Small Towns

BY KERRY ANDERSON

Grit, determination, and innovation to problem solve issues common to small towns came through loud and strong at the inaugural Small Town Show and Tell mini conference held in Cohuna on Friday 13 July, 2018.

So what did I hear in the room?

Small towns are important

1.8 million people live in small towns (under 5,000 population) across Australia which is the equivalent of the city of Perth. ‘Small towns are important,’ Jack Archer, CEO of the Regional Australia Institute stressed. He encouraged us to use the INsight data and research generated by RAI to assist with evidence in our submissions.

Encourage the entrepreneurs

It comes as no surprise that this was the thrust of my presentation and it was backed up by Jack Archer. For this reason we need to fight for improved technology so that more people can live and work in small towns. With a growing ‘gig’ economy where more people are self employed and contracted to perform services for the big corporations, there is a great opportunity for small towns to attract people away from the cities. I also shared some recent research from the Kauffman Foundation in the U.S.A. that has discovered that for every one percent increase in new business, there is a two percent decrease in poverty.  Business is important!

Be inclusive and form partnerships

Small towns don’t have to do it alone. Jan Smith spoke about how the small community of Girgarre has achieved so much because they have shared both the work and the benefits with all their local groups. They’ve also welcomed visitors into their town inspiring them to help out with various events and activities. I shared a project currently unfolding in Warracknabeal at the court house which is managed by the Working Heritage board on which I serve. A partnership with the local community and Monash University has eventuated in grand plans to establish an artistic hub. Bakery on Broadway revealed that they had received assistance from the Rotary Club of Keilor in sourcing equipment for their bakery. City people love to help a rural community to succeed.

Young people like growing up in a small town 

Secondary college student Taitum Mason took some time out of her school holidays to come and share her thoughts on being a young person growing up in a small town. She listed a whole range of events that young people love to attend including The Big Cohuna Festival, an initiative of Operation Next Gen. ‘I don’t feel like I miss out event though Cohuna is a small town,’ she said. ‘I’m proud to be a part of this community.’ This supports the findings of research undertaken by Operation Next Gen through a survey of over 2,000 students.

Migrants are a life line

This message came through repeatedly through Tom Smith from Kia-Ora Piggery near Pyramid Hill, Ann Durie from Bakery on Broadway in Wycheproof, and Jack Archer, CEO of the Regional Australia Institute.  The benefits are undeniable and Tom is lobbying hard for better conditions to assist migrants to gain stability when moving to rural areas. This includes extended visas as a pathway to citizenship including for extended family members; recognition of prior qualifications and fast tracking assessment and skills upgrades; and understanding that we need hands on people to migrate, not just academics.

An abundant resource

Gen Barlow from Newstead talked about opportunities for small towns to take advantage of the sun and create renewable energy. During Newstead's community consultations they discovered that not everyone was interested in renewable energy but they were interested in reducing their energy costs.  Discussions have been ongoing and persistent to get across the various regulation and service provider barriers that have presented along the way. ‘The big corporates find it hard to understand that small communities can do this,’ said Gen.

Housing is important

Cohuna’s Emily Wood presented the findings of a research project that highlighted some important points. Professionals attracted to a small town like to rent before buying to ensure that they are a good fit for that community, however, there is a lack of suitable accommodation available for rent to meet their needs. Investment opportunities to be explored for Cohuna in particular included building two four bedroom homes to be rented to professionals for 3-6 month periods, and two to four small units suitable for retirees coming in from the farms. Financial incentives for young people to purchase and renovate old homes was another recommendation.

Learn to ask

Jan Smith shared the story of how Girgarre turned a negative into a positive. When the Heinz Factory was being closed they refused a cash offer and asked instead for land which came with water rights. In effect this turned out to be far higher value that the initial $50,000 offered and is enabling them to build a $12 million botanical gardens. ‘Learn to ask,’ Jan advised.

Build a ‘war chest’

Jan’s other piece of valuable advice was to ‘build a war chest.’ She acknowledged a canny treasurer who kept putting money aside from each of their markets for when it was needed. It helped the community to save its kindergarten.  As someone who has served on both philanthropic and government bodies administering grants, I reiterated that it is important to demonstrate what your community is prepared to contribute, or already has. If you are not prepared to invest in yourself, why should anyone else?

Measure your local spend

Kathryn Lanyon explained how Boort’s Shop Local campaign has had a positive outcome for their business community over the past five years.  Coupons enable the committee to measure what is spent locally over an 8 week period - $350,000 - $400,000 through 25 businesses alone. ‘Each year the participating business owners are inspired by the results and it is good for the community to understand how much money can be spent in our town,’ Kathryn said. ‘We need to embed a culture of shopping local in every business, club and organisation all year round.’

Arts and Culture connect people

Tanya Black from Cohuna Neighbourhood House spoke about the newly formed Gannawarra Arts Culture and Entertainment Club (the ACE Club) where members come together to attend various arts and cultural events being rotated around the small towns helping to connect people. 'Many Melbourne based performances are being presented and supported by small rural communities, bringing life back into their community halls,' Tanya explained. 'It's a great way to meet new people, and you can be assured of a lovely country spread for supper.'


Congratulations to the Cohuna Neighbourhood House for this great initiative, funded by Regional Development Victoria as part of a larger project, 'This is Cohuna - Celebrating Our Heritage & Unique Neighbourhood Assets.'

Will it be a one off? Given how well it was received I think that another town may well take up the challenge to host this event in the future. Which town will it be I wonder?

WATCH RECORDINGS OF ALL THE PRESENTATIONS (coming soon)

And some more reading that may interest you:

Bakery on Broadway: Wycheproof

Rural Towns Fighting Back: COHUNA

Rural Towns Fighting Back: GIRGARRE

 

RAI How to end regional population decline

Tom Smith - Kia-Ora Piggery


KERRY ANDERSON: Founder of the Operation Next Gen program and author of ‘Entrepreneurship: It’s Everybody’s Business,’ Kerry works with small businesses and rural communities to help them embrace new opportunities. READ MORE

Why wait for adversity?

Photograph by Shayne Mostyn Photography, Cohuna

Photograph by Shayne Mostyn Photography, Cohuna

Adversity is a great breeding ground for entrepreneurs. We see it all the time. Someone suddenly loses their job and starts their own business. A major employer closes down and even more people launch a small business or buy into one. There is no doubt that, when pushed, we can step out of our comfort zone and do something that we’ve previously only dreamed of. A regular income holds us back but once it is taken away we suddenly have nothing to lose and are willing to have a crack.

Two questions come to mind. Why are we waiting for adversity before we take positive action? And why aren’t we doing this as a community rather than just as individuals?

I want to pay homage to the communities with vision who understand that we should be nurturing our entrepreneurs and preparing the groundwork long before any hardship hits. Experience has demonstrated to me that those who have already laid the foundations of a collaborative entrepreneurial ecosystem are much better equipped to weather a storm.

Many Victorians will recall the shock waves of the Morwell community audibly vibrating through the media all the way to the Victorian State Government’s treasury when the closure of Hazelwood Power Station was announced in late 2016. Even though the storm clouds had been gathering on the horizon for some years, the community still appeared to be visibly shocked when it finally descended.

Despite the digital age and vast information at our finger tips, storms can still arrive unannounced and create much damage. And they come in many forms, not just of the weather variety that rural communities are familiar with.

In April 2016, some months before the Hazelwood announcement, the ‘dairy crisis’ hit a number of rural communities when Murray Goulburn and Fonterra delivered the gut wrenching news to farmers that they were dropping their milk price payments. No, this was not just reducing the farmers’ profits, it created a situation where the cost of caring for and milking their cows was greater than the return farmers would receive.

No doubt many dairy farmers were despairing at the time because their pain was just as great as the Hazelwood workers. And it wasn’t only power station employees and dairy farmers feeling the pain. With lost incomes comes a general downturn in business and a spiral effect across the whole town. Their communities were hurting along with them.

No rural community can avoid these upturns and downturns but some are better equipped than others.

Cohuna in north-central Victoria actively started developing their entrepreneurial ecosystem well in advance. Despite being surrounded by dairy farms and hit hard by the ‘dairy crisis’, Cohuna appears to have rallied more quickly and with less outside assistance than Morwell, primarily because of an embedded collaborative culture.

Enhancing an existing supportive community, Operation Next Gen Cohuna was formed in 2013 to empower emerging community leaders to explore new business opportunities and strengthen their community into the future. The group established a ‘Cohuna Farmers & Makers’ Market that has helped create and promote many micro businesses within the community. An annual event, The Big Cohuna (held over the Melbourne Cup weekend) has provided a creative platform for locals and attracted visitors to their rural town. Multiple events have been held to engage their youth and form strong ties with their home town. Encouraged by a #GetYourBacksideCreekside campaign, new seasonal businesses now operate during the summer period. Another quirky campaign attracted national media and multiple business proposal for a vacant building.

‘Cohuna has experienced some of its best tourism in five years,’ Jennah Martin, a local accommodation provider told the media early this year. It was hardly coincidental that five years is exactly the time frame that Operation Next Gen has been active in Cohuna.

By the time the dairy crisis hit in 2016 it was a natural reaction for the Cohuna community to ask: What can we do to help ourselves? Because of Operation Next Gen and the community’s collaborative culture, much was already in place and individuals were empowered to take positive action.

Dairy farmer, Di Bowles, co-founded a social media platform #DairyLove to support farmers with positivity and the non-farming community was equally active. Local photographer, Shayne Mostyn, convinced his Melbourne based partner to bring their new night photography workshops to Cohuna. ‘It’s only eight people each month but it is eight people that weren’t coming before,’ Shayne says. ‘They come and use the local accommodation and spend their money in town.’

Another huge asset has been the establishment of a RV camping site in a prime location in town. ‘Caravaners stop, walk over to the shopping centre and SPEND money,’ community member Denise Morrison advises joyfully. ‘We have also had at least three new families buy a house in Cohuna to live after they have stayed at the RV because they liked the feel of the town!’

More recently Operation Next Gen Cohuna has launched Cohuna Unlocked, a new autumn event to showcase and stimulate local businesses. And, defying the closure of other milk processing plants in the region, two local business people have also launched a bid to build a new $130 million milk processing plant aptly named NO BULL. ‘Rather than have their milk sent 120 kilometres away, they can have it processed here and that will generate local jobs and help ensure that farmers in this area remain profitable,’ said John Mawson, owner of the local quarry, supported by Cohuna’s veterinarian, Jason Wright.

The list goes on …

Let’s be clear. Nothing happens overnight as it takes time to gather momentum and show positive results. Communities that understand the value of local leadership and building collaborative entrepreneurial ecosystems are much stronger and able to take advantage of new opportunities as well as weather any storm that presents.

Which brings me back to that all-important question. Why are we waiting for things to go wrong when we could be actively looking for opportunities now?

For those communities not waiting for adversity, here is some more information on Operation Next Gen


KERRY ANDERSON: Founder of Operation Next Gen and author of ‘Entrepreneurship: It’s Everybody’s Business,’ Kerry works with small businesses and rural communities to help them embrace new opportunities. READ MORE

Celebrating Rural Women

(L-R) Jenni Finn from Factory and Field in Cohuna, Lauren Mathers from Bundarra Berkshires in Barham, and Andrea Harrison from Kawaii Kids in Birchip, engaged in conversation with Kerry Anderson to celebrate the International Day of Rural Women on 15 October, 2017.

(L-R) Jenni Finn from Factory and Field in Cohuna, Lauren Mathers from Bundarra Berkshires in Barham, and Andrea Harrison from Kawaii Kids in Birchip, engaged in conversation with Kerry Anderson to celebrate the International Day of Rural Women on 15 October, 2017.

On 15 October, to celebrate the International Day of Rural Women, Kerry Anderson invited three female entrepreneurs to share their inspirational stories of starting a rural business.

What a pleasure and privilege to have these three dynamic and extremely busy women together in a room sharing their passion for starting a rural based business.  Their introductions alone were inspirational.

Jenni Finn: Factory and Field, Cohuna 

LINK TO FACEBOOK PAGE

When Cohuna teenager Jenni Finn got a casual job in an orange juice factory in the 1980’s she had no idea that one day she would own that historic building – originally a butter factory - and establish one of her home town’s most successful businesses in recent years.  Tucked away on a back road in an industrial estate, Factory and Field is not exactly where you’d expect to find a popular home wares and gift store and that is part of its charm.  Opened in somewhat of a rush in September 2013, Jenni’s vision is rushing ahead in leaps and bounds as she continues to bring her ideas into reality across the four acre industrial site.

Andrea Harrison: Kawaii Kids, Birchip 

LINK TO WEBSITE

What do you do when you live in an isolated rural community and can’t buy shoes for your toddler?  Well, if you’re Andrea Harrison from the agricultural town of Birchip, you start up your own online business, Kawaii Kids, importing children’s shoes and clothing.  Operating from the family home; clothes were stored in industrial containers in the back yard and a laptop on a small desk in the hallway acted as a business hub.  Fast forward a decade, Andrea has opened a retail store in Horsham and collaborated with retailers Australia wide to manufacture a specialist baby range. 

Lauren Mathers: Bundarra Berkshires, Barham 

LINK TO WEBSITE

In 2009 a lone Berkshire sow ‘Doris’ was the beginning of what Lauren Mathers envisioned as a whole herd of free roaming black heritage pigs rooting about improving the soil.  “Bundarra” is Lauren’s family free range Bio-dynamic farm on the Murray River just outside the small township of Barham in Southern NSW. The farm itself was dormant land that she and husband Lachlan saw potential in and, after years of patience, the farm was finally theirs.  Not content with just breeding, Lauren learned the skills of butchery and in 2013 started processing all meat onsite.

How did they gain the confidence to start a new business venture?

Research has shown than over 30 percent of people are more likely to go into business if they know someone in business, most often a family member or close friend.  In Jenni and Lauren’s case this happened to be their grandmothers who had also started businesses.

‘Nanna comes into Factory and Field and likes to remind me that it is all because of her,’ Jenni confided with a laugh.

Confidence is a huge impediment to anyone starting out in business especially for rural women with no formal business skills. 

A classic attribute of an entrepreneur is a quiet self-belief in themselves.  Rather than blindly take a leap of faith they avidly research to the point where they are both excited and confident that they have a great business idea.

All three women alluded to this as they spoke about their vision and the determination to bring their new businesses into reality.

‘You have to have an appetite to take a risk,’ Lauren admitted.

Andrea, who lays awake at night dreaming of all the things she would like to do, believes that you have to be passionate about what you do otherwise you wouldn’t do it.

Overcoming financial barriers.

One of the biggest hurdles in establishing a business is accessing finance, and right from the start it became evident for each of the women that a business loan from a bank is not the answer.

Jenni’s advice is ‘don’t accept the first no.’  Factory and Field was born in a bit of a rush; three months to be exact.  She made the decision in July, purchased stock at a trade fair in August and opened in September.  While the bank had been happy to support the purchase of the building, it wasn’t prepared to finance the business.  Undeterred Jenni gave the building a bit of a tidy up and used her personal credit card to purchase stock.  Thankfully she sold out on opening night and had the cash to stock up for the next influx.

Andrea and Lauren also found alternate ways of funding their business activities.

Andrea managed to self-fund the start of her business but recalls how a bank wouldn’t loan her money to expand despite the impressive cash flow figures she presented. Having no credit history was a bitter lesson.

Financial pressure can be felt every time there is a major investment in stock or improvement to the business.  Cashflow is crucial.  At times Andrea admitted to anxiously waiting for the EFTPOS sales to be deposited into her account just to cover her expenses.  While determined to keep the business separate from the family assets, at one point the family car was sold but thankfully it was a short term solution.

In 2014, a commercial kitchen was required when Lauren wanted to take her business a step further making traditionally cured pork products to sell online and at Farmers Markets. Cashing in on the great goodwill there is for free-range products, she used a crowd funding platform, Pozible, to successfully raise $18,000 ($3,000 more than required) for the project.

The panel agreed that it was worth looking at other short-term options such as a personal loan or through an online lender such as Prospa.  While the rates are higher, they are far more accessible.

Balancing business and family life.

With Lauren a mother of three, and Andrea a mother of four, they clearly rely on a lot of passion and drive to nurture a young family and business at the same time.  It’s not always easy but business does have some advantages over a 9 to 5 job.

‘I work every spare minute that I have,’ Lauren admitted. In addition to a little bit of child care relief, she often works into the night as and when the need arises. ‘It gets me ahead and puts me in a better place.’

Child care is also a lifeline for Andrea especially when she heads to the retail store in Horsham. Her time is much more flexible at home dealing with the online side of the business. 

‘I couldn’t do this without the support of Daniel my husband,’ she is quick to acknowledge. ‘And when he is busy with cropping on the farm I have to hold back on my business so he can concentrate on what he needs to do.’

Like many children of working parents their children grow up thinking it is normal to be in a work environment.  Their mothers are role models demonstrating that it is possible to control your own destiny in a rural town.

Jenni’s children were teenagers when she started her business giving her much more freedom to put in the long hours although she does admit that perhaps they were a little ignored. ‘I don’t think they really cared at that age,’ she smiles.

Already her 16-year-old daughter is working part time in the business and has developed valuable skills.  ‘My daughter is capable of running the business and has already done so when I can’t be here.’  There will be no shortage of opportunities as Jenni prepares to open another business, Factory and Field Waffles in the main street of Cohuna.

Despite the hard work and frequent frustrations, Jenni, Andrea and Lauren clearly love being in business.

‘The best thing about being in business for me is the satisfaction I get from people picking up my garments in store and loving them, without knowing that they were once only an idea in my head,’ explained Andrea.

It was of significance that this celebration was held at Factory and Field.  Four years ago, as part of an Operation Next Gen conversation, I brought a group of local leaders to this vacant building and challenged them to look at existing landscapes with fresh eyes.  Jenni did exactly that and, within six months, this old butter factory was experiencing another exciting chapter in its long history.  

With the vision, passion and determination of an entrepreneur anything is possible, especially with a supportive local community.

 

Kerry Anderson, author of Entrepreneurship: It’s Everybody’s Business, works with rural towns all over Australia.

www.kerryanderson.com.au

Blinded by the Stars

WORDS by Kerry Anderson, PHOTOGRAPHS by Shayne Mostyn

In what many would term an unusual career pathway, Shayne Mostyn has been preparing to be self-employed for most of his adulthood. From the army to technology; from the Gold Coast to the dairy town of Cohuna, every step and new skill has prepared Shayne to create his own destiny in a rural town where he was blinded by the stars.

Like most teenagers, school was just something you do every day according to Shayne. ‘Nothing inspired me at school,’ he admits without apology. ‘I just wanted to go into the army.’

Six years in the army taught him one of his greatest skills.  ‘Tolerance,’ Shayne says. ‘I cope with day to day stresses much better than most people. When I am out at 2.00am doing a night photography course with a storm raging around me,’ he explains, ‘I weather the storm a lot better.

Exiting the army, he then became a technician for Xerox in Sydney followed by a stint working at the Olympic Games.  Technology is another expertise he has accumulated.

‘I worked my way up through Xerox becoming a team leader and then operations manager.  You get a name for yourself and then get head hunted to put out fires.’

Working for Xerox and IBM taught Shayne about processes, another important element that has prepared him for business.  ‘Flying by the seat of your pants is definitely not the way to manage a business,’ Shayne says.

As is often the case with tree changers, Shayne first discovered Cohuna in northern Victoria when he and wife Sarah were visiting her sister over the Easter holiday five years ago.  Arriving in the small agricultural town of just over 2,000 population they discovered that there was no reception for their mobile phones via Vodaphone.

‘Without my usual 140 emails per day, eighty percent of which would require action, I suddenly had bliss,’ Shayne recalls.  ‘We loved Cohuna and driving back to Melbourne I said to Sarah that I could live there.’

As fate would have it, by the time they arrived back in Melbourne he had received a job offer of driving an excavator.  ‘I’d driven tanks in the army,’ Shayne explains. ‘Other than a gun there is not much difference.’

Two weeks later Sarah was offered a job with an accounting firm in nearby Echuca getting offered more money than she was receiving on the Gold Coast.  Their fate was sealed!

Owning a farm was a dream of Shayne and Sarah but it soon became evident that a traditional dairy was beyond their means. ‘With a $2.5 million buy-in required we decided to go with a different business model,’ Shayne explains.

An episode of Master Chef featuring goats cheese gave them the idea to convert an old dairy farm to breed and milk goats, a much more affordable solution.

‘I enjoy the farming side of things and did relief milking to gain experience,’ says Shayne. ‘We’re doing something different and I would challenge anyone in the district to say they are bringing in more money per acre.’ 

Hmm in light of the recent dairy crisis, he is probably right!

With Sarah driving the product development and marketing their boutique soaps made from goat’s milk at Windella Farm, Shayne has been free to pursue other interests.  It soon becomes clear that he is not one to sit around and lounge at home.

That very first weekend in Cohuna he saw the stars and took his first astro shot.  Actually, that was the big selling point when it came to relocating there.

‘You can’t see stars like that on the Gold Coast,’ he says. ‘I started studying online watching You Tube clips.  I took a night photo of an old Massey Ferguson tractor in a paddock and put it up on Facebook where it got a lot of attention.’

That was the catalyst to establishing Shayne Mostyn photography which is now one of his favourite past times and an increasing source of revenue as he studies what is the best business model in this field.

‘Everyone has a camera these days and, even if they want professional photos, many aren’t prepared to pay for it,’ he says. As far as photography is concerned, Shayne believes there are three sources of revenue. 1. Selling artwork through a website; 2. Paid photography for special family events and commercial work; and 3. Teaching photography through workshops.

The latter is what Shayne is finding most successful.

Collaborating with Matt Krumins, a Melbourne based photographer, Shayne is offering city photographers something they can’t find in Melbourne – the stars.  Weekend workshops are bringing city folk to the country.  They start with the theory, photograph at night, and then edit and reflect by day.

‘We were thinking of doing it closer to Melbourne but because of the dairy crisis and fear in the local community I decided to bring the workshops to Cohuna.  It’s only eight people each month but it is eight people that weren’t coming before,’ Shayne says.  ‘They come and use the local accommodation and spend their money in town.’

Becoming part of a rural community has had a huge impact on Shayne and Sarah.

‘On the Gold Coast we lived closed to people but didn’t know anyone. Here we have got to know people. What should take 30 minutes to do often takes over an hour in Cohuna because we are always stopping to talk to people.’

And local connections leads to more work as Shayne has discovered. Drawing on his technical skills and love of a challenge, he has his finger in many pies.  25 local businesses now entrust their websites to Shayne for regular updates and he is also trained to do specialist hoof trimming through a local vet for local dairy farmers which involved training in the United States.

When I ask what Shayne thinks about living in a rural town he pauses for a moment.

‘There is an element of satisfaction and achievement that I’ve never had before,’ he admits. ‘I’m more creative.  I look at an opportunity and see what I can do with it.’

On the downside there is limited customer reach in a rural town requiring travel. ‘You’re also competing with the locals who are already well known.’ On a positive note, he adds, ‘the strength of a small town is word of mouth testimonials. Do a good job and they become your biggest advocate.’

Five years living in a rural town and Shayne’s goal is not to be working for anyone else. That means doing something different in Cohuna hence the Astra workshops and a new idea to combine them with a tour of the Murray River.

‘There are plenty of people doing this type of thing but I can do it differently. I’m looking for the wow factor,’ Shayne says.  Some would say he has stars in his eyes!

Check out Shayne Mostyn Photography

Shayne’s Top Business Tips

  • Diversify. Don’t do what everyone else does.
  • Follow up with everything you do. ‘Must have’ photo list for a wedding essential.
  • Be honest about what you can do.

KERRY ANDERSON: Author of ‘Entrepreneurship: It’s Everybody’s Business,’ Kerry works with small businesses and rural communities to help them embrace new opportunities. READ MORE

Entrepreneurial Ecosystems

Welcome to Global Entrepreneurship Week 2017. To celebrate we are offering 7 free webinars over 7 days tailored especially for rural Australia.

Is your rural community ready to establish an entrepreneurial ecosystem?  How can we create a collaborative culture where entrepreneurs are valued, nurtured and supported? Sonia Wright from Operation Next Gen Cohuna joins the conversation.


KERRY ANDERSON: Author of ‘Entrepreneurship: It’s Everybody’s Business,’ Kerry works with small businesses and rural communities to help them embrace new opportunities. READ MORE http://www.kerryanderson.com.au/about/

Number Crunching Pork Producer

Photographs courtesy of Shayne Mostyn, Cohuna

Photographs courtesy of Shayne Mostyn, Cohuna

BY KERRY ANDERSON

When a small group of pork producers was faced with an increase in freight costs for the cost of purchasing feed, Aeger Kingma, an enterprising pig grower with a passion for ‘crunching numbers’ was motivated to take action. Five growers subsequently established Pentagon Feeds at Cohuna, in northern Victoria, in 2010. Six years on and it has significantly reduced costs for its members and is turning over $20 million per annum.

Comprising a green site development of a purpose built feed processing mill with capacity to store 3,000 tonnes of grain, Pentagon Feeds is a substantial addition to Cohuna’s industrial district. The mill produces 1,000 tonnes of pig feed a week to meet the needs of its five shareholders and other local pork producers as customers. By controlling their own grain procurement and utilising modern technology to achieve efficiencies, this privately owned company is producing quality feed at a reduced cost.

Creating much interest at the time it opened, and since confirming its viability as a business, Aeger is happy to share why he believes Pentagon has been a success.

In his view, it all comes down to ‘a bit of lateral thinking and ability to crunch the numbers.’ As is often the case in agriculture, he also agrees that adversity is a good catalyst for change, enabled through a spirit of co-operation.

‘For a couple of years, the pig industry wasn’t so good and there wasn’t a lot of money in it,’ explains Aeger.  Given his long involvement in the industry as a current director of Australian Pork and former representative of the Victorian Farmers Federation Pig Group, he is well placed to comment.

‘Changes to the pork industry import regulations in the early 2000s allowed importation of pork into Australia which ultimately decreased pork prices and resulted in an excess of pigs being produced. A number of pork producers exited the market until the national herd was decreased and a balanced industry and pricing was restored in economic terms.’

Then, just as balance was being restored, along came the drought.  ‘This increased our feed costs and impacted severely on our bottom line,’ says Aeger.

Normally 50–60 percent of total costs, in the drought feed costs rose as high as 75 percent. When their local feed mill closed down in 2007 an additional freight impost was introduced to transport feed from St Arnaud. 

As a producer who runs 1,400 sows and cares for a total of 14,000 pigs at any one time, Aeger had very good reason to be concerned. ‘We had no control and were fed up with being dictated to.’

Using his accounting skills, Aeger wrestled with the issue and came up with a business proposal based on a similar model already operating in South Australia.

Operating for about a decade, the Murray Bridge Abattoir, led by Ian Parish, had successfully brought together a group of farmers and processors to control the quality of slaughtering for the export and domestic markets. 

‘It was initially Ian’s suggestion that we look at this model,’ says Aeger. ‘A proposal was prepared but none of us had a lot of spare cash at that point in time so we parked the idea for a couple of years.’

Two years later in 2009, when the timing was right, Aeger updated the figures and put the proposal to five local pork growers. Most of the group had already formed a relationship for joint negotiations to purchase feed at the best price.

In fact, with this existing spirit of co-operation, Pentagon Feeds Pty. Ltd. only took 17 months from the initial concept to turning out the first run of feed pellets.

‘We worked out that we could build a pretty fancy mill for the cost of freight savings and produce at least 600 tonnes of feed per week for ourselves and other customers.’

Initially each partner signed an Expression of Interest and contributed $2,000 to fund a feasibility study to ensure the proposal was sound.

Discussion then turned to operating budgets and the legal side of the business, with agreements drawn up on how profits would be distributed and shares could be traded or sold.

Because the amount of feed required for each partner varied, shares issued was proportional to the amount of feed consumed. This was an important part of the company structure, therefore it was considered fair that the shared risk also be proportional according to the shareholding.

‘We each put in some cash to underwrite a loan for the business. All up we borrowed $3.2 million. The bank co-operated with us to establish proportional guarantees.’

Aeger stresses the importance of having a champion who will drive the process.

‘You need to recognise the points at which you are competitors and where you are not. It’s then easy to create a desire to achieve as long as someone is prepared to lead it.’  Aeger took the time to make a personal approach to each grower, explaining the figures and assisting them to understand the required investment versus anticipated return.

Early on the shareholders decided on a few basic principles.

‘We agreed that we were sharing the mill and that we would be as efficient as we could which meant some compromise.  Efficiency depends on long production runs with similar rations, not lots of different varieties.’

Six years down the track and Aeger, who was appointed non-voting part-time executive director, is clearly delighted with the results.

‘It’s gone significantly better than expected. We bought into the concept based on savings on freight but didn’t understand the savings generated by being involved in our own procurement of raw materials which were obtained at a cheaper price than by the previous supplier.’

The mill was designed to be run with low labour input and, with the unanticipated savings on procurement, Pentagon has been able to weather the storm of increased energy costs.  Aeger proudly claims that they get 33 percent throughput above the average of other mills out of their presses and can recite a range of statistics and figures to back it up.

Strategy is an important part of each board meeting held every two months, especially when it comes to purchasing their main raw ingredient of grain.

‘If commodity prices are at a high point we buy short, and if they are at a low point we buy long,’ says Aeger. ‘We are lucky to have the funds behind us to buy six months’ worth of grain.’

The company has just invested in additional grain storage to maximise buying capacity. They now have eight silos with capacity to store a total of 3,000 tonnes of grain for processing.

As a director of Pork Australia, Aeger also follows with interest the results of any research. 

Specialised equipment from Germany is currently being installed to enable Pentagon to precisely measure and add protein to food pellets, once again maximising available raw materials for the cheapest possible ration cost.

‘Fat is a good source of digestible energy,’ explains Aeger. ‘Every percentage point of energy is worth about $28 to us per tonne.’

$70,000 has been invested in an infra-red machine, the size of a little computer, which gives Pentagon the ability to scan incoming samples of grain, and translate the imagery into data that is then emailed to their nutritionist for analysis.  Another piece of technology then accurately sprays up to an additional 4 percent of fat coating around the food pellets. A nutritionist uses the information from this equipment to formulate appropriate rations for each class of pig.

Six years since being established, and with all this additional investment, there is no doubt that the benefits have been significant for Pentagon Feeds’ shareholders.

‘From a company point of view, over $1 million per year finds its way either back to shareholders or into assets,’ says Aeger. His accounting background compels him to also measure and track his own savings. ‘I personally save $5,000 each week on supplying feed to our farm.’ 

He is acutely aware that the longer they are removed from purchasing through a feed supplier, the more difficult it will be to calculate an accurate return. ‘It’s not just the freight savings, it is the increased ability to control the quality of feed going to your animals.’

Their next challenge as directors is to manage a new, and most welcome, scenario as the company transitions from one that has a big debt to service to one that doesn’t.

Without doubt, Pentagon Feeds is a great success story. As long as there is a viable pork industry, Aeger does not foresee any changes in his lifetime to the company structure or its shareholders, despite an exit strategy being clearly outlined at the very beginning of its formation.

‘All five shareholders are well into succession planning,’ says Aeger. ‘My son is well entrenched in our piggery and while it exists, the need for the mill exists.’ Even if there is a downturn, he says the mill infrastructure can be adapted to process feed for another species if required.

In Aeger’s words, backed up by his number crunching abilities, Pentagon Feeds has ‘turned into quite a useful business!’

Aeger’s top business tips:

  • Understand where control can bring added profit to your business. 
  • Think strategy before structure.
  • Commit the necessary number of people to make it viable.
  • Recognise the points at which you are competitors and where you are not. 
  • Take the personal approach when bringing people on board a business idea.  Explain the vision backed up by the figures and how they work.
  • The simpler you can keep the entity, the easier it is to get off the ground.
  • Be clear on your exit strategy before agreeing to entry.

KERRY ANDERSON:  A businesswoman, author, and community advocate from Central Victoria, Kerry is passionate about rural and regional Australia.  She works with small businesses and rural communities to help them embrace new opportunities. READ MORE

This story is featured in Kerry's book: Entrepreneurship It’s everybody’s business

Rural Problem Solving

BY KERRY ANDERSON

A COMMON attribute of an entrepreneur is their desire to find a solution to a problem.  Another is that they quite often don’t fit into the school system.

With this in mind, it was no surprise that Travis Howard of Cohuna used to be easily distracted at school.  “All I could think about was farming,” he admits.

When the family dairy farm was sold in 2006 Travis contracted his skills out and kept his eyes open for opportunities.

An idea was presented to him by Cr. Goulding in 2009 when the Ganawarra Shire was trying to decide how to dispose of its green waste collection.  As a result of that initial conversation, Travis started a unique business that was beneficial for the Shire, the environment, and for farmers.

Travis started buying the green waste off the Gannawarra Shire and relocating it to dairy farms that require bedding for their cows prone to mastitis and other conditions inflamed by lying on the wet ground.

A big tick for the shire and an even bigger tick for the dairy industry.

After a period of time Travis then collects the further enriched waste and composts it in wind-rows over a six month period before sifting it into a format that is suitable for
vegetable gardens, lawns, and pasture enhancement. 

Another big tick for his customers.

A field day sparked the original idea and You Tube and the internet provided the rest of the knowledge that Travis needed to get his business started.

“I love experimenting and seeing things grow,” says Travis and this has clearly resulted in a win-win for everyone concerned.

He needed help to get started and pays credit to his father for being a great business mentor.  The farming community has also got behind him. John Keely and other local farmers have allowed him to make use of their land to process the compost.  Travis continues to move his enterprise around the Cohuna district utilizing land too salty for the farmers to use.  In return for the use of the land he spreads compost and improves the soil so that eventually the paddocks again become usable to the farmers.

In what is proving to be a profitable business Travis started off processing 80 tonnes of waste on the ground and four years later was up to 2,500 tonnes annually.  Seven years on and he is processing around 4,000 tonnes and employs another local person three days a week. 

As both Travis and his employee have young families, it suits them both to work part time allowing them the flexibility to share child care responsibilities with their partners.

“Having someone working with me has taken the pressure off,” says Travis but admits that taking the step from working solo to being an employer was a major one.

“I never realized that there was so much paperwork with super and tax.” His accountant was duly enlisted to help set up that side of the business.

And don’t think that Travis has finished yet. As his domestic market has grown significantly in recent years he has started buying green waste from a neighbouring shire and is currently looking for a retail site with suitable road frontage.

Watch this space!


KERRY ANDERSON:  A businesswoman, philanthropist and community advocate from Central Victoria, Kerry Anderson is passionate about rural and regional Australia.  She works with small businesses and rural communities to help them embrace new opportunities. READ MORE

MEET KERRY IN PERSON:  During August Kerry is sharing her knowledge on entrepreneurship as part of the Small Business Festival in Melbourne (8 Aug), Geelong (19 Aug) and Bendigo (31 Aug).  READ MORE