Entrepreneur Written Interviews Written Interviews Uncategorized

“Believe in what you are doing” – my interview with agricultural entrepreneur Sam Dobson of Dobson Farms

Statesville Record & Landmark feature on Sam Dobson’s Grass-fed Beef Operation.

Thank you very much for agreeing to this interview today. Could you please tell us about yourself?

Sure. Sam Dobson from the northern part of . I think I’m the tenth generation on this dairy and now, . We’ve been in the dairy since 1939, and before that we farmed the traditional cotton and tobacco, and maybe some small grains since the late 1700’s. We have transitioned over the last few years after looking at organic dairying, and transitioning with that process as well as starting a grass-fed beef part of the operation in 2006. We’re moving forward with that. I’m married – I have a wife Sherry, and one son Chase, who’s five; so there’s another generation coming along! And we just kind of hang out here on the farm and try to make things go.

That sounds great. Ten generations, that’s really impressive! Most people are starting businesses with the goal to sell it half way into their business and cash out. So, that’s quite a legacy!

Well, some people say we were never smart enough to cash out, (with much laughter) but we just kept it going!

That’s really good though! You are selling dairy wholesale, right?

Yes.

And your beef is direct marketed to your customers, and are you selling that wholesale too?

We do the wholesale through Hickory Nut Gap Farm, and then we have a little retail line here through Dobson Farms. They’ve both done really well. We’ve only done the and retail side for about two years, which started with some local farmers’ markets, like the Evening Farmers’ Market at Pecan Park and the Rotary Farmers’ Market, both in downtown Statesville. And that kind of allowed us to pick up a couple of customers at each market, and they started to come out to the farm. That was the main goal, to get people to come to the farm where they can see what you are doing here. I want people to come and ask questions; I want them to see the cattle ; I want them to know why grass-fed is better. We can still look at growing the direct market side of it, definitely. The wholesale side has grown; that’s probably why the retail side has not grown, because we hadn’t been able to keep up with the wholesale side of it. We’re still looking for that balance, but I don’t know where that’ll be!

How did you decide to get into direct marketing grass-fed beef from dairy?

Well, the beef started with Jaime Ager of Hickory Nut Gap Farm in Asheville, NC. We roomed together, and we’re good friends, at the CALS Ag Leadership Program at NC State. He had a market, and I had some land and some knowledge on grazing, and that’s how that started: with him taking a chance with me, and me taking a chance with him. It just kind of worked, and we developed a great relationship -we’re great friends first-, but we found some with some good quality product and his great marketing skills. That kind of started the beef, but the retail direct marketing side of it started when some people found out what we were doing, and it spread by word of mouth here in our local community. They would ask where we can we get your beef? I’d say, Earth Fare in Boone, Earth Fare in Asheville, but there was nowhere around here where they could get our product. So, we had enough of that, and decided we would look into developing some local options.

You didn’t really have a formal plan to get into this business, it just kind of happened and you are running with it, it sounds like.

Yes, I knew we had to do something. We had to do something different. When I came home from college, I guess it was what everyone goes through with the family business: you bring a whole different set of ideas and some different experiences to the table. You see society changing, and people’s interests changing, and what people want is changing, and consumer demand is changing. That also makes you the crazy guy on the block when you come home and tell your father and grandfather that! My grandfather was still living and was still real active in the farm at age 85 when I got home from school. So, I knew we had to do something different. So, what we started doing was – we’d always grazed our cows just a little bit, during the spring and in the fall. We had plenty of land to do it. But I said, “You know, our cows do so much better when we’re grazing them.” So, I got into the rotational grazing and that was shortly after I got home from school. I went through the trial periods with dad. This is just a story: I remember one time when, we had a lot of land that had been fenced for sheep production back in the 60’s and 70’s, and that old fence was there and I was using that. It was terrible fence and I was sectioning it off to create temporary pasture. And I remember we had this good milk cow and she went across that barbed wire fence and she cut her udder wide open. And my dad told me “this is why grazing won’t work.” He was just looking for a reason to tell me why it wouldn’t work. And I said, “No, this just means I need to get this old fence fixed and clean it up.” So, that’s what I did. I drove a bulldozer through there and cleaned it up. The milk cow ended up being all right; we lost that one quarter, but saved the other three. So then, I realized that if I was going to do this grazing, I’d have to get to fencing. I spent probably five years; any time we weren’t in the hay field or cutting silage, or something. I spent five years fencing. It was a pretty good capital investment, and a lot of hard work. But you kind of put that system in place. We were fortunate that we had that land around the dairy to work with, because that was the key: the most expensive thing was already there, which was the land. That’s kind of how it all started, and it kind of evolved into the grazing operation. When I met Jaime, he was impressed that I was rotationally grazing cows. And so I guess it was kind of by luck that it ended up like it did, but you had to start somewhere, and I guess me just rotationally grazing the dairy cows just kind of triggered the other.

So you saw a need to improve some of the operations on the farm, and because you satisfied those needs other opportunities arose.

I’ve been totally against grain since day one. My end goal with this is to be 100% , like our beef cattle are 100% grass. If I’ve got a problem in the world, it’s that I think too much. I remember the breakfast table at my grandparent’s house, that was the place where my dad and my grandpa would discuss everything. And every month the biggest problem was the feed bill from the local mill. That was what they would be griping about: whether they didn’t bring the right amount, or the price had gone up. It was something to do with that feed bill. I’m sitting there thinking, “cow’s are supposed to eat grass, they’re grazing animals.” You know my dad and my grandpa were both really good farmers, and of course my dad is still involved: I guess he’s still the CEO up here. They got caught up in the conventional – I need to be careful with this – but, the extension type of agriculture. You know, what the university had pushed. And my great uncle was a professor at NC State in Agriculture, and so they listened to him. They kind of got caught up in that. I just decided that I would do a little research, and the feeding of grain to cows wasn’t a popular thing until after World War II, you know.

Exactly.

And I just decided that let’s back this thing up, we’ve got resources to work with. Let’s just go back to what’s efficient. And we didn’t have the right (cow) genetics for it, and it’s been an uphill battle the whole time. But, ten years later I’m seeing the definite fruits of what we done.

It’s all very interesting to hear.

That’s kind of how it all spurred. The farm was in trouble. And I’m twenty-one years old and I’m thinking if I’m going to do this for the rest of my life it’s going to have to work. I’m going to have to make this pay, somehow.

Is that starting to happen?

It is. Yes, it is. I mean, I’ve made more money now then I ever have. So I guess it is. But at the same time, I’ve put a lot more on the line and I’ve got of risk out there, too. But yes, it is. And I think I’m just now seeing it work. I did see it work all along, but at the same time you just had all that investment. The genetics is a slow process, cause we are a closed herd here. I’ve bred it instead of just selling cows and buying new ones. So it’s been a slow process, but yes. The cows that we’re calving now at the dairy are Jersey crosses, and you can definitely see those cows thriving in this system. I’ve had some 1,700-1,800 pound milk cows that sit out there and eat, and graze, graze, graze, graze, and they never do fill up. They just require all that energy that maybe you can’t get as much out of grass as you can with that high starch ration. And the beef, I’m ready for the beef to thrive. We just haven’t been able to catch up! Everything that I’ve made I’ve put right back into it. We’re sitting on year six now and I’ve always read in the Stockman Grass Farmer that in four years you need to start seeing this thing work, and I’m at six. I sure haven’t lost anything. I’m worth more with equity and net worth than I was back in those days, but at the same time I’m not really paying myself anything yet, either. I’m at about the limit. I keep fencing in land, and I’ve added some leased land. I’ve got about to where the system is in place, and hopefully we’ll start to see some results from it financially. I think I painted the picture to my wife that this is going to be some big home run, and so she’s still waiting on the home run (laughter)! But we’re getting there!

Ok, so if it’s still taking a lot of time, if you were to have the systems in place instead of trying to take control of your markets with direct marketing to customers, would you make more money grazing and taking your cows to the wholesale commodity markets like the cattle auctions?

Absolutely not. Beef prices are the highest they’ve ever been in our country, right now. The last two years the cow-calf guys have probably made a little money. They’ve made more money in the last two years than they ever have. Although fertilizers higher, their input costs are higher too. The answer to that is no, I would not. Because it seems to me that in farming, especially in dairy – and I speak from dairy, because that’s what I have the most experience in – is that they always keep you hungry. They’re always going to pay you enough to keep you in the game, but they’re never going to pay you enough to allow you to be complacent. They’re always going to keep you hungry. When the markets go up, everything goes up with it: your fertilizer, your fuel costs, the parts for your tractors, the equipment costs, everything goes with it. So, it we go from $16 to $20 milk, you’re thinking, all right, I’ve got $4 more per hundredweight. Well, everything around you absorbs it. All your input costs absorb it, because they know those markets too. All you have to do is get on any commodity exchange website and you can watch those futures everyday like everybody else. And they watch them more than I do as a farmer. And they know before I do what they are going to charge ahead of time. My whole thing was that I had to get closer to the consumer. I’ve got to get closer to the consumer, and I’ve got to do it in a way where I can do it with the least amount of input cost as possible. So, do I have that plan in place? Well, I’m a lot better than we were. But no, I don’t think I have that completely figured out. At the same time every year I think we’re a little closer.

How much time do you devote in your business to refining that plan?

I think 24/7 (laughter)! Really, it’s twenty-four seven. It’s almost become a problem in my life. I have a five year old and a wonderful wife, and I never enjoy them like I should because I am constantly thinking about all this other stuff. The good part about that is that I enjoy it, because I am doing something different. I feel like I am making a positive impact on our land, which is my first love – the farm and the land itself. I feel like I’m making a positive impact on it. I think I’m making a positive impact on people’s health. And I think the end result is that I feel like I’m making a positive impact on our family and our business. But at the same time, yes, it keeps me up at night. I knew I had that buying club beef order in Fort Mill, SC, two days ago, and for some reason, I do not know why – because I’m a pretty low key guy, and I don’t get stressed out too terribly easy – but I was up at 3:00 am worrying about that order, making sure I had the right cuts and quantities. And then I’m always thinking maybe we should plant more annuals this year, and then the next year I’m thinking, maybe we overdid that and should have planted more perennials. It’s changes everyday, you’re constantly thinking about it. I really spent a lot of time reading biographies, I study a lot of business models, whether it be a technology company or an agricultural business. I study business period. One thing I’ve noticed is that a lot of these guys have failed five times over before they ever made something work. And so that gives me confidence that I’ve been able to hang in there, which is a good thing, because I’ve surely haven’t done everything right. I keep thinking that everybody that’s been successful in business has failed many times over before they ever found what worked. Even when they do find something that works, they still have to change with that. So, I think what I have learned is that if you are willing to constantly change then that’s where success is. Hopefully. I’m right. That’s the problem I’ve had with the whole conventional agricultural system is that they don’t want to change. They don’t want to change, and they don’t want to change their business model. They just want to do more of the same, and just grow volume wise, which means more debt, more labor, and more moving parts, which equals a big disaster to me. That’s my opinion.

Well, it sounds like you have experience in both systems, conventional agriculture and organic agriculture.

I do, and that helps too. I grew up in the conventional system. We still did a little grazing, just on a smaller scale. We’ve always grazed our heifers; we’ve never had them on feed or anything. We’ve always done that my whole life. I’ve kind of grown up around both. All my friends farm, and they are all in conventional agriculture. It’s the misery party (laughter)!

Yes. So are your daily costs going down for your farm, other than the one-time capital expenditures for fencing?

They are. There are a couple of grazing dairies around, but when we get together we always kind of chuckle that, “wow, $18 per hundredweight (milk) is pretty good!” When everybody else is just barely breaking even, we’re kind of enjoying it and doing all right. But we’re maybe a little more drought sensitive, as we make our own feed. But they hit it too. With that drought in the Midwest grain prices are through the roof. We’re definitely dependent upon nature a lot more, but what I’ve noticed with the grazing you’re even taking risks out of the drought because if you do a good job with your paddocks 2/10″ of rain will bring my pastures back to life where a lot of people require 2″. So, yes our cost of production has gone down. With the transition to organic we’re doing right now, maybe the cost are a little higher because we’re doing these organic things now but we’re not getting the organic price yet. So, maybe this year’s a little different, but once we get the organic price in place I’ll feel better about it than I did a couple of years ago. The way I figure it is that the percentage of cost per hundredweight will be in a lot better shape, I believe.

Backing up a moment, I’m really glad that you mentioned the business biographies.

Well, my grandpa and grandma got me a book, probably when I was in high school. It was about the hundred greatest North Carolinians. I think that Our State magazine put it out. I think I opened it, thanked them for the gift, and set it to the side. And I picked that book up when I was probably getting out of college, and I’ve read about ever one of them. And it was the same story over and over and over again. No mater if it was textiles, or agriculture, or banking. The Julian Price Lake up there in Boone, that guy was Jefferson Pilot, and he went bankrupt three or four times. And he was forty years old before Jefferson Pilot took off. It was just remarkable reading about these people. And Wendell Murphy – and I am totally against his type of agriculture – but the story about how he was a high school teacher who bought this little feed mill, and he was working that at night and teaching school during the day. And boom! He hit it huge!

We lose sight of the struggles and talk so much about how people are overnight successes. Especially now with the new technological , where it is hit or miss, and most people forget that it’s a lot of failures.

More so than the successes. Absolutely!

That’s really good to hear. In closing, are there any tips you’d like to give to people that are interested in businesses that involve agriculture?

Well sure, though I don’t claim to be the expert, that’s for sure. So I don’t know if my advice is good or not. But, first of all I think you have to be willing to work hard. That’s first and foremost. I think that’s a common sense thing. If you are going to be involved in any type of agriculture business you’ve got to sacrifice those weekends and holidays, where everybody else is out enjoying themselves. I can sit up here, I don’t know how many times, and watch on Facebook where people will say, “oh Memorial Day weekend was so wonderful!” And all I did was bail a thousand bails of bailage and milk the cows! So that’s step one. I think step two is understanding each level of what you are doing: knowing how to grow your product, and then knowing how to market your product. Farmers, in my opinion, have always been really good, whether you agree with the system that they are using or not, but they’ve always been really good at growing a product. They’ve been good at what they do, but they’ve never been good business people. I think that if you approach agriculture as a business, that’s my best advice for people. Say, this is a business and treat it like one, and I think it’ll go a lot smoother. A lot of people just get caught up in the process of growing the product that they lose sight of how much they’ve spent, what are they going to get out of it, is this a perishable product or not, that kind of thing. I couldn’t image having to direct market a perishable product. I did a produce business for one year when I was in high school. Went to the farmers’ market to sell it, and lost my tail. I lost my tail. But the reason for that was, I could grow it – man, I had good stuff – but I didn’t know how to get rid of it. I just thought I’d go down there on Saturday morning and sell it

Wholesale?

Yes. But that didn’t work. I sold everything for pennies on the dollar. So, I just think that if you study business and you understand business, and you work hard, and believe in what you are doing. That is probably the number one thing for our farm and operation; we had to struggle with, my dad and I, when we were making this transition to grazing and the style of operation that we’re doing. My philosophy was you can’t do both. You can’t grow 200 acres of corn silage and spend all this money on our grazing. You can’t do both of these. But my dad wanted to hang on to what we were doing as a safety net. If you’re going to do something alternative like grazing, you have to believe in that system and you have to put all your efforts into that system. You can’t halfway do it, you can’t do both: you can’t be conventional and you can’t be organic; you can’t be grass-fed and you can’t be grain fed. You’ve got to pick something out, and understand your goals to get there, and just do it. We’re finally getting to that stage after ten years. We didn’t grow any silage this year. We had no corn silage this year, and this was the first year of that. And of course this would be the year we’d have the drought (laughter)! But you know what, we did grow a lot of sorghum, and we mowed it and bailed it before it made grain, and we’ve got more feed this year than we’ve ever had.

Good for you!

And we had a drought. That was great because he’s starting to see. Now, we’re not going to have the herd average that we’ve had some years. But you know what; our input cost is going to be so much less, and that bottom line is what matters.

It’s all that matters. That’s very good! Well I truly appreciate your time!

Yes sir, I enjoyed it!

 

 

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