PLOWING THE SOUL OF A NEW GENERATION
Candace Krebs, Contributing Editor
Editorís Note: Consolidation, globalization, specialization, and modernization continue to reshape the agricultural landscape. In this series of snapshots, we spotlight (two of) the newest members of the agricultural community. By harvesting their insights, goals and decision-making strategies, we hope to plant a portrait of our industryís future.
Duane Grant,Rupert, Idaho
Education: High school graduate, college business courses
Farm Operation: 5,000 acres of irrigated wheat, sugar beets, barley, silage corn, alfalfa, potatoes, dry beans and onion seeds.
Family: Wife Lori; sons Dustin, 16, and Taylor, 13.
Interests/hobbies: Snow skiing, motorcycle riding, politics
What he loves about farming: Unlimited opportunity. You do something different every single day, and every skill will be tested.
Farm background and current enterprise: I didnít intend to be a farmer growing up. I wanted to build houses and work in construction. My dad gave me a call one spring morning and said if you have ever thought about farming, you better come back now. At the beginning I worked for him, but it didnít take long before I matured and could see there was a tremendous opportunity in agriculture.
My dadís generation was hard scrabble pioneers. My dad came to Idaho with $5,000 and a truck in 1958, and he took desert ground and turned it into a productive, profitable operation. Because they were pioneers, they developed a seat-of-the-pants management style. They didnít always make the most profitable decisions, but the ones that seemed to be the most practical at the time. It was very much a one-man, self-reliant show.
Now weíre much more open to collaboration and cooperation with other producers. Instead of being independent we want to be interdependent. Itís a method of management that lets us grow and handle opportunities and challenges more easily because we have not only our own resources but also those of our associates and customers.
Iím now meeting every Tuesday morning with a group of 10 guys who are engaged in similar farming enterprises. We share ideas on more efficient, effective ways to do our jobs and run our businesses. Weíve taken that a little further with a six-month-old farm management group, a loose alliance for marketing and input purchasing as well as for political solutions. It grew out of discussions we had on merging several local farmers into a large single-operation.
Odds are, in five years, weíll be merged with somebody. Thatís the direction we are headed to gain the resources that each individual brings to the table. I donít think the farms of the future will allow a producer to be a jack-of-all-trades. We will have to specialize. In a future merger, I will probably focus on sales and marketing, developing customers and not just pricing wheat.
Iíd be 100 percent contracted if I could. I havenít been able to get there yet, but that is my goal. Itís about being customer-focused. I have three main customers who are potato processors, and each of them has distinctly different product needs.
There was one potato customer I lost for a little bit. The weather was against us, and we were behind at harvest. I was delivering poor quality potatoes with a lot of rocks in them. He nicely called me about it, and I told him there was nothing I could do. After that, I didnít sell him another potato for four or five years. In hindsight, there was a way to work through it. It was kind of a wake-up moment for me. They are my customers, not just a place to dump my crops. They have needs that have to be addressed.
We are seeing changes in the way agriculture is capitalized, with more integration between producers and end-users. A lot of these large agribusinesses have more efficient access to capital than traditional agriculture does. They can raise a lot of capital through the stock market, which is lower-cost capital than traditional debt financing.
Contracting is one step towards interdependency, but it is a year-by-year model. Equity investment by an end-user in the production stream becomes a marriage. Itís longer term with more potential benefits, and the liability side is more difficult to resolve.
Weíve divorced agronomic service from agronomic supplies and hired our own agronomist. Weíve put our suppliers on a bid system. Weíre buying from half a dozen suppliers versus one or two, and that cut our input costs by about 20 percent.
Weíre still discovering ways to use technology. There are three handheld computers in our operation, and weíre tracking all of our inputs through them. We can also do our bid orders that way.
Eventually, marketing technology will allow us to identity preserve our grains and even our beans. The only reason to do that is if there is a value to capture, which I think there will be. Iím just trying to keep my hands around what technology will do for us.
The business world thinks nothing of making significant changes in their operations if it will yield a more efficient company. In agriculture, weíve focused on things like 100-year farms. Thatís admirable, but I donít think thatís the future of agriculture. It wonít lead to an efficiently run operation when you are bound by tradition rather than practical business decisions.
Jarrod Stewart, Keyes, Okla.
Education: Oklahoma State University, bachelorís degree in agronomy, minor in economics
Farm Operation: 6,800 owned and leased dryland acres in wheat, grain sorghum and corn; owns an eight-vehicle trucking company with his dad and a crop insurance agency.
Family: Son Layne, 9
Interests/hobbies: Water skiing, travel, farming (Itís my vacation and my vocation.)
What he loves most about farming: The freedom and individuality of being your own boss. Iím doing something noble and worthy; I enjoy taking care of the land. My dad always says it was built into our last name to be good stewards.
Farm background and current enterprise: When I was 11, dad put me on a tractor and paid my wages. The winter I turned 12 he said, ĎI will continue to pay you to farm for me or you can take over a lease on a quarter of land.í I was young and naive so I took him up on it. When I came home from college, I was doing crop insurance appraisal work and farming 600 acres. In 1994, I added a couple thousand acres and started a crop insurance agency. Weíve been treading water in the trucking business for two years now.
When I first moved here after college, I was gung-ho. I thought I could farm the world. Dad told me then, calm down and do a good job and by the time you are 30 you will be turning land down. He was right.
Ag finance is probably the most important thing in my business. You donít expand at this rate and not need money to do it. I am extremely lucky to have a locally owned bank. I wouldnít change banks if someone else offered me half the interest rate.
My banker is a partner. He has an investment in my farm. He doesnít ask whatís going on, and he doesnít have to - I tell him. There are two people that need to know everything you are doing: oneís your banker and oneís your accountant. As long as both know what you are doing, odds are you can keep yourself out of trouble.
Things arenít as profitable as they used to be, so if I save one-tenth of one percent of the whole picture, itís money I can put back into this business.
So far, we havenít purchased many ag-related products over the Internet, because our local suppliers are willing to match prices. Thereís not much profit in agriculture right now. Agribusinesses are going to have to remain competitive with everybody, not just the co-op down the street.
Energy costs are a new challenge for me. Itís doubled over what it was a year ago. Itís scary. How do you budget for that?
This year for the first time Iím going to refinance some land to the bank to provide operating money for the farm. Iím going to do it one time, and then itís going to have to sustain itself. Iím not going to use the equity Iíve built to sustain farming.
Anybody who has returned to the farm in the last 20 years questioned whether that was the right decision. Iím 30, I have a degree, and Iíve managed three businesses at the same time. Iím just glad Iím not 55, like my dad, with my whole life invested in the farm because he probably wouldnít have the same job opportunities I do. AM
Candace Krebs is a freelance journalist based in Enid, Okla.