Photo by J. Alan Paul Photography
Coming from a farming background from Williston, N.D, Nick Horob understands the day to day struggles of farmers. After studying at the University of Minnesota, he spent three years working for ShoreView Industries, a private equity firm. After leaving ShoreView, he spent eight years as a farm finance consultant, working with farms in North Dakota, South Dakota and Minnesota. Now, as the founder of Harvest Profit, he’s out to help farmers run their farm as a successful business. We chatted with him about how farmers are adopting new technology and what this means for their ROI.
Q: There is a shift in agriculture as the old generation is being replaced by the new generation. What does that mean in terms of innovation in agriculture?
A: The younger generation of farmers have grown up with technology in all aspects of their lives. This familiarity with tech will drive technology adoption on the farm and I’m seeing evidence of that in our business. It does come with challenges though. As farms pass from one generation to the next, the younger generation often takes on quite a bit of debt as they grow into the farm. This debt compresses profit margins, forcing them to be very mindful of spending in all areas of the farm (technology included).
Q: Being a farmer is a unique job as you’re an entrepreneur. Talk about the struggle of being a farmer and handling the business of farming but also having to do the day to day work of farming.
A: Producing a good crop is dependent on, outside of the obvious weather factor, timely and effective planting, fertilizing, spraying and harvest. From the outside looking in, this is what most people think makes up the entirety of a farmer’s job. But, in reality, they don’t know that a farmer also wears many other hats: HR, risk management, accounting, capital allocation, landlord relations, lender relations and many more.
At the end of the day, farming is a manufacturing business but it’s lower margin (over the long-term) than most manufacturing businesses. So, the majority of farms don’t have the resources available to have full-time employees cover all of the main functions of the business. What I’m seeing is that more and more farmers understand that they can’t just focus on operations. They need to learn or bring in resources to help them manage other aspects of their farm. I like to say that a chain is only as strong as its weakest link so any business owner, farmers included, should focus on fixing their weakest links to build a long-term prosperous business.
Q: What sort of feedback are you hearing on technology? Are people excited for this new tech or are they hesitant?
A: Most farmers I know are definitely excited about technology but they are skeptical when it comes to ROI promises. A lot of the skepticism comes from the fact that they are bombarded with marketing messages such as, “Spraying ABC chemical will cost you 1 bushel of soybeans, but will gain you 3 bushels!”
It’s also hard to test the ROI of many types of farm technology. For instance, we at Harvest Profit make farm management software focused on cost of production and profitability analysis. Our customers use our tools to implement the best practice of tracking their numbers like nearly every successful business in another industry does. It’s hard to split-test the ROI of this best practice. Most farmers that I talk to are excited about technology on the farm but are continuously skeptical of ROI promises.
Q: What is the next needed shift in ag?
A: I don’t think there’s a needed “shift” in ag. I do think that more and more farmers are realizing the complexity of their business and are comfortable bringing in expertise to help manage areas where they are weak. I do think that there’s room for AgTech to help farmers define the probabilities of their decision making. Humans tend to judge their decisions based on the results of the decision. This resulting bias can lead to indecision and reactive decision making.
Farming has a lot of similarities to gambling. If you have the best hand possible in poker, you will still lose a material amount of the time. In farming and poker, there are rarely certainties and often only probabilities. A person needs to “play” the probabilities. New methods of capturing data on the farm are making it much easier to analyze the ROI (or lack thereof) of on-farm decision making. Farmers that conduct their own on-farm trials (supplemented with industry/university studies) will be able to arm themselves with the data necessary to fight the cognitive biases that complicate probability-based decision making.
Q: How will the Grand Farm affect North Dakota as a whole in terms of automation in agriculture?
A: Autonomy capabilities are advancing at breakneck speed. My hope is that the Grand Farm will help address the challenges that present themselves when trying to implement autonomy on the farm. Two big challenges in my mind are:
1) solving the logistics of autonomy (eg. how to move from field-to-field)
2) the labor requirements of monitoring autonomous fleets of equipment.
I’m hopeful that the Grand Farm will work to address the real-world complexities of autonomy.
About Harvest Profit
Harvest Profit is a farm management software that allows producers to track their P&L, manage their farm and helps with grain marketing.