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Extension, farmers take up research slack

"Ever since I could walk and follow my dad and grandfather around, that’s what I’ve wanted to do," says the 24-year old Hunt County, Texas, grain farmer. He and his father Kenneth are tending 4,800 acres of wheat and milo this year, the first crop they’ll make since they officially created a partnership and merged separate operations into one.

The timing could be better, Kenneth says. High production costs and poor commodity prices make farming a tough business. But they hope to parlay some newly learned marketing skills, sound risk management decisions and a custom application business into a formula for success.

Kenneth says he’s proud to have his son join him, but he also expresses concern about what the future holds for Kendal and other young farmers.

"I didn’t exactly discourage him," he says, "but I got him to visit Texas A&M University at Commerce and talk to some of the folks there before he made up his mind. But he’s always wanted to farm and that’s what he’s doing."

"I may still go to college," Kendal says. "That’s always a possibility."

He’s taking advantages of other educational opportunities in the meantime. He and Kenneth participated in a Master Marketer program, sponsored by Texas A&M, several years ago, and both agree it’s one of the best things they’ve ever done for the farm.

"I’ve always understood the fundamentals of marketing," Kenneth says, "but I didn’t understand the technical side. Master Marketers helped me understand how the process works."

"Marketing is where the money is," Kendal says. "We’ve cut production costs as much as we know how to and we can’t really see where we can cut any more and increase profit. The money is in marketing what we grow."

He says the Master Market curriculum was intense. "We went every other weekend, eight hours a day for two straight days for a total of six weeks. They pack a lot of information into a weekend. We had speakers from the Kansas Board of trade as well as university specialists."

Kendal says many good crop producers do a poor job of marketing what they grow. "Too many just cross the scales and take what’s offered," he says. "It’s in our best interest to develop a marketing plan."

Kenneth says a thorough marketing program demands someone watch for opportunities "eight hours a day. We don’t have time to do that, so we still use a marketing consultant."

Chad Hobbs, with the F.C. Stone Company, helps a lot," Kendal says. "We’re still not doing a lot of hedging. I just can’t get used to margin calls, but we pay attention to marketing opportunities."

"We use DTN and keep up with market movements," Kenneth says, "but we still like having someone watching out for us."

Hobbs, a former Texas A&M risk management specialist, "got us interested in the Master Market program," Kendal says.

Risk management plays an important role in operation decisions. A sound marketing strategy reduces some risk, but crop selection and their custom application business also help.

"I enjoy planting corn," Kenneth says, "but we planted none this year. We can make more money with corn than we can with milo, but we take a lot more risks. I can’t ever remember losing a milo crop."

The transition into a partnership and jumping from 2300 acres to 4800 puts a strain on finances, Kenneth says. "Once we pay the equipment down a bit, we may go back to corn. But this year, we’re looking at crops that will cash flow and wheat and milo fit the bill. We’ll play as safe as possible for now."

Their custom application business also helps with cash flow. "We use our sprayer to bring in extra income," Kenneth says. "It’s especially important this year because we have a lot of crop inputs on the front end. We’ll do as much custom work as possible."

Kendal says custom application allows them to upgrade equipment for their own farm by spreading costs over their operation and the custom business.

Kendal started the custom application operation while he was still in high school. "We bought a sprayer and I started doing custom work," he says. "I still do most of the custom spraying and dad fills in."

Most of their customers are repeats. "A lot of our business comes from people we know and people we’ve worked for before," Kenneth says. "Some of the local companies we do business with also provide referrals. And then we try to drum up some business on our own."

"We usually stay busy with custom work," Kendal says. "In 1998, we had a drought all season and the sprayer sat for about six months."

Kenneth says much of what he and his son have accomplished the last few years would have been impossible "without an understanding banker. Craig Overstreet, our loan officer and president of the First Bank of Farmersville, has stood behind us. It’s an independent, locally owned bank and we’ve done business there for 34 years. That makes a difference."

Kendal says nothing he’s encountered so far has soured him on farming as a career, but he does worry a bit about the future. "Two things bother me: losing farm land to development and low prices."

He says maintaining a sound marketing strategy will help with prices. "But staying in business may mean finding a way to keep leasing land. We lease all but 84 acres and urbanization is taking a lot out of production. But a lot of farmers in the area are reaching retirement age and I think as they quit farming I’ll be able to rent land."

Kenneth says he’d like for the long-term outlook to be a bit more promising for Kendal. "We’re looking at soybeans, mostly to clean up new land. I’d like to find a way to make them profitable. Also, we’d like to find a hard wheat adaptable to this area."

Hard wheat brings about 60 cents per bushel more than soft.

Even with the challenges, Kendal says he’s happy to be where he is. "I like working with my dad," he says.

Both admit to having occasional differences of opinion about how to run things. "But we usually talk it out and come to a mutual understanding," Kendal says.

Both say they have "some interesting conversations."


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