley grain into hydroponic feed. Fibrous feeds and other supplementary ingredients are then combined with the hydroponic feed to form a total-mixed ration (TMR).
The SAS System very much adheres to Peter Drucker’s advice: “Do what you do best and outsource the rest.”
Outsourcing the production livestock feed saves money, time and risk. This outsourcing model also greatly reduces the demands placed on SAS farm managers. There is no:
- Harvest stress
- Distraction from managing cows (the profitable asset)
- Overtime or seasonal hours
- Exposure to the vagaries of the weather
- Requirement to accept below standard inputs
The investment flowing into indoor agriculture (or controlled environment agriculture (CEA) and vertical farming) is testament to the interest in more climate resilient and consistent food production systems.
The ability of the SAS System to produce consistent feed rations every day, virtually anywhere on the planet and irrespective of external weather conditions, is quite something.
The benefits of outsourcing have been well demonstrated by many successful businesses. As McDonald’s grew, so too did its food supply network – the bun suppliers, the patty manufacturers etc. This allowed the McDonald’s Corporation to focus on its core activity – growing a franchise network.
SAS’s feed outsourcing model is simple and reliable. The value of removing the uncertainty, weather risk, and seasonal workload associated with conventional livestock feed production cannot be underestimated.
Fewer people now work in agriculture than at any other time in history – just when the industry needs more staff and new ideas.
In 1851, the number of UK agricultural workers totalled 1.7 million. In 2008 the total British agricultural workforce was 187,900. Today, less than 1% of the British workforce is employed in agriculture.
Obviously technological developments have increased employee productivity. But working in this sector is still considered undesirable. Agricultural work generally involves:
- Rural isolation
- Exposure to the elements
- Physically demanding work
- Long hours
- Poor remuneration
- Dirty working conditions
As a result, many young people with rural backgrounds are pursuing well-paid careers in urban centres. Couple this with the global aging of farmers, and it is evident that the availability of farm labour poses a slow-moving threat to agricultural productivity.
Radical transformation is required to offer young people attractive career opportunities within farm businesses.
The SAS System can make the dairy farm a more desirable work place. Back-breaking work does not have to be part of modern-day farming. One of the most fascinating aspects of the SAS System is the use of robotics and automation (R&A) technology.
R&A technology eliminates most of the mundane and laborious tasks so prevalent in agriculture.
Cows thrive on repetition, most people do not. Automation satisfies both parties – people are working as overseers rather than “robots” and the cow is free to set her own routine.
It is important to recognise that automation does not mean autonomous. When labour goes down, management must go up. Skilled staff ensure the technology is working at peak efficiency.
Most importantly, the management information generated by the R&A technology enables herd managers to provide proactive, rather than reactive husbandry. Reports generated by the equipment’s analytical tools tell the manager what needs to be done and which animals require their attention.
In the future, competition for high-calibre employees is only set to increase, making the challenge of attracting younger generations into agriculture even more difficult.
Despite the growing world population, many key economies are expected to see a decline in the working age population. Even in China, by 2050, models predict that the country’s population will reduce by around 60 million, while the working age population will decline by 212 million.
Working people are going to have to become more productive if they are to support their economies and aging populations.
By leveraging technology, such as robotic milking and automated feeding, it is possible to increase labour productivity.
Lastly, the working conditions and shift lengths in agriculture need to be made more sociable.
In October 2016, a tractor driver was killed in New Zealand after he logged a 17-hour day. At 2.45 am he crashed the tractor and died as a result of his injuries. An investigation found that fatigue was the most likely cause of the accident (the man had clocked up 200 hours in the two weeks leading up to the crash).
This kind of workaholic mentality is not sustainable. Agricultural systems need to provide a work-life balance.
Under the SAS System, all farm staff can expect a maximum 45 hour working week.
In conventional agriculture, no two seasons are the same. The amount of experience and knowledge new entrants must gain to confidently operate farming businesses through difficult and varied seasons is substantial.
However, under the SAS System, everything is controlled, repeatable and consistent. There are no seasons, and the system operates irrespective of the external weather conditions.
Additionally, because of SAS’s feed outsourcing model, farm managers do not need to have any agronomic or feed production knowledge. There is no pasture to manage, no fertiliser or chemicals to apply, no expansive irrigation systems to monitor, and no sophisticated harvesting equipment to operate.
Because the SAS System is controllable, it is possible to train farm managers to operate the SAS System in the same way McDonald’s trains franchisees or managers to operate their restaurants.
McDonald’s developed their own “Hamburger University” to send a steady procession of qualified operators and mangers out to new restaurants.
In Ray Kroc’s book recounting the development of McDonalds, Grinding It Out, he explains the process owners or managers must go through before taking on a new store:
“about four to six months prior to the date his store is scheduled to open, the licensee attends our advanced operations course at Hamburger U. This adds polish to the management skills and operations knowhow he’ll need to greet his first customers. All of this preparatory work and training helps insure success for the small businessman who gets a McDonald’s franchise. And it doesn’t stop there. We stay right in there helping him through our system of field representatives. It’s all interrelated – our development of the restaurant, the training, the marketing advice, the product development, the research that has gone into each element of our equipment package.”
Although the SAS System business structure will work quite differently to the McDonald’s restaurant deal, the operational characteristics are very similar.
Every SAS System farm manager will pass through the SAS farm management training programme. This will teach new recruits how to operate the SAS System using the UK demonstration unit as the training facility. “Pre-trained” farm managers will ensure the smooth start-up and operation of international turnkey developments.
Although this “managed approach” to primary agriculture may appear overzealous, it is precisely the kind of mentality an agribusiness must embrace if it wishes to scale – the subject of next week’s post.