CEO, Running Lake Farms
Tell us a bit about yourself and your farm.
I started farming in 1980, after I received my degree in Agricultural Engineering at the University of Arkansas. I came back to the family farm and started working with my dad. He has long since retired but his assistance was immeasurable. I was the only one in the family who was interested in coming back and staying involved in farming. Our largest and most valuable crop is rice but we also grow 1,200 acres of soybeans, and some corn and peanuts. We’ve been slowly but steadily growing and the business side of farming is becoming more intense. Even today I enjoy seeing people return to farming, especially people that have developed a strong business sense. That’s what it takes today.
How do you forecast your farm's profitability at the beginning of the season?
It’s hard to forecast probability. We take a leap of faith every year. Sometimes we can price our grain earlier in the year and expect to be profitable and sometimes you spend all year trying to limit your losses.
But we’ve developed several tools to help us. I can look back through our data history and identify applications on fields we can do without. That’s what much of our data collection is about. For the past 5 years we have been able to keep a full record of our input applications. And now with Granular we’re able to add the financial aspect to that data. So we know cost of production per field. And that’s what’s exciting about farming today - there are all these tools that come together to give us true knowledge of each farm, each field, each commodity.
I spend several hours in the office in January and February to look at the previous years’ production and pinpoint areas of profitability, as well as what was marginal, and what was unprofitable. For the fields that weren’t profitable, I try to figure out why. Did we spend too much money on our corn crop? Should we have reduced inputs, used variable rate fertilizers? Was the yield below expected? And I do this on a per-field basis. With the right analytics, we can now create options to reduce our costs, and secondly, we can predict at what price a commodity becomes profitable and capture marketing opportunities moving forward.
What financial reports / metrics (on and off the farm) do you look at every day?
We develop a comprehensive cropping plan for each field. This includes projected inputs, yields and prices. This plan is only a click away on my Granular tablet app or phone, so I’m out on the farm every day - I can’t sit in the office and manage my crew from there. I’m most comfortable in the field confirming everything is operating as smoothly as possible. It’s constant communication with my crew to make sure that what we planned is fulfilled and we’re on target. Having my whole cropping plan developed before the planting season is essential. Fortunately, the plan is flexible and changes are a daily occurrence.
Today’s technology keeps me just an app away from all the markets, weather forecasts, local seed and chemical suppliers, and university research data. If the soybean market jumps I can quickly react and if a storm is moving in I can scramble to be prepared.
If you could only pick 3 metrics to measure your farm's financial health, which would they be?
Today’s depressed ag economy has us all more focused on financial health. I try to break out the pieces of my operation and look at the farming operation, land investments, storage facilities, and capital improvements separately. Once I identify individual financial stress I know where to direct my attention. Then I look at all the enterprises together for our overall health.
My three priority areas would be:
- Compare specific financial concerns against overall business strength
- Pricing opportunities both for crops and input items
- Analyze what the crop needs versus what I can afford
What's the biggest decision you've ever changed as a result of looking at your farm's financials from one year to the next?
We made several this year but the biggest one was to reduce our corn acreage. On our least productive corn fields we switched to soybeans - but we also knew which fields are more conducive to soybeans. We changed our cropping plans based on expected financials. In the past, we weren’t able to do this.
History of production tells you a lot, that institutional knowledge is critical. I feel we make good decisions just because of our history of farming. But what’s exciting is not to have to rely 100% on that. We’re can be as fast as the changes in the markets because we have great tools to reinforce our instincts.