For Wade Dooley, farming is all about being dynamic. Dooley, 38, who farms near Albion in Marshall County, Iowa, has made significant changes to his farming operation in the last five years to improve his net farm income by focusing on his profit centers.
“I’ve done quarterly financial check-ins for the last five years or so, to ask, ‘Where did I think I was going to be and where am I now?’“ Dooley says.
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Dooley came back to the family farm in 2007, after graduating from Iowa State University with a degree in agronomy in 2005 and spending some time working in the vegetable seed industry in Florida. Since then, he’s taken steps to increase the amount of cover crop acres on the farm and has started management-intensive grazing. Recently, however, he decided to make bigger changes to boost his profitability and the longevity of the farm.
“I sat down last winter to go through the numbers. The trend line showed I was breaking even, was going to keep breaking even, and breaking even isn’t good enough,” he says. “I want to be comfortable for the rest of my life, and you don’t do that breaking even. You’ve got to make a profit. My plan was to get rid of anything that wasn’t making a profit on a reliable basis and work on things that look like they will reliably make a profit.”
To get started, he spoke with some of the founding members of Practical Farmers of Iowa on their successes and failures to help with his own long-term plans.
“I ran the numbers after talking with producers that were successful, but more importantly, those that failed. They made good decisions, but also bad decisions, and the accumulation of bad decisions was what took them out,” he says. “Talking to them and listening to their wisdom was helpful for me to take a holistic approach. I learned it doesn’t matter what your yields are or even what your net profit on a single commodity is — it’s your net profit across the whole farm.”
Focus on profit centers
After running the numbers across the farm, Dooley identified his cow-calf herd, cover crop seed sales and custom drilling as his major profit centers.
However, he ultimately decided to sell most of his cow herd in spring in preparation for a complete revamp of his pasture paddocks and watering system for rotational grazing.
“Livestock is one of my top profit centers, and I sold them off. It doesn’t make sense, except I need to do a massive infrastructure update,” he says. “It’s hard to put in new paddocks and water systems when cows are in the pastures.”
With the new paddock setup, he plans to start custom grazing and build up enough capital to buy a new herd of cows and raise grass-fed, grass-finished beef.
“It’s the next logical step, because I’m already rotational grazing. I’m putting in the effort, so I may as well get paid for it,” he says. “I’m giving myself extra time by custom grazing first. The herd I have isn’t genetically set up for grass fed, grass finished. I know growers that have bred it in, and it takes 15 years. So, I decided to sell the herd. I can update my infrastructure and custom graze everything I’ve fixed to get the capital back to buy the genetics I need to do this right.”
He’s also started his own cover crop businesses. Five years ago, Dooley bought his own 30-foot Landoll box drill to raise his own rye seed, and custom-seed cover crops for other growers.
“It’s got airbag down pressure, and I can move through the field at a pretty good clip. It’s a 30-foot drill, which fits our 12-row equipment. It fits through all of our gates and fields, and I can cover an awful lot of ground in a short amount of time,” he says. “I started doing custom seeding at that point because I realized if I cover X number of acres every year for customers, that makes the payment, and I have a drill for free. For the last four years, that’s what I’ve done.”
And raising cereal rye seed has helped expand his customer base to growers seeding pollinator mixes under USDA Natural Resources Conservation Service’s Conservation Reserve Program.
“Half of my custom seeding in 2020 was in the spring doing hay in CRP, because I can blend in anything into that drill, and I can drill it as long as I’ve got a grain to carry it,” he says. “You open that bag of CP 42, and it looks like a rat’s nest with all the fluffy seed. It’s super light, super fluffy. Growers are trying to run it straight through their grain drills, and that’s impossible. So we blend it with rye, which is heavy and dense, and it flows nice and it carries through the drill.”
Learning from others
In 2020, as Dooley’s custom-seeding business has grown, he decided to cut back on his row crop acres, and focus more on his cover crop seed and custom-seeding business. While he typically covers from 800 to 1,000 acres each year, he’s hoping to eventually reach 4,000 acres and upgrade his drill. He’s also raised cereal rye seed for the last five years, and has raised certified rye seed for the last year. In 2020, he planted foundation seed so he can begin raising registered cereal rye seed in 2021— allowing him to raise foundation seed to sell to certified seed growers who can then sell the cover crop seed directly to growers.
Last winter, Dooley was one of 10 participants in the Cover Crop Business Accelerator program — a partnership between Practical Farmers of Iowa and the Iowa Soybean Association, with funding support from the Walton Family Foundation. The program’s goal is to support new and established cover crop businesses. Now, with the program’s help, he’s making some additional changes to his custom-seeding and cover crop seed business.
“The program helped me with business planning, so I now have my custom-seeding business set up as a corporation, Dooley Ag Stewardship Inc. It’s going to be my main profit center, with growing and selling seed rye for cover crop seed as my secondary income,” Dooley says. “The program had a business consultant, Jen Simpson, help us develop a business plan, set up a proper corporation and planning a marketing strategy. Marketing is a weak point for me, but it’s a primary factor for a successful business. It was very worth it for me to be signed on with this program.”
For Dooley, it’s about staged planning beyond the year-to-year mindset to help reach his goal of earning a profit, and not just breaking even.
“Everything in farming is a long game. Anybody who farms year to year is doing it wrong. That’s not how it works,” he says. “Everything else in life is a long game. That’s why I’m trying to retrain myself to play the agricultural ecosystem game. This year we do this, and next year we do that. I’m hoping I’ve got 30 to 40 more years of farming in me. I’ll be 78, and almost ready for semiretirement. If I can do that by then, I’ll be doing pretty well.”
Cover Crop Business Accelerator helps farmers at all stages
The Cover Crop Business Accelerator program is a partnership between Practical Farmers of Iowa and the Iowa Soybean Association, with funding support from the Walton Family Foundation. The program is aimed at helping both those businesses that are already well-established and those that are just getting started.
“The program is a dream of mine. I’ve been thinking for a number of years, ‘How are we going to seed 13 million acres of cover crops in Iowa?’ ” says Sarah Carlson, PFI strategic initiatives director. “That’s the number of acres we will need planted every fall to reach the water quality goals of Iowa’s Nutrient Reduction Strategy — a 42% reduction in nitrate pollution to water bodies.
“One of the best ways to do that is cover crops in the off season. The number of acres we would need is between 12 [million] and 16 million acres of cover crops, which is about every other field in the state. Right now we’re able to seed maybe a million.”
The first group of 10 growers participated in the program in the winter of 2019-20, and Carlson and Heath Ellison, ISA field services program manager plan to start a new group of 10 this winter.
For 2019-20, the program offered several benefits to participants, including the opportunity to work with independent business consultant Jen Simpson, of Simpson Sales Solutions. Simpson helped the entrepreneurs with everything from developing a marketing plan to advertising to setting a business as a corporation to expanding an already established operation.
The program also offered several incentives, including:
- loan buy-down opportunity at a flat rate for growers making capital purchases to support their cover crop businesses, such as seed cleaning equipment or a grain drill.
- acre incentive payment, providing a $2-per-acre incentive up to a number of acres for participants involved.
- seed production incentive for a small-grain cover crop, providing $4 per acre for growers contracting seed production fields
“We will have a bottleneck one day if we’re getting all of our cover crop seed from North Dakota, where we get most of our seed now. We need to build up the infrastructure to do it locally,” Carlson says. “More and more, growers are contracting locally grown oats and rye for cover crops. And we really want to incentivize that.”