LAW IX - The Law of the Hog Farmer

This Law is dedicated to a Hog Farmer that runs one hell of a tight ship. I learned so much from my tour of his farm that it forced me to hop back on my blog and create LAW IX, The Law of the Hog Farmer.

LAW IX - The Law of the "Hog Farmer"

"When thine business is run tighter than a bull frog's ass, thou shalt be in a position to buy assets to increase the overall value of the company"

I spent some time in Minnesota this past weekend visiting with my Girlfriends family over Labor Day. I had the absolute pleasure of spending some time with her brother in law who happens to own a Hog Farm. For those of you that have never had the pleasure of visiting a Hog Farm, I suggest you put that on your list of "to do's" because it was really a great experience.

We drive up in our rented Chrysler... of course! and find Libby(her sister)
and Vic(Libby's boyfriend) out front of the house standing next to their Chrysler... of course! It was a really funny sight; Libby, Vic and Julie all live in LA and I live in South Beach Miami. Here we are 4 "typical city folk" all standing outside of this ranch house in the middle of corn and soy fields stretching as far as you can see. The moment I get out of hte car I get hit with this overwhelming sweet stench that I would quickly but unwantingly learn to recognize as "normal".

The sweet stench was coming from the 5 hog bins/containers, I forgot the proper nomenclature of what they are called but they are basically the houses which hold 100 hogs each. I would later find out that this is only one of 5 sets of 5 that the Kohlenhofer's own.

So... as you can probably imagine, I needed a beer. Not just so I can handle the stench but also because I just got off a 5 hour flight and an hour drive... come on, I'm not that much of a wuss. So I grab a couple Busch Lights(I was thirsty) and head over to the patio to relax a bit and take in the scenery.

Julie has me hyped up to go on a tour of Jeff's farm. The whole drive down I was getting prepped on it and I have to admit, I was pretty excited about checking out Jeff's operation. While I wait for Jeff to get back to the house, I kick back with Vic and pound a few brewski's. We small talk a bit about business, what's new, what's old and the overall scenario of us being on this farm with our country girls.

Fast Forward >>>

Jeff and I are in the Yukon and heading out. Jeff tells me a bit about what he's been dealing with over the last few months. Basically, he's been buying up all the farms surrounding his. From what he tells me, the banks are throwing money at him so he is taking it and using it to build his assets. Jeff and his brothers run a tight operation and they are very profitable so it's no doubt that the banks want to give them more money to re-invest into additional pieces of land. According to recent articles, the real estate bubble is real and it makes sense for financial institutions to aggressively seek business right now, especially when they are investing in a proven business.

He origninally started out with a small piece of land given to him from his father along with a small tractor and a few hogs. His brothers and he built the operation up and began expanding, coming up with creative ways to improve the living standards for their hogs, allowing them to grow bigger, healthier and keeping more of them alive during the growth process. He then began growing his own corn to feed the Hogs cutting out the local graineries from that revenue.

He then began using his own fertilizer, monetizing the hogs manuere to feed the soil of his fields improving the quality of his crops. As time went on, he started expanding his operation by investing in new equipment and newer technology making his operation the most streamlined operation in all of Minnesota. To further improve the quality of his corn operations, they created their own storage facilities also allowing them to sell their grain and manuere to other local farmers. In doing this they added additional revenues streams to their operation.

Next they decided to start growing Soy Beans because soy beans put nutrients back into the soil rather than suck them up like corn. This enabled Jeff and his brothers to flip flop their crops from area to area moving corn to the soy field and soy to the corn field further slimming and optimizing their operation.

The whole time Jeff is showing and telling me this I am thinking to myself about all the similarities I have in my own business.

1) Improvements in Process
2) Improvements in Product
3) Additional Revenue Streams being created by cutting suppliers out
4) Keeping a tight clench on spending allowing us to reinvest into the company technology
5) Constant Optimization always looking for ways to slim things down while increasing productivity

Everytime he showed me something new I was thinking to myself what it would be equivalent to within my own company.

Segway>>>

Here is something that I thought was so interesting, I couldn't leave this part of the story out. Jeff even has a Hog Fertility Technician. This guys house is set up literally right next to this lab that houses all of the male Hogs. HUGE CREATURES... that have but one purpose; to pass their genes on to continually produce top quality hogs that eventually become "the other white meat".

Every day, this guy goes into the lab and gathers "milk". About a good quart to be exact. :O!!!

I had no idea Hogs had that much force. A whole quart... good god!

I apologize for the visual but we must give respect to force when recognized. Moving on...

At the end of the day the most important thing I learned was that the fundamentals of running a business are the same whether you are managing a hog farm or a start up internet company.

Quote of the Weekend:

"I'm not trying to buy everyone's farm, just the ones that are butted up next to mine".
- Jeff Kohlenhoffer, Hog Farmer & Entrepreneur

**Jeff tells me this after his wife just got done telling me that all the neighbors are pissed at Jeff because he keeps buying up the neighboring farms to continue building his massive operation.