Color Them Plain but Successful: Growing Hutterite Colonies Find Successful — and
Sizable — Niches in District Economy
Cobb, Kathy. "Color Them Plain but Successful: Growing Hutterite Colonies Find Successful — and
Sizable — Niches in District Economy." Fedgazette, January
For the past few decades, many pundits have bemoaned the shrinking
number of family farms and with that the loss of small town businesses
and population. But there's a unique and growing niche of family
farms in Ninth District states using a combination of old-fashioned
hard work and technological savvy.
Though they shun the attention, Hutterite colonies are significant
producers in a number of agricultural sectors. Their simple life
belies the fact that Hutterites are smart, efficient farmers, using
the latest technology to keep up with the competition.
So, where are you from?
Named after their original leader, Jakob Hutter, Hutterites came
to North America from Eastern Europe in the 1870s to escape religious
persecution. Hutterites first formed colonies in Europe in 1528
and, similar to the Amish, are an Anabaptist sect; that is, baptism
is chosen by adults. Their belief system is based on strict interpretation
of the Bible.
Hutterites are the oldest continuous communal religious order in
the United States, having originally settled in South Dakota in
1874. From that base, South Dakota has become home to the largest
number of Hutterites in the country, with about 54 colonies and
6,000 residents. Montana is not far behind with 50 colonies and
4,000 residents. Minnesota's eight colonies and North Dakota's six
have largely formed since the 1980s. (See map.) All totaled, there
are about 460 Hutterite colonies with 40,000 residents spread across
North America, concentrated in Great Plains states, the Pacific
Northwest and Canada.
|Source: Hutterite Phone Book, U.S.
Edition, James Valley Book Centre, 2004
All the colonies are in rural locations and are largely self-sustaining;
that is, they grow and raise what is needed to feed an average population
of between 60 and 160 residents. The size of a colony is based on
how many workers are required to maintain the farm and other businesses.
If a colony's population grows beyond what's needed, land is purchased
to start a “daughter” colony.
German is still the native colony language. Colony members dress
simply and avoid modern media and technology, except where it pertains
to their farm or business operations. There is no individual ownership
of assets or personal income, but money may be doled out from the
colony treasury to purchase necessities and small personal items.
The organizational structure of a Hutterite colony is not unlike
that of a major corporation: The CEO is the minister and spiritual
leader, who works in conjunction with an advisory board, similar
to a board of directors. The colony manager (think chief operational
officer) handles the finances and business matters. The farm manager
supervises all field work. And other members of the advisory board
are responsible for additional areas of colony life as needed.
Building an ag presence
That corporatelike structure has led to much-admired efficiency
in farm and business operations. And while they adhere to many traditional
values and practices, Hutterites have become sophisticated businesspeople,
adroit at finding industry opportunities and building very competitive
businesses for the good of their colonies.
That's particularly the case in farming. Although many perceive
that Hutterites use only natural methods to raise their crops and
livestock, most use the same techniques and applications as other
modern-day farmers to increase yields in a cost-effective way. Regardless
of the methods used, Hutterite farms reach a scale and production
level that would probably surprise most people.
In South Dakota, for example, Hutterites raise about 50 percent
to 60 percent of hogs sent to market, according to Jeremy Freking,
executive director of the South Dakota Pork Producers Council in
Sioux Falls. That's more than 1 million a year and about 1 percent
of total U.S. production, Freking added.
Hutterites also have a corner on Montana's hog market: Over 90
percent of hogs raised in that state come from Hutterite colonies.
“They've been able to absorb low prices because they're so
diversified,” said Todd Gahagan, Milk and Egg Bureau chief
for the Montana Department of Livestock, while others may get out
of the business when prices drop.
In addition, about 98 percent of Montana's eggs come from Hutterite
farms, using state-of-the-art equipment. In 2003, the latest year
for which statistics are available, 107 million eggs were produced
in Montana. According to Gahagan, between 35 and 40 colonies are
licensed for egg production, with each farm having 10,000 or more
birds. Other private owners have gone out of business over time,
Gahagan said, but even 20 years ago, Hutterites had a large part
of the market. “They have the advantage in nearly free labor,”
and because of their size, they realize some savings on feed and
other related products, Gahagan said. Hutterites also built their
own slaughterhouses to turn older, nonproductive hens into meat
for sale at retail outlets throughout the state.
Let's talk turkey(s)
Turkeys are probably the biggest story in South Dakota. The colonies
raise about 80 percent of the 6.2 million turkeys in the state,
and starting this month, most of those are heading to a new Hutterite
processing plant in Huron. The Dakota Turkey Growers plant, owned
largely by 44 Hutterite colonies in the Dakotas and Minnesota, will
open with about 400 non-Hutterite employees and process 17,000 to
18,000 birds a day. When fully operational in the next two and a
half years, the $45 million plant is expected to turn about 9 million
turkeys annually into lunchmeat, turkey filets and so on, and employ
more than 1,000, with a payroll of between $28 million and $30 million.
The plant is an “opportunity to create a large number of
jobs” in the community, said Jim Borszich, executive director,
Greater Huron Development Corp., whose organization worked with
state and county officials to get the project off the ground. He
added that the plant grew out of Hutterite farmers seeing profit
margins squeezed as they contracted for their processing. They simply
wanted to be more profitable and to take control of their own destiny,
That destiny has been a matter of small, methodical business steps.
One particularly important step came in the 1980s with the formation
of a soybean feed cooperative, according to Jeff Sveen, an Aberdeen,
S.D., attorney who has represented Hutterite colonies for more than
25 years. Hutterites banded together largely to sell soybeans and
purchase meal and to enjoy co-op dividends, which at one time amounted
to about $15 a ton, Sveen said. But what the co-op really succeeded
in doing was fostering greater cooperation and marketing strength
among the colonies. Now, Sveen said, “65 to 75 semi [truck]
loads of soybean meal are purchased on behalf of co-op members each
week to feed their turkeys and hogs.”
Sveen also encouraged colonies to file with the Internal Revenue
Service as a 501(d) nonprofit religious organization, that is, one
with a communal treasury, which the colonies already had. That status
has allowed them to function better as a unit in financial and business
ventures, Sveen said. Until that time, each colony operated quite
There's a common misconception that Hutterites don't pay taxes
because they're a religion-based community, but that's not the case.
The colonies pay property taxes on farmlands and businesses in the
same way a family farm corporation or business would. Because there
are no salaries for colony members who work within their community,
individual Hutterites are not subject to state or federal income
taxes. They don't pay Social Security taxes-but then Hutterite workers
don't collect Social Security, either.
And then there's manufacturing
Some Hutterite colonies have also diversified into other businesses.
According to Sveen, 10 to 12 colonies in the Dakotas and Minnesota
have substantial manufacturing businesses. Most employees are colony
residents, but several hire non-Hutterite salespeople. One of the
larger operations is Millbrook Industries near Mitchell, S.D., anchored
by the Hydronic Division, builder of the Hydron Module Ground Source
Heat Pump, which uses the earth's warmth to heat and cool homes
and businesses and is sold in 35 states and Canada. Other businesses
at the site include commercial feed production, poultry, farming,
metal fabrication and a major machine shop.
At Newdale Colony in Elkton, S.D., the specialty is metalworking,
where Hutterites manufacture metal cladding for buildings and feed
mill equipment, among other products. The operations are state-of-the-art;
equipment includes the latest in laser cutters, CAD/CAM software,
robotic welders and more.
And in Gibbon, Minn., at the Starland Colony, workers operate a
machine shop that makes steel tools and produces metal parts and
accessories for complex commercial applications. One person spends
most of his time on the Internet buying and selling steel for precision
Wind power is the focus at the colony in Martindale, Mont. A dozen
wind-powered electric generators are operated by Two Dot Wind LLC,
which sells power to Montana Power Co. According to Dave Healow,
Two Dot's managing partner, the project is the perfect marriage
of Hutterite mechanical expertise and his goal of harnessing wind
energy through refurbishing and reinstalling otherwise outdated
turbines. Hutterite blacksmiths, welders, electricians and mechanics
help get the salvaged equipment running again, Healow said, and
he also uses the Forty Mile Colony's machine shop to fabricate replacement
“The Hutterites had a hard time believing this would work,”
Healow said. But once he installed the first turbine, which provides
enough electricity to power the colony's homes and operations, they
were sold on the idea. Now there are 11 other turbines on land leased
from the colony, with many more planned. Healow said he likes the
fact that the refurbished equipment is about a third of the cost
of new turbines, and “the money stays local.”
Just typical farmers?
According to a number of non-Hutterite sources, what makes Hutterite
business endeavors so successful is a combination of work ethic,
smarts and the cultural idiosyncrasies of being Hutterite.
Donald B. Kraybill, senior fellow, Young Center for Anabaptist
Studies at Elizabethtown College in Elizabethtown, Pa., has written
extensively about Hutterites and other Anabaptist sects. He described
a colony's operation as “basically a large corporate farm,”
averaging about 3,000 acres. "Because of their scale, they
can negotiate," said Kraybill, adding that “their technology
is communally owned so they can control it more.”
“They pay attention to detail, utilize the latest technology
and provide an excellent environment for raising hogs,” said
Freking, of South Dakota's Pork Producers Council. “Some people
like to lump them together, but they're not much different from
any other farmers. They learn from each other and talk shop, just
like you'd find in any small town coffee shop talk among farmers,”
But because of their traditions and unique financial situation,
Hutterites may be able to create more opportunities for their colonies
than some other farmers. Mike Held, administrative director for
the South Dakota Farm Bureau in Huron, said, “They run intensive
modern livestock operations,” a value-added product. “They
are also famous for getting involved in allied industries,”
he said, noting that Hutterites have developed an expertise in making
livestock equipment to expand their job and sales opportunities.
But overall, Held said, “I would say they're successful due
to their work ethic and skills of their people.”
Regardless of their colony structure and distinct lifestyle, Hutterites
don't seem to have any problems marketing their products. There
are no barriers, said Mike Tschetter Sr., president of the New Elm
Spring Colony in Ethan, S.D. “We can market anything we want.”
Each colony decides what to specialize in—be it manufacturing
or farm products, Tschetter said.
That's not to say that every entrepreneurial Hutterite idea turns
into a bonanza. The Riverview Hutterite Colony in Chester, Mont.,
which has been producing baby carrots for the past 10 years, had
reached capacity and wanted to expand. So the colony and five other
growers asked the Bear Paw Development Corp. to conduct a feasibility
study for a processing plant. Given the limited growing season in
Montana, carrots would have to have been imported from the South
to keep the plant running year round, and the capital costs were
just too high, according to Craig Erickson, director of community
planning for Bear Paw. That and other issues sank the project.
Still, Riverview continues to grow and process enough carrots on
three acres of land to supply the local Wal-Mart and a couple of
supermarkets in Great Falls and Shelby, according to Erickson. “I
take my hat off to them—taking a garden product and making
it a cash crop.”
Some things don't change
Despite their growing participation in business and industry, at
the end of the day, Hutterites return to the colony's cultural and
religious traditions, which haven't changed in hundreds of years.
Though Tschetter, of the New Elm Spring Colony, admitted that more
young people leave to taste the secular life, for most it's only
a temporary diversion-90 percent return to the colony. “They
come back to work for their own future,” Tschetter said.
“The average age of colony members is under 21,” Sveen
said. “When I set up a health plan in 1990, there were 5,000
members. Now there are over 6,000.”