Acknowledgements

Purdue University’s Department of Agricultural Economics organizes the annual Indiana Farm Management Tour in cooperation with the Indiana Farm Management Association and the Purdue University Cooperative Extension Service. The tour visits farms that demonstrate highly successful farm business management practices or have unique perspectives on farm business management. The purpose of the tour is to encourage and develop a high level of management knowledge and skill among Hoosier farmers. This publication profiles the management of the farms visited during the Indiana Farm Management Tour in 2004. The tour organizers sincerely appreciate the willingness of the host farmers to welcome tour participants onto their farms and to share what they have learned about managing their farm businesses.

The organizers of the Indiana Farm Management Tour appreciate the sponsoring agencies and companies whose donations help finance the tour. The organizers also thank the volunteer individuals and groups who give of their time to help make the tour as enjoyable, safe, and informative as possible for tour participants.

Tour Coordinator
Alan Miller

Tour Site and Host Farm Selection
Dale Koester     Steve Gauck     Scott Fritz     Lewie Fox     Alan Miller

Tour Planning
Jeff Burbrink     Steve Engleking     Alan Miller

Local Arrangements
Jeff Burbrink     Steve Engleking

Publicity and Publications
Sandy Dottle     Laura Hoelscher     Kay Hagen
Steve Leer     Russ Merzdorf     Christine Roper




Contents

 Indiana Farm Management Tour

What Can You Learn from Our Tour Host?

Farm Management Profiles  & Authors

Crystal Valley Diary Farms
Michael Schutz

Hoop Land Farms
Maria Marshall

Lord’s Seed
Craig Dobbins

Foxwood Farms
Corinne Alexander

Perkins Twin Creek Farm
George Patrick




Indiana Farm Management Tour

Elkhart and LaGrange Counties

June 30 and July 1, 2004

Wednesday June 30, 2004

1) Crystal Valley Dairy Farms Elkhart County – Interview at 1:00 p.m. Mini-tours at

1:35 p.m. Mini-tours at 1:35 p.m. on farmland preservation zones, combining two farms into one, and milking parlor/dairy facilities.

2) Yoder Popcorn LaGrange County – The tour will stop here at 3:00 p.m. before moving on to visit the Yoder’s farm operation.

3) Hoop Land Farms LaGrange County – Interview at 4:00 p.m. Mini-tours on irrigation and variable rate planter/GPS technology at 4:20 p.m.

4) Evening program Clearspring Produce Auction Building, Lagrange CountyA traditional Amish haystack dinner will be served at 5:30 p.m., A presentation entitled “Amish Farming Practices”   will be presented after dinner by Steve Engleking, Purdue Extension Educator, and a panel of local Amish farmers.

Thursday, July 1, 2004

5) Lord’s Seed LaGrange County – Interview at 8:00 a.m. Mini-tours starting at 8:45 a.m. on pickle production; fertility, field mapping, and weather data technology; seed corn production and processing; irrigation; and the farm office complex.

6) Foxwood Farms LaGrange County – General interview at 10:45 a.m. Mini-tours at

11:30 a.m. include a woodland walk focusing on farm woodland management, and a Golden Harvest corn yield test plot. A discussion of government farm program payment limits and their relationship to farm business organization will also be featured during the general interview.

Lunch will be served at 12 Noon at Foxwood Farms. Chris Hurt, Purdue Extension Marketing Specialist, will provide an update on the market outlook for grains, soybeans, and livestock immediately after lunch is served.

7) Perkins Twin Creek Farm LaGrange County – Interview at 2:00 p.m. Mini-tours on dairy herd health management, milking parlor/free stall barn, and managing a farm supply business at 2:45 p.m.





What Can You Learn from Our Tour Hosts?

Five farm families with their own unique management practices welcome you to their farms. Read the profiles in this publication, look over the farmsteads, listen to the general interviews, and then see if you can answer the following questions. As you answer them, think about how you might use some of the host farms’ ideas on management to improve the management performance of your own farm. 

Crystal Valley Dairy Farms

  1. What are the advantages and disadvantages of combining individual dairy operations into one business entity?
  2. Which tasks are Crystal Valley Dairy Farms outsourcing, and what advantages are achieved by outsourcing?
  3. In what ways does Crystal Valley Dairy Farms strive to keep itself “people oriented”?
  4. What steps are Crystal Valley Dairy Farms taking to ensure that the farm business will remain viable in a county undergoing rapid development?
  5. What technologies are being used to improve the efficiency of selling a single commodity—milk?

Hoop Land Farms

  1. Why did the Yoders divide their business into three limited liability companies?
  2. How has technological innovation have benefited the Yoders?
  3. What risk management strategies have the Yoders implemented to keep their family business strong?
  4. Why do the Yoders believe diversification is an important risk management strategy?
  5. How is estate planning being used by Richard and Sharon Yoder to pass their business to the next generation?

Lord’s Seed

  1.    How does the management team of Lord’s Seed measure success?
  2.    Why did the Larimer family diversify their farm operation, and how have they gone about this process?
  3.    How is Lord’s Seed making effective use of technology?
  4.    What is John Larimer’s approach to personnel management?
  5.    Who are the customers of Lord’s Seed, and what benefits do they receive from doing business with Lord’s Seed?
  6.    What methods are used to promote the business, and why is this important?

Foxwood Farms

  1.    How does Foxwood Farms trim soybean seeding rates without trimming profitability?
  2.    Why are building connections within the community a key to successful farming for Foxwood Farms?
  3.    What factors, including farm payment limit rules, should be considered when a change in farm business organization is planned?
  4.    What are the best management practices for farm woodlands?
  5.    What are the benefits of being a River Friendly Farmer of Indiana?

Perkins Twin Creek Farm

  1. How did Jim Perkins create opportunities for his sons to return to the home farm?
  2. How does the Stroh farm supply company complement the Perkins farm operation?
  3. What strategies does Perkins Twin Creek Farm use to make a multiple operator family farm business run more smoothly?
  4. What are the opportunities for a small farm supply company to grow?
  5. Customer service works in the farm supply business; how does it apply to farming?
  6. How does Perkins Twin Creek Farm plan to remain competitive in the dairy industry?

Crystal Valley Dairy Farms

The dairy industry is a major part of the agricultural scene in northeast Indiana.  Crystal Valley Dairy Farms is a successful family dairy farming business near Middlebury, Indiana that strives to produce milk profitably, provide an attractive lifestyle for its partners and employees, and ensure its viability in a county undergoing rapid growth and development.

Though the farm site has been in the dairy business for many years, Crystal Valley Dairy Farms was formed in 1998 by The Udder Guys Co., LLC, a partnership between neighboring dairymen Mike Yoder and Mike Lee and their families. Both recognized that partnering together would more easily allow modernization of their existing facilities.

Brief History

Crystal Valley Dairy Farms was formed  in 1998, when neighbors Mike Yoder and Mike Lee combined their individual dairy farms into one business entity. At that time, Mike and Becky Lee, with their children, Monica, Erica, and David, were milking 60 Holsteins and farming approximately 150 acres. Mike and Rhonda Yoder and their two daughters, Lindsay and Tasha, were milking 180 cows and farming approximately 350 acres.

Although both Mikes grew up in the Middlebury area and graduated from high school together, they did not really maintain any business or social connections prior to their decision to form a partnership. The decision arose from a remark Mike Yoder made in Mike Lee’s stanchion barn in early 1997. That comment led to a phone call by Mike Lee to Mike Yoder in early 1998.  That call started the planning process that resulted in the formation of The Udder Guys Co., LLC and Crystal Valley Dairy Farms on September 1, 1998.

The main dairy site is located at the original Yoder dairy farm. The Lee dairy farm now is used for raising the farm’s dairy replacement heifers and for hay and machinery storage. Crop land is rented from both farms by The Udder Guys, LLC and is used for corn and soybean production, which is nearly all utilized for feed. Similarly, facilities are rented from both of the original farms.

Dairy Operation

The dairy operation at Crystal Valley Dairy Farms currently consists of approximately 335 milking cows and 35 additional dry cows. The herd is primarily Holstein, but with a few Jerseys and Holstein-Jersey crossbreds. Cows are housed in freestall barns and milked in a double 8 parallel milking parlor. Production is currently around 72 lbs. per cow per day at 3.8 percent fat and 3.0 percent protein. Herd health is monitored closely; hoof trimming is completed on a regular schedule; and heifers, dry cows, and lactating cows have access to a grass lot so that they can be off concrete as much as possible. 

Manure is stored in two earthen manure storage structures with a storage capacity of around 3,000,000 gallons. Their original Confined Feeding Ordinance permit from the Indiana Department of Environmental Management allowed for expansion to 1200 cows. But the permit was renewed in 2003 and changed to the current herd size at Crystal Valley’s request.

While both partners are involved in decisions that guide the overall direction of the dairy, many of the day-to-day details are directed by herd manager Larry Hibschman.  Milking is handled mainly by three milkers, and Mike Lee’s daughter, Erica, is a part-time employee this summer. Becky Lee works off farm at a local bank and does the bookkeeping for the partnership. Rhonda Yoder teaches elementary music in the local school system.

Crop Operation

Altogether, the partners own about 360 acres and cash rent an additional 500 acres. In 2004, there are 407 acres of corn, including 207 acres of silage corn. In 2003, yields averaged 120 bushels per acre and 23 tons per acre for silage. Much of the corn harvested for grain is stored at high moisture in silage bags. There are 194 acres of Roundup Ready soybeans, and production averaged 35 bushels per acre last year. Additionally, 50 acres are planted to wheat, and 65 acres are used for pasture, which is used primarily for grazing replacement heifers.

Cropland is no-tilled unless manure has been applied. Because manure application includes incorporation, “minimum tillage necessary” is probably a better description of tillage practices for corn.

After expansion of the dairy farm, the larger group sizes now allow trials to compare feeds. Crystal Valley Dairy Farms plants a silage corn test plot to compare hybrids for feeding value, especially focusing on digestibility.  This year, a higher yielding brown mid-rib variety is being utilized.  

Partnering

Mike Yoder and Mike Lee mention the decision to form a partnership and the partnership itself as their single biggest comparative advantage, relative to similar dairy farms. They see the following advantages to combining their resources and forming a partnership.

1.      They do not feel as much pressure or risk when management decisions are made by both partners.

2.      Scheduling their time is easier when another partner is available to make decisions and perform required work.

3.      It has been enjoyable to work together and learn from each other’s strengths.

4.      Combining assets made it easier to secure capital and resources needed to expand facilities.

5.      Better long-term decisions are made than if a single person makes the decision, because more ideas and viewpoints can be brought into the decision-making process.

Of course working in such a farming partnership has a couple of disadvantages, too. 

  1. It was very difficult to decide which business relationships (veterinarians, nutritionists, equipment dealers, etc.) would be broken and which would be maintained.
  2. It is not always easy to reach business decisions when there are initial disagreements.

Without a doubt, the partnership arrangement has allowed Mike Yoder and Mike Lee to be involved in more organizations and activities than if they were each managing their own farms. For example, Mike Yoder is currently a member and director of Indiana Farm Bureau, a founding member and the first-ever president of the Indiana Professional Dairy Producers, a member of the Indiana Soybean Association, and a director of the Indiana Soybean Board.  Mike Lee is president of the Elkhart County Ag Council, leader of the Elkhart County 4-H Dairy Feeder Steer Club, board member of the Northstar Cooperative, and a member of Indiana Farm Bureau and Indiana Professional Dairy Producers. 

Outsourcing

Over the years, several attempts have been made to reduce costs at Crystal Valley Dairy Farms. Opportunities to reduce costs by contracting services rather than owning or leasing equipment that would be used sparingly during the year are evaluated seriously. Currently, no alfalfa hay or haylage is grown or harvested, but it is purchased and remains an important part

of the dairy ration.

Similarly, manure removal and application to fields are contracted out. This requires less capital investment in equipment and probably allows the manure to be applied within a shorter window of time, because

the custom applicator can afford more and bigger equipment.

Contract heifer raising was attempted several years ago, but existing facilities allow for heifers to be raised at the original Lee farm, and this keeps control of heifer management with the two partners. Feed refusals from the dairy herd can be used by the replacement heifers.

Mission

The mission statement that guides decisions at Crystal Valley Dairy Farms is:

Crystal Valley Dairy is a family and people oriented business. Through profitable production of high quality dairy products we strive to provide financial security for the families of all involved in the farm.

The mission of achieving profitable production of high-quality milk is not unique to this farm, but the goal of being a family- and people-oriented business is eye-catching and, more importantly, put into practice. All employees share in most tasks on the farm.  Many daily assignments are determined in “quick meetings” held every morning.

An employee manual is provided to each new employee, and training of new employees is accomplished first by the herd manager and then by having the new employee work closely with a more experienced worker. Milkers work 40-hour weeks, with one day off. The herd manager works 50 to 60 hours per week, with one day off. Employees are attracted and retained by maintenance of a good work environment and a competitive wage. The employee turnover rate is low.

Long-Term Viability

The Udder Guys, LLC view continued pressure on agriculture from development, environmental regulation, and the need to decrease costs of production as their largest challenges. The partners are taking many steps to ensure they will remain viable.

One of the steps they have taken is in their support of an Agricultural Preservation Zone program in Elkhart County. Elkhart County has three voluntary, intensive agricultural zoning districts. The goals of these districts are to: 1) enhance right-to-farm protection, 2) increase recognition by the community, 3) promote agriculture economic development, and 4) co-exist with residential neighbors.

Crystal Valley Dairy Farms is zoned ‘A-4,’ a confined feeding protection district. The dairy farm is also included in an innovative and experimental TIF (tax incremental financial district. This program is designed  to return a portion of the increased property taxes, which resulted from the business expansion, to the farm as lease payments for the real estate development rights.

Ways to improve the efficiency of production and enhance profitability are sought continuously. Routine meetings are scheduled with the partners, herd managers, veterinarian, and nutritionist to evaluate the dairy herd’s current status and to set herd management goals. Such metrics as milk quality, reproduction efficiency, milk production, and cost of production performance are measured continually.

For example, to lower labor costs in the face of record low milk prices in 2002 and 2003, the decision was made to switch from milking three times per day to milking two times per day. That allowed one person to milk per shift. While it takes longer for one employee to milk the cows, there is now plenty of time in the day with one less milking shift.

Furthermore, new ideas are gathered through the participation of the partners in a newly formed dairy peer group with five other northeast Indiana dairy farms. The peer group meets monthly through the winter to review financial information and walkthrough each other’s farms. Both Mikes regularly attend dairy educational seminars and conferences, and read, study, and ask questions everywhere, of anyone, all the time.

The Future

The careful decisions that have been made with regard to agricultural preservation, environmental management, and cost

control have positioned Crystal Valley Dairy Farms well for the future.

Currently, it is unclear if the next generation of Yoders or Lees will choose to be involved with Crystal Valley Dairy Farms. One thing is clear; if one of the younger generation chooses to join the partnership, there will be an opportunity to do so. That opportunity is provided in the operating agreement.  However, anyone who wishes to become part of the farm must work away from the farm for a period of time first.

While their initial plans called for the herd to be at 1200 cows by now, that growth was slowed. The Udder Guys chose instead to focus more on increasing the production and profitability of the cows they already owned.



Hoop Land Farms

The Yoder family has kept the family business strong and viable through innovation and diversification. They were one of the first farms in Indiana to install center pivot irrigation in 1973.  Irrigation allowed them to increase yields and take advantage of high prices to quickly pay off that initial investment and reduce debt (a Yoder family mantra). Besides the standard corn and soybeans, they grow popcorn and alfalfa.

The 1355 acres the Yoders farm are not the only area where they demonstrate their diversification strategy. In a move to further diversify the family business, Richard Yoder and his wife Sharon and their son Russell and his wife Kristi (who is a registered nurse) purchased Yoder Popcorn in 1999. Because Yoder Popcorn was an established business, the new owners were able to retain much of the customer base developed by the previous customers. Besides wholesale and mail order sales, their products are also sold through a retail shop that was already in place on the property. 

Their risk management strategies have helped them keep the business growing despite adversity. Risk management is a way for businesses to reduce or avoid losses and maximize opportunities and profits.  The Yoders have used various strategies to reduce the production, price, financial, legal, and human risk associated with their business.   

Background

The Yoder farm has been in the family since 1901. Richard Yoder and his wife Sharon are the fourth generation. They took over the management of the business in 1982, approximately 20 years after Richard’s parents, Willard and Maxine Yoder, had taken over the management in 1963. In 2000, Richard and Sharon Yoder separated the family business into three limited liability companies (LLC). The land is held under Yoder Family Farm LLC, which includes Richard and Sharon and their two sons Russell and Ryan. The farm operation is managed under Hoop Land Farms LLC by Richard, with Sharon as the only other member. Their son Russ, the fifth generation on the farm, manages and is part owner of the third entity, Yoder Popcorn LLC.  Sharon keeps the financial records for all three limited liability companies. Russ has always worked as a “hired hand” on the farm since his junior high days. In 2001, he rented his first acreage. Of the 1355 acres farmed by Hoop Land, Russ manages his own 400 acres of rented ground.

There are several benefits to dividing the business into distinct limited liability companies. A limited liability company allows members to participate in the daily management of the business, therefore making the transfer of general management responsibilities easier as a successor starts to take over the business. Besides shielding members from personal liability, it also avoids the double taxation on corporations because members pay income taxes only on their net shares of the LLC’s income, but the LLC itself does not pay taxes.

Innovation

Soon after Richard and his father Willard set up their innovative center pivot irrigation system in 1973, they understood just how well they could manage production risk through irrigation.  Production risk is mainly due to unpredictable weather and uncertain crop performance. At a time when corn grown in their area was yielding 50 bushels an acre, their fields were yielding 165 bushels an acre. Needless to say, the irrigation system soon paid for itself. In the 1990’s, Richard switched from high pressure nozzles to low pressure nozzles to reduce the electricity costs of their all-electric units. They use a corner irrigation system that forms a “Z” pattern that not only increases the area that is irrigated but also avoids watering the roads. 

The use of innovation to reduce production risk continues with Russ. The Yoders plant more accurately by using a variable rate planting method that uses a global positioning system (GPS). This technology was particularly beneficial when they needed to vary their seeding rate for planting dryland corners where the yield potential was considerably lower. This year Russ will plant insecticide-coated field corn seed on 60 acres. This type of insecticide-coated seed is new to the market and is supposed to be easier and safer than using granular insecticide when planting. 

Diversification

Besides innovation, another risk management strategy the Yoders use is diversification. Diversification reduces their production and price risk, which in turn reduces their financial risk. Price risk can be due to weather, government intervention, or changes in world markets. Financial risk is affected by price and production risk, because they affect one’s ability to meet cash flow needs and the ability to maintain and grow equity.  

The diversification of crops reduces the Yoders’ dependence on any one crop, thereby reducing their price risk. They grow soybeans on 415 acres and corn on 880 acres, of which 75 are popcorn.  Their soybeans, corn, and popcorn are all sold by contract, which is another way to reduce price risk. The popcorn is sold to a processor with whom they have a long standing relationship and who in turn is the popcorn supplier for Yoder Popcorn.

The Yoders have 60 acres of irrigated alfalfa that they sell to local horse and diary farms.  This is the largest acreage they have ever had and includes 24 new acres. They do their own small bales, but their 500-600 pound large bales are custom hired. At this point, Richard and Russ feel that they are at a crossroads with this crop. Although alfalfa has provided them with sufficient profit in the past, with today’s high corn and soybean prices, should they continue to cultivate this labor intensive crop?

Yoder Popcorn

We could say that Yoder Popcorn is back in the family. Rufus Yoder, Sharon Yoder’s great uncle, established Yoder Popcorn in 1936. However, in 1996 the Yoder Popcorn trademark was purchased by Kirk’s Popcorn. The land and buildings had been purchased a year earlier by Richard and Sharon, who then leased the buildings to Kirk’s Popcorn. In 1999, Richard, Sharon, and their son Russ purchased Yoder Popcorn, bringing it back into the family. 

Russ manages Yoder Popcorn, while Sharon keeps the financial records. They are well known for providing an excellent work environment. In turn, they have no trouble finding part-time employees among the Amish in the area and even transport their employees to and from work. Yoder Popcorn employs Russ, Sharon, and three part-time employees. 

The popcorn is shipped by UPS and sold through specialty stores across the U.S.  Although this distribution channel has been successful, the Yoders decided to increase their direct sales to consumers, thereby increasing their portion of the marketing margin. They hired a professional company to establish and maintain a website through which they could sell their popcorn. It can be found at <www.yoderpopcorn.com>. The website provides a way for them to reach customers anywhere in the world and Internet sales have increased each year since the website was first established. 

Distribution Channels

Previously, the 60-year-old retail shop was located at the back of a long drive and was difficult for shoppers to find. In 2003, a new retail shop was built along county road 200 South, only five miles south of Shipshewana (which is a popular tourist attraction). The new shop allows for extra space for tour buses and groups, as well as providing better visibility for anyone wanting to visit Yoder Popcorn. They opened the retail store in Topeka, IN to take advantage of the tourist season surrounding Shipshewana. The retail store is open from February to December, when their holiday Internet sales peak. Yoder Popcorn was a way for Richard and Sharon Yoder to not only diversify their holdings, but also bring Russ in as an equal partner into the business. Figure 1 shows the three different distribution channels for Yoder Popcorn. 

Management

Holding it all together is a strong sense of family and the open communication between the family members. They have a common vision and mission that span across generations and guide the family in its assessment of new opportunities.

The Yoders do a cost-benefit analysis for most of the decisions in their business, whether it is to buy a new combine or to launch a new advertising and promotion campaign. This has helped them assess new opportunities and allowed them to increase equity while keeping debt low. A consistent message from both Richard and Russ was their belief that debt should be kept as low as possible.

A challenge for most family businesses is the transfer of leadership and wealth from one generation to the next. Human resource risk due to the death, disability, divorce, or absence of an owner, manager, or key employee is one of the most important risks faced by a family business. Therefore, Richard and Sharon have put a considerable amount of thought and planning into making sure that their strong and viable business stays in the family. 

One way that Richard and Sharon are reducing their human resource risk is by grooming Russ as their successor for a smooth transition from one generation to the next. Richard indicated that Russ would probably take over within the next 5 years.  Another way in which Richard and Sharon are reducing their human resource risk is by having an estate plan. An estate plan is a way for them to minimize the impact that taxes can have on their business, their estate, and their sons’ wealth. 

Family businesses will be the conduit for a large amount of the $12 trillion in wealth expected to be transferred from one generation to the next between 2001 and 2017. With tax rates on gifts and estates as high as 48 percent in 2004, a plan that reduces the tax burden on the next generation is an important requirement for the continuation of the business. Even if the estate tax is permanently repealed in the future, the orderly transfer of both property and management from one generation to the next will continue to be an important concern for the owners of family businesses who wish to see the business continue beyond the current generation of owners.

As part of their estate plan, Richard and Sharon issue their sons certificates of ownership every year to reduce their own tax burden by taking full advantage of the annual gift tax exclusion. This type of annual giving plan ensures everyone’s financial resources are protected.

The Yoders have managed to “pop” their own piece of paradise through strong management and smart planning.  They have maximized their opportunities and reduced their losses through innovation and diversification. Above all, Richard, Sharon, and Russ love what they do and share the desire to see the business continue for another century. 


Lord’s Seed

Lord’s Seed is a diversified farm business that includes the production of seed crops, identity preserved crops, and specialty crops. For 2004, total corn acres are 11000. This is comprised of 3600 acres of waxy corn, 400 acres of high oil/waxy, and 7000 acres of seed corn. There are 1500 acres of soybeans (1100 acres of Roundup Ready soybeans and 400 acres of other soybeans). There are also 1600 acres of cucumbers (for pickles) and 150 acres of wheat. Seed corn is the primary activity. The cucumbers and soybeans provide rotational crops for the seed corn.

If this weren’t enough to keep the Larimer family busy, they also own and operate Lord’s Grain, Inc. in Lagrange. This company has three employees and $3,000,000 in sales annually. They also manage a seed corn processing plant for Great Lakes Hybrids, Inc./AgReliant Genetics, LLC.

History

John and his wife Sherrie began farming in 1973. John worked for his dad, Wayne, while renting 60 acres his first year. In 1975, a corporation was formed with John’s parents. John has focused on identifying things he could do in his business that would provide better margins than commodity production and were not being done by other farm businesses. In 1975, John began the process of adding specialty enterprises with his first popcorn contract.

One question behind John’s search for opportunities is “What can we do to provide additional value to our business relationships?” This strategy has provided steady growth and several changes in the business over the years. By 1980, John decided that the business should not be in the production of commodities and began raising seed corn with his first 250 acres. In 1985, a joint venture with Great Lakes Hybrids was initiated. In 1989, John bought out his parents, there was a name change for the corporation, and a seed corn dryer was purchased. In 1992, several new enterprises were initiated: a hog operation, Lord’s Grain, and the cucumber enterprise. In 1996, the decision was made to become a service provider for the entire seed corn industry. In 2002, a partnership was formed that allowed John and Sherrie’s children (Mark, David, and Rebekah) to come into the business, and the hog enterprise was liquidated. Mark, David, and Rebekah provide key middle management expertise to the business.

Technology

Technology evaluation, adoption, and effective use is one key to the success of Lord’s Seed. Having seed and specialty crop processors as customers requires collecting, organizing, and supplying lots of information to processors. Variable rate technologies are being used for fertilizer applications. Soil samples are being taken every fall. Application rates are determined by the trends in fertility. Yield monitors and yield maps are used to make cropping decisions. They also use spray monitors.

As in any other farm business, discovering ways to produce more efficiently is important. Lord’s Seed has given special focus to seed production. John indicates that they have developed several procedures and applications that are new to the industry. One of the procedures currently being experimented with is spraying and detasseling at the same time.

Lord’s Seed conducts a lot of production research for seed corn. Managing the data and getting it organized into a format that can be used to support decision making is becoming an increasing challenge. With the increase of traits in seed, record data requirements have increased significantly. One set of important information is the quality control records associated with the purity of seed. To manage the increasing amounts of data, computers have been networked to allow data sharing and access to e-mail and the Internet. The application of information technology is so important to Lord’s Seed that they employ a full-time production information manager and a full-time information technology manager. To help maintain strong communication links, 40 cell phones and over 50 mobile radios are used.

Lord’s Seed uses its own weather station to create field reports that include weather information, crop progress, and field procedures. One weather station is located at the office site. A second station is located on a farm about one mile away from the office. All fields are mapped using a GPS system for accuracy.

Information technology is also used to support marketing decisions for corn and soybeans. DTN and the Internet are used to provide information about prices. Lord’s Seed uses information about its cost of production to make decisions on the pricing of grain. Once the price reaches a level that the business can begin taking profits, John indicates that they price often, usually on rallies. The primary tools used in pricing their crops are forward contracts.

 

Personal and Business Philosophy

Each business manager must define success. Regardless of the definition, the answer to the question of “What is success?” has a strong influence on the business. John indicates that from a personal perspective he defines success as being able to say “yes” to the question “Is the world better because of me?” From a business perspective, John has two questions that he wants to answer with “yes.” “Can this business go beyond me?” and “Is the world around the business improved because of it?”

The importance of these goals is communicated to others in the business through occasional meetings, monthly partner meetings, and quarterly meetings with partners and financial consultants.

Participating in professional development activities is important. John has participated in TEPAP (Texas Executive Program for Agricultural Producers) and is a member of the TEPAP alumni group AAPEX (Association of Agricultural Executives). Mark is currently participating in the TEPAP program, and David intends to participate in about three years.

John is a member of Farm Bureau, ASTA (American Seed Trade Association), IPSA,  Independent Professional Seedsmen Association), and ICIA (Indiana Crop Improvement Association). Employees are also encouraged to attend conferences related to their fields of expertise.

John feels that the major strengths of the business are:

John is working to develop a business that will last longer than his career. He has focused on defining the business and developing an organization that places people first.

In thinking about the future, John has three concerns. One is the high volatility in markets. On the positive side, this means that there are higher highs. On the negative side, there are lower lows. Another concern is obtaining enough capital to finance growth. The third is the development of a management structure that allows administrative costs to be kept low.

Time away from work is also important. Building the office in 2001 helped separate business from family. The office was the place to focus on business. Being away from the office was the time to focus on other things. All family members are active in the Brighton Chapel Church. The family also loves to travel and vacation together. John, David, and Brad (Rebekah’s husband, who also works at Lord’s Seed) enjoy motorcycle riding; Rebekah and Sherrie love to read; and Mark enjoys riding 4-wheelers. 

 

Organization & Employee Management

The business utilizes three legal entities

1) Lord’s, Inc., a sub-chapter S holding corporation, 2) Lord’s Grain, Inc., a sub-chapter S corporation, and 3) Lord’s Seed, a general partnership. John and Sherrie are the owners of Lord’s, Inc. and Lord’s Grain, Inc. Lord’s Seed is an equal five-way partnership among John and Sherrie and their children Mark, David, and Rebekah. Each family member receives a salary, fringe benefits, and bonus.

As each of the children joined the business, it was important to identify their area of responsibility. Mark indicates that the cucumber enterprise arose out of trying to decide what he was going to do. He continues to be in charge of this area. David’s main focus is to assist in seed corn production and head up most field operations for that enterprise. Rebekah serves as co-manager for Lord’s Grain. The objective is to organize the business in such a way that the family members will have their area of responsibility and will not be butting heads.

Given the size of the farm business, employee management is critical to business success. The business currently has about 25 full-time employees, to which Lord’s Seed attributes most of their success. While paying as competitively as possible – including benefits such as insurance and a retirement program – is important in attracting and retaining good employees, other things are also important. John’s approach to employee management is to try and provide as much individualization as possible. John meets with each employee on an annual basis to discuss performance for the year, employee goals, and compensation. John indicates that it is important to listen to each employee: “What is important to one may not be important to another. My task is to develop a job that will challenge each person and provide a compensation package that addresses the employee’s concerns.”



Foxwood Farms

R.D. Wolheter is the only full-time employee of Foxwood Farms. With the help of his family and part-time employees, he currently manages over 2,000 acres. R.D. is a conservation-oriented farmer, who is always looking for new technologies to improve his management of the land. The Wolheter family is committed to contributing to their local community and to the agricultural community.

History

R.D. Wolheter’s father farmed part-time on three farms while working for Sealed Power Corp. His father built a house for his parents in 1949, the year that R.D. was born.  Growing up, R.D. was active in 4-H and FFA. In 1971, R.D. graduated from Purdue with a BS in Agricultural Education. 

After doing some graduate work in agricultural economics and working as a swine herdsman in Michigan, R.D. moved home to farm in 1974. He started farming with his brother and father in a joint venture where they shared the equipment but operated their own farms. This arrangement only lasted a year because they all realized they had different goals and incompatible operating modes.

Overall, 1974 was not a good year for R.D.  Because he was just getting started, R.D. financed his entire operation with a loan from FHA – land, equipment, and hogs. R.D.’s original goal was to become a hog farmer, so he invested in open gilts, feeder pigs, and bred sows. The weather did not cooperate that year, and R.D. planted late.  On September 10th, there was a killing frost, and in November the corn was still at 40 percent moisture. R.D. faced a 7 percent death loss on the feeder pigs. The surviving feeder pigs that had been purchased at $40 per head and fed expensive feed, then sold at $25 per cwt.. He jokingly maintains that he lost the least money on the dead pigs because they did not eat much of the expensive feed.  

After a terrible start, things started looking up. In 1975, R.D. refinanced the entire operation. R.D. met Julia, and they got married the following year. Julia worked for Purdue Extension, starting as a Youth Educator in 1973 and then moving over to Consumer and Family Sciences until 1988. Starting out, they were able to live off of Julia’s income. Julia now works part-time for the LaGrange  Department of Family and Children, so she is able to devote more time to the farm operation.

Philosophy

When R.D. started farming, one of his goals was to be financially secure enough to not depend on social security in retirement. He believes that “you have the privilege to farm to try to make a living” and that farming is more of a business than a way of life. One of R.D.’s challenges is to balance the demands of the farm business, family, and other important activities that create valuable connections in the community. 

One of the cornerstones of R.D.’s philosophy is his emphasis on building connections within the community and contributing to the community, which is illustrated by R.D.’s, Julia’s, and their children’s many activities. Julia is on the Lagrange County Park Board, which manages eight different parks throughout the county. R.D. is a member of the South Milford Lions club, which sells pork burgers at local festivals and serves pancakes and sausage at Maple Syrup days (where they feed over 3000 people breakfast in two days).  R.D. has also been active on the Soil and Water Conservation District board since the mid-1980’s, and their district has won national education awards for water quality programs targeted to landowners. All the family has been involved in the 4-H program and their church. In addition, their children Kara and Neal were active in FFA. Neal was named Indiana FFA State Star in 2003.

R.D. sees a lot of competition for land, but also opportunities to expand his acreage. He believes that networking is critical. Right now, lots of non-farm people are looking to invest in agriculture. This offers farmers an opportunity to work with them and teach them about agriculture. His participation in groups such as Pheasant's Forever and 4-H has led to rental arrangements in the past, and he believes this will continue to be advantageous in building relationships and trust that could lead to further rental or custom opportunities.

R.D. sees a couple threats to agriculture.  First, increasing regulations are making it harder to operate. He believes that environmental groups are disconnected from the economic consequences of regulations on endangered species and wetlands.  Second, the non-farm population no longer understands how their food is produced.  Again, R.D. believes networking offers an opportunity to educate non-farm groups about the challenges faced by farmers. 

Current Farm Operation

Foxwood Farm, Inc. currently operates over 2000 acres. They got out of livestock entirely in the 80’s. They rent land from many landlords. The majority of the rental arrangements are cash rent, though some acres are share rented. With one landlord, the cash rent is adjusted each year to reflect changes in cash rent based on Purdue’s land rent survey (conducted by Craig Dobbins in the Agricultural Economics Department).  R.D. says that it's important to understand what each landlord values. 

While Foxwood Farms grows some wheat, most of the acres are in a corn-soybean rotation. All of the soybeans are Roundup Ready, which has been a boon to no-till soybeans. About 200 to 300 acres of early planted corn are in Bt corn, and the rest of the corn is conventional. 

R.D. was an early adopter of no-till farming.  He started no-tilling corn in 1981 and soybeans in 1987. The no-till technology is advantageous because of local soil types and rolling hills. No-till greatly reduces soil erosion and also doesn't bring the stones to the surface. R.D. has used some rotational tillage to work in lime and level the fields.  R.D. was named a River Friendly Farmer of Indiana in 2002 for his production practices of no-till and use of filter strips. Because of the no-till drill and planter, R.D. has also done a lot of custom work.

Foxwood Farm has brought a lot of CRP land back into production. R.D. has found that the ground has improved after being in CRP. One field has an artificial wetland that may be enrolled in the Wetland Reserve Program. Foxwood Farms also has a mitigated wetland that is permanent, where he worked out an agreement with the county.

Farm Structure

In 1989, R.D. set up Foxwood Farms, Inc. as an operating corporation with no land. In 2003, the Wolheter family restructured the organization of their farm businesses because of the payment limitations associated with the Farm Bill and because of other changes occurring in the family business. They invested a lot of time in learning the rules and regulations associated with the payment limitations, which meant a lot of paperwork and frustration. The family received assistance from the local and state FSA offices.

Neal rents farmland and manages his own farm operation, using a tractor that he owns, and supplying management, labor, all the inputs, and sharing equipment. This allows him to be considered a separate person for payment limitation purposes. (Neal made money in his first year!) Neal wants to come home to farm full-time when he graduates from Purdue, while R.D. and Julia have encouraged him to work off the farm for a while before returning to the farm full-time in order to gain experience.

Labor

R.D. is the only full-time person on the farm, and he supplies most of the management. He plants the corn and some of the beans. Julia helps in the office, running for supplies and providing some of the management. Both Neal and Kara help on the farm. Neal, who is a sophomore at Purdue University in Agricultural Systems Management, does maintenance and mechanical work and plants beans. Kara, who is majoring in accounting at Manchester College, helps in the office and with obtaining supplies. 

Foxwood Farms also has several long-term part-time employees with other jobs. At Foxwood Farm, part-time employees work as many hours as they want. Chad Perkins is the chief mechanic, and he plants a large portion of the beans. Several firemen work on the days they have off, as does a high school student. They each work to their level of expertise. Some landlords and friends also help.

R.D. coordinates the part-time help, matching their talents to the needed tasks, using cell phones and two-way radios. He believes you sometimes have to push people to have them reach their potential. He communicates his expectations with on-the-job training.

Production Management

The average field size for Foxwood Farms is 30 acres. They are using Farm Works to keep field records. Their goal is to improve the farm record-keeping so that they can identify which fields are profitable. One of the challenges, which is also an advantage, is that Foxwood Farms covers a lot of different soil types; this means that in a wet spring, some of the fields will be ready to plant much sooner than the others.

They “have been through variable rate technology,” but R.D. is not “as high on it” as he used to be. He used GPS until the combine unit broke. Using it took a lot of time, and he didn't see much payoff, because in his experience the high fertility soils do not necessarily correlate to high yield.  Instead, R.D. has found that high yields depend on drainage, timeliness, weed control, and population, in that order.

R.D. has been a frequent participant at Purdue’s Top Farmer Crop Workshop, and he credits Howard Doster with emphasizing the importance of machinery and economics of size. In the early 1990’s, R.D. switched from a 6-row to a 12-row planter and is now using a 16-row planter. Given the narrow roads, ease of transport and safety are always a major consideration in machinery purchases.

R.D. feels that the two most important pieces of equipment are the corn planter (John Deere 17970) and the combine (John Deere 9750). Soybeans are more forgiving of how and when they are planted than corn.  Last year, R.D. took advantage of this and cut back his soybean populations by 20 percent when planting in 15-inch rows, with no loss in yield, because seed had gotten so expensive. He hopes to cut back another 5 percent in 2004. A second reason that R.D. is using a John Deere 1790 planter for beans in addition to the drill is that he has found that the planter places the seed at a more uniform depth, resulting in more consistent emergence.

Marketing

Until recently, the farm delivered almost all of the corn at harvest to nearby South Milford Grain Co. The beans were either stored in old bins or taken directly to the elevator. They sell the wheat to the elevator and the straw locally.

As the elevator expanded, it stopped accepting late grain deliveries. The ability to

harvest grain in the evenings is critical to Foxwood Farms, because of the availability of part-time labor. Consequently, the business invested in grain bins and a dryer. There is a new bin on order, and once it is built, Foxwood Farms will be able to store its entire corn crop. Having storage offers a wider range of marketing options.

Closing Remarks

Their philosophy is to be good stewards of the land so it is there for future generations. They ask, “If we don’t take care of our natural resources, who will?” They are, “farming today – for tomorrow and striving to be valuable and contributing members of our community.”



Perkins Twin Creek Farm

“Our mission is to own and operate a profitable, efficiently managed dairy and crop farm, capable of providing a good standard of living for all families involved” is part of the current vision/mission statement for Perkins Twin Creek Farm.  However, this was also part of Jim Perkins’ vision when he got out of the Navy, got married, and started farming in 1956. “I started with 247 rented acres, 40 cows, 10 sows, and 12 chickens that put food on the table,” indicates Jim. “In 1964, I came to what was my Grandfather’s farm and then purchased it from my Dad in 1967. There were about 600 acres, with 500 acres tillable, and about 50 cows.”

Currently, Perkins Twin Creek Farm operates about 2500 acres and milks about 160 cows. They produce 1150 acres of corn (100 acres for corn silage), 1000 acres of soybeans, 150 acres of wheat, and 200 acres of hay (which is largely alfalfa). The dairy herd is divided, with the top 100 producers being milked three times a day and the lower producers being milked twice a day. The rolling herd average is about 21,600 pounds of milk per cow per year. Jim (Dad) is somewhat retired. All four of Jim’s sons have some involvement with the farm operation. Perkins Twin Creek Farm is an operating corporation involving the brothers Todd, Kirk, and Rod. Another brother, Eric, is the manager of the nearby Stroh Farm Supply (which is owned by Jim). “I’d like to help more on the farm, but our busy time in the farm supply business tends to coincide with that of the farm.” Eric and Rod own some of the land that is farmed by Perkins Twin Creek Farm, while Kirk also sells Pioneer Seed. A daughter, Teresa, lives in Montana with her husband and two sons, but gets back to the farm each summer with her children.

Making an Opportunity

One of the challenges facing many farm families is creating an opportunity for a son or daughter on the home farm. The Perkins’ have had innovative responses to this challenge of generating additional income, some on-farm and some farm-related.  Furthermore, their responses have been dynamic, changing over time as new opportunities have developed.

Kirk and Rod studied at Purdue, and both returned to the farm in 1982. “We had wanted them to get an education for a good job,” indicates Jim, “but they wanted to farm.” Kirk explains how he created an opportunity, “We had gotten started with contract corn detasseling with a pick-up truck and 12 kids in 1978.” Over time, the detasseling business expanded to four buses and 200 teenagers operating in both northern Indiana and Michigan. Rod explains another part of their strategy, “In 1982, Kirk and I bought 30 Holstein heifers for about $2,000 per head at 21 percent interest and expanded the milking herd to about 75 cows, as well as picking up some additional rented ground.” Additional land was rented as it became available to expand the crop operation. In 1982, a 104-cow free-stall barn was built. “Because of the large number of people in the detasseling crew, July became a nightmare; so we dropped that business when we built the new milking parlor in 1997,” explains Kirk.

In 1985, Eric graduated from Purdue.  “Things were not going so well in agriculture about then. Farmers’ State Bank offered me a job, and I took it without having to do an interview,” relates Eric. The bank had a strong family connection as first granddad and then an uncle had been the bank’s president for over 50 years. Eric worked at the bank and helped on the farm for nine years before becoming involved with Stroh Farm Supply.     

Todd graduated from Purdue in 1989. “The most interesting offer that I had was feeding beef cattle on shares with a neighbor who had the facilities,” explains Todd. “The 1000 head per year that we were feeding provided a market for some of our corn, and we made some money over the next couple of years.” Changes in circumstances led to termination of the beef feeding operation and Todd’s greater involvement with the dairy.

Although not part of Perkins Twin Creek Farm, Stroh Farm Supply has had a significant role in the Perkins’ families continued involvement with agriculture. In the early 1970’s, the existing mill burned, and about 40 farmers went together to rebuild the facilities (keeping the previous manager as part-owner).  By 1992, the manager had passed away, and the mill’s net worth was negative. Jim offered the other farmers their initial $100 capital contribution back and took over control of the business and its debt. After the manager who came to the business moved to a different job, Kirk served as interim manager until Eric took over.

Over time, the business has been turned around financially, and an additional mill was acquired, primarily for its customer base. Servicing the feed needs of some area dairies, Amish heifer operations, and the growing horse population, as well as crop needs of farms in the area, are the primary lines of business. Stroh Farm Supply provides all of the spray operations for Perkins Twin Creek Farm on a custom basis. The drying, storage, milling and transportation capacity of the farm supply business all complement the farm operation. Kirk’s sales of Pioneer Seed are also carried out through Stroh Farm Supply. 

Dairy Production

Todd is the dairy operation manager. “We stress producing high-quality milk that achieves all of the quality premiums offered by the milk companies, as well as cow comfort,” indicates Todd. To the extent possible, the free-stall barn has been remodeled to improve cow comfort. Eaves of the building were extended and curtains installed to give the cows lounge room.  “Because of the manure handling system, we’re stuck with bedding with cow mattresses and shavings for now, but in the future we’d like to move to sand like the other barn,” explains Todd.

The 100 highest producing cows are milked three times a day about eight hours apart.  Matt Taylor, who does most of the night time milking, has worked for the Perkins’ for about 10 years. Matt handles much of the dairy record keeping, and because all the cows are bred artificially, he also serves as the “back-up inseminator” behind Kirk.  According to the brothers, “Matt is very motivated and a great co-worker.”

The lower producing cows, generally those later in their lactations, are milked on a twice a day basis about 12 hours apart. “We got started on the three times a day milking when milk prices were up and decided we could not stop,” explains Todd. “I was a feed salesman and have done quite a bit of ration balancing.” The high producing cows are on a total mixed ration (TMR) of half corn silage and high haylage (with corn and grain from the mill). The lower producing cows get silage, big bales of alfalfa, and some 3rd or 4th cutting balage (large round bales of high moisture forage wrapped in plastic).

“We try to produce the highest quality forage possible,” notes Rod, who is the crops manager. “We do a little bit of everything in terms of harvesting.  Most of the 1st and 3rd cutting is chopped with dry hay being made when weather conditions are more favorable. The balage  works well late in the season, when the drying conditions are not favorable.” 

Herd health is also an important part of their dairy herd management. “Our veterinarians, Drs. Doug Yoder and Dereck Klopfenstein, have us on an aggressive vaccination program to improve milk quality and avoid disease,” notes Todd. Select Sires, Inc. evaluates the cows in the milking herd and makes planned matings. “Although we could do this ourselves,” explains Todd “they are very knowledgeable.” 

Crop Operations

The lakes and growing population in the area make Perkins Twin Creek Farm very aware of potential impacts of their farming operations. Filter strips are used along the creeks that give the farm its name. Manure management is also important. “We don’t no-till near the buildings because of manure; we try to till some,” explains Rod.  Phosphorus levels are monitored carefully.  “We try to be as efficient as possible in nitrogen management. Typically we make three applications, a little N in the starter fertilizer, about 60 pounds of N  sprayed on, and the rest side-dressed or applied when cultivating,” explains Rod. “We also try to be neighborly to the ‘lake people’ in both our dairy and crop operations.” 

“We try to farm to suit the landowners,” notes Rod. “We recently acquired a 12-row Kinsey planter with capability to interplant 23 rows of soybeans in 15 inch rows.” Relative to drilled soybeans, the seed requirements per acre are reduced, with an estimated savings of about $8 per acre.

Management

Management responsibilities for the farm operations are shared. Rod is the crops manager, Todd is the dairy manager, and Kirk handles accounting and seed sales.  “We try to keep things simple and avoid disagreements,” explains Jim. “We’ve tried to avoid vested interests in our business organization.” The homes have been separated from the rest of the farm business and are owned individually, “which contributes to family harmony.”

“One of my concerns is estate planning,” notes Jim. “When a neighbor died, they paid almost 50 percent of the estate in taxes.” Jim has formed a land corporation, which is being used to make distributions of the land to all of the children, including those not directly involved with the farm operation. Gifting of shares of stock in the land corporation is a means of transferring ownership of the assets to the next generation. Making gifts on a gradual basis, utilizing the annual exclusion amount, avoids gift taxes.

Plans for the Future

Rod participated in the Executive Institute for Commercial Producers program, which was sponsored by Farm Credit Services in collaboration with the Purdue’s Department of Agricultural Economics. One aspect of that program is a focus on the goals and objectives for the farm operation.  Although Rod and his wife, Kathy, were the program participants, all of the Perkins family got involved in doing the homework assignments. 

A primary goal and objective is to achieve a size that will assure efficiency and market competitiveness. “We continue to look to rent land whenever it becomes available and looks profitable,” indicates Kirk. “Currently we are reducing our debt load in preparation for future expansion of the dairy.” “We want to expand the dairy to about 475 cows in the not so distant future,” notes Todd. “By expanding to that size herd, we would have a tanker load of milk every other day, and this would allow us to pick up some additional volume premiums and improve our price. Increasing the quality of milk sold will help us obtain the maximum quality premiums and make us a preferred provider for milk companies.” 

Eric explains that Stroh Farm Supply has some profit opportunities. “We stress service to the customer. I like to hire people with an agricultural background. They have a good work ethic, understand the operation, and can explain things to the customers.” The gardening and landscaping areas appear to offer potential as the rural non-farm population in the area continues to increase.  “We don’t want to get too big because that would subject us to additional regulations and control,” notes Eric.

“We all have boys who are active in sports, and we try to support their activities as well as being active in church and community activities,” notes Rod.  “A good ROA and ROE in future operations allow for adequate retirement planning and help assure opportunities for future generations,” explains Kirk.  Jim concludes, “I have four sons and a daughter, and there are a total of 11 grandsons and two granddaughters. That’s a bunch to plan for.”



Indiana Farm Management Association

Directors

  Lewie Fox                    Frankfort, IN

Scott Fritz                    Winamac, IN

Steve Gauck                 Crawfordsville, IN

Dale Koester                Wadesville, IN

Alan Miller                   Purdue University

 

Association History and Purpose

The Indiana Farm Management Association was formed in 1932 to encourage more profitable organization and operation of Indiana farms. To this end, the Association has cooperated with the Purdue University Cooperative Extension Service and the Department of Agricultural Economics in planning and conducting the Indiana Farm Management Tour each summer since the first tour was conducted in the early 1930’s.  The officers and directors of the association are actively involved in all the work that goes on behind the scenes to make the Indiana Farm Management Tour a reality each year.

Association Membership

Membership is open to farm operators, farm owners, and other persons interested in farm management. The $10 annual dues paid by members are used to pay for expenses incurred for publicizing and conducting the annual farm management tour, as well as to support other activities of the association. The leadership and the financial support this group provides are greatly appreciated by Purdue University and Indiana farmers. 

For more information about the Indiana Farm Management Association, contact its Secretary: Alan Miller, Extension Farm Business Management Specialist, Department of Agricultural Economics, Purdue University, 403 W State Street, West Lafayette, IN, 47907-2056; (765) 494-4203; <millerwa@purdue.edu>.