American agriculture is unmatched around the world. Yet with this success comes an even greater challenge: Who will replace the half-million farmers and ranchers who plan to retire over the next two decades? Look no further than our next class of America's Best Young Farmers and Ranchers. They are among the best of their generation. They embrace the future of agriculture and are developing the technical and managerial skills to build their own successful businesses.
Just a bad switch?" Ben Hendrix asks the person on the other end of the cell phone conversation. "Is No. 2 running right now? You might have to check, because since you called I've been hitting refresh, and it hasn't kicked on."
This is the face of modern technology in the hands of a young producer managing his world in real time–by way of a cell phone and tablet computer. Ben is 32, sitting behind a desk in the front room of a renovated Queen Anne cottage-style home in Wray, Colo. It is the headquarters for Progressive Agricultural Management (Pro-Ag). Ben is the chief financial officer for Pro-Ag and Circle 3 Farms, LLC, a land-holding company.
He leans forward to show a visitor the screen of his iPad; it's filled with virtual depictions of center-pivot units. His AgSense software is pumping information from his irrigation units to his fingertips, displaying data from pumps, various wells and ground moisture probes.
"One person cannot drive to every center pivot in a day," says Ben, who farms in an area where irrigation is indispensable. "We use the technology to expand our management capacity."
That Ben would return to the family business at the beginning of 2012 was not a foregone conclusion. His father, Jim Hendrix, set tough standards he expected Ben to meet before he came back.
Education and off-farm experience were two requirements for his return. His father, Jim, was specific in his charges to Ben as he left home for college in Iowa.
First, Ben would have to earn a master's degree. It's an academic credential essential for today's agricultural manager, Jim believes. Ben earned his MBA from The University of Iowa, where the academic work immersed Ben in standard business and accounting practices.
Second, Ben had to demonstrate success in an off-farm career. He went to work for a startup financial services company and was promoted several times in an enterprise that, from the day it opened its doors to five years later when Ben resigned, accumulated $135 million in assets. He gained an appreciation at that Des Moines, Iowa, business for the value of human resources and the importance of recognizing individual achievement.
Ben looked west toward home with the degrees and business experiences his father had requested. But that was not all. The owners of Pro-Ag needed to be convinced that their investment would earn a greater return with Ben's leadership than if they simply sold the company. It was no small decision. Jim is 63 and plans to retire in four or five years. The farm's business partners, suppliers, buyers and bankers understandably wanted to see business proficiency as well as a succession plan that included Ben.
His father's business partners grilled him over the two days of his formal interview. "They wanted to know what he brought to the farm that they couldn't hire elsewhere," Jim says.
Ben got the opportunity to prove himself. A formal arrangement was drafted, spelling out the terms of the business arrangement between Ben and the business partners. By its terms, Ben is buying an 11% stake in the operating business. His employment contract outlines bonuses and specific goals to be accomplished.
"He'll be 36 years old and running a very large business," Jim says about the pending transition. "But it is amazing what he has taken on. He has a willingness to see projects through and get them done at a high level. His contemporaries in related businesses are highly qualified, and Ben gets their language, how they get their work done."
Jim recognized then that grain marketing would be a complex experience for Ben. He decided to give Ben a real-world experience, with his own money at stake. For a growing season before he came back to his family's farm and then, for two seasons after, Ben rented 62 acres of corn from his father. Ben was solely responsible for the hedging activities and crop insurance on that ground.
"My father decided to throw me into the deep end on [that] one," says Ben. He admits that his initial marketing plans were too conservative, focused on assuring profit rather than positioning the crop for potential market rallies.
The experience was critical and indispensable in Ben's development as a farm executive. "Marketing is truly what sets Pro-Ag apart from other farms in our area," says Ben, adding that it is a competency in which he grows every day. Marketing a few thousand bushels of corn was but one step in his journey back to Colorado and an operation spanning two states (the other is Nebraska) and five counties.
The core of the irrigated operation resides in Yuma County in northeastern Colorado. The crop rotation consists of corn, light red kidney beans and popcorn–more beans and popcorn than field corn. The operation has a national impact. Pro-Ag accounts for about 5% of U.S. kidney bean production. A customer eating red beans and rice in a Popeyes Louisiana Kitchen restaurant is consuming Pro-Ag kidney beans sold to the quick-serve chain through Diversified Foods & Seasonings, Inc., in Louisiana. The popcorn crop is direct-marketed to Mexico, where there is a strong and growing appetite for the snack food. It is a business Ben expects will soon grow several times over.
"Pro-Ag has an 'all-of-the-above' attitude toward business opportunities," Ben says. "We spend considerable time thinking strategically. 'Because we've always done it that way' isn't heard on our farm. We are always open to new partnerships that can prove to be mutually beneficial."
An overarching philosophy driving Pro-Ag is that this business develops the capacity and capabilities to take advantage of new enterprise opportunities. For example, Pro-Ag purchases the planting and harvesting equipment unique to the production of kidney beans. However, it has foregone the purchase of a corn planter, a piece of equipment that does not provide Pro-Ag with a unique capability. The farm's corn is planted by a custom operation.
Pro-Ag has doubled its working acreage since Ben returned to the farm. But growth and success are measured in opportunities realized, not only in acres managed. "We don't want to leave opportunity on the table," Ben says. "So, we built a production mechanism that has standard operating procedures, accounting practices and skill sets" to create a platform for large-acre management and for new business opportunities.
The farm's newest endeavor is an organic alfalfa venture with a dairy. "I believe the natural and organic movement is a long-term phenomenon, and we have adjusted our farm to serve this agricultural segment," Ben says.
Buying or renting additional land to meet kidney bean opportunities is less important to Ben than finding partners with land who are willing to form long-term joint ventures to produce the beans. Kidney beans are produced on a five-year rotation and require an over-the-horizon commitment.
"Finding willing, land-contributing partners has allowed us to turn our kidney bean production expertise into very successful joint ventures," Ben says. In other words, the joint ventures marry the land brought by new partners to the kidney bean management and production platform developed and refined by Pro-Ag.
The operation has adopted accrual accounting methods that offer managers a clear, real-time financial picture of the business. Pro-Ag closes its books quarterly, and those financial statements "will be critical as we grow and need better forecasting and additional working capital," he says. Ben also is writing a rolling, five-year business plan that he will share with investors, bankers, vendors and employees. "We need a common document that clearly states the vision and direction for our operation," Ben says.
Ben is a young visionary in managing the employees who are essential to Pro-Ag's production platform. Retaining employees and offering them opportunities to improve their skill levels are critical management functions, especially in a setting where employees might record 3,000 working hours in a year. Two thousands hours a year is more the norm for non-agricultural workers.
"Coming from a more corporate setting, human resources were always a priority," Ben says. "Back at the farm, employee policies were not often formalized."
An early win, Ben says, was the development of goals as a basis for bonuses. Before he returned home, bonuses were paid at the end of the year and were based loosely on overall productivity and profitability. Bonuses did not recognize individual achievement.
That began to change two years ago. Employees were asked to suggest two personal goals for the coming year. Fifty percent of their bonuses are now based upon achieving those goals, independent of the farm's success. The goals are to be beneficial to the employee and to the farm. The goals may define the need for a new skill set, an advanced certification or lay out steps to complete a project. Ben meets with every employee to establish goals, and there is a mid-year review of the progress made toward each goal. Ben sets goals of his own and shares them with his father and the other owners of Pro-Ag.
Most of the employee goals were achieved in the first year of the new program. They paid quick dividends, too. The farm now has an additional employee with a commercial driver's license, a system for tracking sprinkler parts, a vehicle and machinery maintenance tracking system, a monthly safety meeting with an agenda and an updated accounting documentation system.
"These are all achievements that benefit the farm, but would otherwise tend to be lost during the controlled chaos of the growing season," Ben says.
Employee development continues to evolve as Ben writes formal job descriptions and assigns job titles. Clear responsibilities with meaningful titles are important to the farm's efficiency, he believes. They also ensure employees that they have a place and a productive function in Pro-Ag, Ben says. Pro-Ag will budget for the training needed to make them successful in their areas of responsibility.
Successful employees, including Ben, are key to Pro-Ag's growth and its ability to recognize and profit from new opportunities.
"We're better as a group than we are by ourselves," Ben says. "We follow consistent standards and a philosophy of timeliness and quality. We don't take shortcuts where quality is key in a job that pays by the ton." – Report by Marcia Zarley Taylor