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Purdue extensionCES-370

Purdue Agriculture

2011 Indiana Farm Management Profiles2011 Indiana Farm Management Profiles

Sullivan, Knox, and Daviess Counties

Melon Acres5388 E. Gauger Rd.Oaktown, IN 47561

Unger Farms6610 S. County Rd. 350 W. Carlisle, IN 47838

Carnahan & Sons9809 E. Wheatland Rd.Vincennes, IN 47591

Villwock Farms 11600 N. Freelandville Rd. Edwardsport, IN 47528

Wednesday, June 29, 2011

Tuesday, June 28, 2011

T.S. Boyd Grain1957 E. 200 N.Washington, IN 47501

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Indiana Prairie FarmerMaster Farmer BanquetSouthwest Purdue Ag Center4259 N. Purdue Rd.Vincennes, IN 47591

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41150

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15050

55067

6758

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Sullivan CountyKnox County

Davie

ss C

ount

y

Knox

Cou

nty

Carlisle

Vincennes

Washington

Bicknell

Edwardsport

Oaktown

Freelandville

CR 20

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CR 200 N

CR 35

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E. Gauger Road

Freelandville Road

Wheatland Road

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45

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N. Purdue Road

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Shipping Street

CR 35

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Carnahan & Sons ▲

Del Unger Farms ▲

Villwock Farms ▲

T.S. Boyd Grain ▲

Melon Acres ▲

Contents Indiana Farm Management Tour Schedule . . . . . . . . . . . . . . . . . . . . . . 2 What Can You Learn from Our Tour Hosts? . . . . . . . . . . . . . . . . . . . . 3

Farm Management Profiles & Authors

Del Unger Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Bruce Erickson

Melon Acres . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Angela Gloy

T. S. Boyd Grain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Chris Hurt

Carnahan & Sons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Craig Dobbins

Villwock Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Angela Gloy

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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Indiana Farm Management Tour Daviess, Knox, and Sullivan Counties

June 28 and June 29, 2011 (All times are Eastern Daylight Time [EDT].)

Tuesday June 28, 2011 1) Del Unger Farms – The farm management tour starts with lunch at 12:00 p.m. at Del Unger Farms. An interview with the Unger family will start at 1:00 p.m. The interview will be followed at 1:30 p.m. by three mini-tours on maximizing planter performance for uniform plant spacing and emergence, fine-tuning nutrient needs with plant tissue testing and foliar fertilization/on-farm testing, and enhancing land owner/tenant relationships through leasing options. 2) Melon Acres – The visit to Melon Acres starts at 3:00 p.m. with the family interview in the watermelon packing shed. Mini-tours will start at 3:30 p.m. and will rotate around the packing sheds. At the end of the mini-tours of the packing facilities, interested participants can also choose to travel in their own cars to the new high tunnel production facility. The high tunnel facility is about a one-mile drive from the packing sheds. Participants should allow an additional 30-45 minutes to complete this optional tour. 3) Indiana Prairie Farmer Master Farmer Banquet, Vincennes University − John Deere Building, Southwest Purdue Ag Center –The reception and tours of the new building start at 5:00 p.m., followed by the banquet and awards program. You must have preregistered to attend this event. Wednesday June 29, 2011 4) T. S. Boyd Grain – The tour starts at 8:00 a.m. with the family interview. Come a few minutes early, and enjoy a free donut. Mini-tours will start at 8:30 a.m. on high yield continuous corn production technologies and on machinery trading strategies. 5) Carnahan & Sons – The visit to the farm starts at 10:00 a.m. with the family interview. Mini-tours on the farm’s quarter horse venture and on the farm’s prescription farming practices will follow starting at 10:30 a.m. 6) Villwock Farms – The tour of Villwock Farms starts with lunch at 12:00 p.m. Lunch will be followed at approximately 12:45 p.m. by an agricultural market outlook update by Dr. Chris Hurt, Purdue Extension Marketing Specialist. The Villwock Farm’s interview will begin at approximately 1:30 p.m. After the family interview, participants will be offered the opportunity to drive in their own cars a short distance to Villwock Farm’s new grain drying and storage facility for a guided tour. One focus of this tour will be a discussion of energy management in grain drying and handling facilitated by Purdue Extension Specialist Chad Martin.

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What Can You Learn from Our Tour Hosts?

Five family farm businesses with their own unique management practices welcome you to their farms. Read the profiles in this publication, 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 farmers’ ideas on management to improve the performance of your own business. Del Unger Farms 1. What new technologies do the Ungers expect to adopt in the next few years? 2. How do the Ungers define return on investment in terms of how the inputs in their farming

operation? 3. What are the keys to successfully managing higher value crops such as seed corn and

vegetables? 4. What recommendations do the Ungers have for farmers who want to more intensively

manage their crop nutrients? 5. What are the advantages and disadvantages of the Ungers’ land-holding and operational

entities? Melon Acres 1. What technologies are used in the produce packing lines at Melon Acres? Why are the

produce packing lines considered a source of competitive advantage by the Melon Acres’ management team?

2. Melon Acres has recently invested in high tunnel facilities for vegetable production. To what extent does this investment represent a major new strategic direction for the farm business, and why did the farm choose to make this investment?

3. How have recent changes in the regulation of food safety in the U.S. affected the management strategies of Melon Acres?

4. What are the challenges to effectively managing a large seasonal labor force, and how has Mellon Acres addressed these challenges?

5. Melon Acres has three young managers (Autumn, Jacob, and Whitney). How did Mike and Vicki Horrall manage to achieve their goal of bringing their three children into the family farm business?

6. How does Melon Acres go about identifying and developing new marketing opportunities?

T. S. Boyd Grain 1. Why do the Boyds consider their machinery trading strategy a source of competitive

advantage, and what is that strategy? 2. What are the benefits of diversification into specialized cropping enterprises such as earlage

and popcorn, and what are the benefits of having diverse lines of business activity, such as farming, trucking, and operating grain elevators?

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3. Why do the Boyds believe that modern farms almost have to get bigger in order to drive down costs?

4. What is the family’s plan for involving succeeding generations of the family in ownership and management of the family business while keeping the family business together?

5. Why do the Boyds consider relationship management one of their twelve keys to success? 6. What type of organizational structure has the Boyd family established to achieve effective

management control of such a diverse set of business activities? 7. Why is turkey litter a preferred source of supplemental fertilizer for this farm operation, and

what is required to effectively incorporate turkey litter into the farm’s nutrient management program?

8. What are the keys to successfully managing long-term high-yield continuous corn production?

Carnahan & Sons 1. What is an enclosed riding arena and stable doing on this Indiana grain farm? 2. What are the Carnahans’ keys to managing a successful business? 3. What are the characteristics of the incremental growth strategy used by the Carnahans? 4. What items do the Carnahans monitor in order to ensure proper business performance? 5. What has been the Carnahans’ experience with energy companies? Villwock Farms 1. What steps would Don and Joyce Villwock recommend farmers take to protect their own

interests if faced with an eminent domain proceeding? 2. Why does the Villwock Farms management team believe the Myers-Briggs Type Indicator

has improved their management styles and communication practices? 3. Given the chance to start over and design a farmstead and a grain facility from scratch, what

factors should you consider? 4. What is Purdue Extension’s grain drying energy assessment program, and what benefits can

it provide for your farm? 5. What steps should you consider to prepare to transfer the family farm business to a

nonfamily successor? 6. How can you have a full-time off-farm career and effectively own and operate a commercial

farm business? 7. Don Villwock believes there are three critical economic principles driving commodity

production. What are those three principles, and why have they led Villwock Farms to focus on producing value-added crops?

8. What are the top management and production concerns that Don and Joyce Villwock see for the next generation?

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Del Unger Farms The Ungers, who operate Del Unger Farms near Carlisle, Indiana, succeed by applying intensity to every aspect of their personal and professional life. Their corn, wheat, double-crop corn, double-crop soybeans, seed soybeans, sweet corn, and green beans are grown with a high output production approach that includes site-specific management with variable rate applications, foliar nutrient and fungicide applications, and irrigation scheduling. By maximizing output, they aim to minimize costs on a unit of production basis. They also operate a cow-calf operation and enjoy supplying 4-Hers with some of their most promising offspring. Management Philosophy With the Ungers, it’s go big or go home, to use an often overused phrase. That philosophy resounds throughout the Ungers’ personal and professional attributes—in how the farm is operated, the livestock is tended, the crops managed, and the family interacts. And that approach seems to be working well. “We are high input, and hopefully that translates to high output. To be successful, you have to be willing to invest in a future that’s not always certain,” said Del, namesake of the operation. “We’re not into spending money for the sake of spending money; we constantly look at places where we can invest and get a return on that investment.” The ability to push more production through a business’ fixed asset base is the essence of the intensification strategy. A more intensely run operation spreads fixed costs over greater output, lowering the overall cost of production. This strategy can be executed through more intense management of

current operations and the adoption of more modern, more intense production technologies. Farm History The farm operation is jointly owned and managed by Tammi and Del Unger, full partners in every sense of the word. This union began when Del and Tammi met at Purdue as freshmen Ag Econ students. By their junior year they had purchased their first land together and had started farming down the road from Del’s folks. Tammi grew up in Parke County, coming from a family with agricultural roots as well. They decided to formalize their personal and business union the following year, marrying in 1984. While those were not flush times for farming, according to Del, “we at least didn’t lose our shirts those first couple of years.” Tammi and Del have passed along their passion for farming to their two children, Adair and Lance, who got an early start at farming. The two siblings rented some land together when they were 11 and 12 years old, respectively, using the folk’s equipment but otherwise taking on the risk. “It was their own money, and win or lose, they were going to deal with the consequences,” said Tammi about this first venture. It ended up in the black, and both went on to graduate from Purdue in Ag Econ like their folks, Adair in 2009 and Lance 2010. Land Resources and Utilization The Ungers feel blessed that they’ve been entrusted to farm some very productive land. The soils in their area are dominated by loams, sandy loams, and fine sands, which are sometimes low in water-holding capacity. But plentiful irrigation water is

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available through much of the area, so a good portion of Unger cropland is irrigated. To capitalize on this productive potential the Ungers grow a mix of specialty crops—seed soybeans and seed corn, green beans, sweet corn. The vegetable production is through Razorback Farms, which is based in Arkansas. Their acres are rounded out with commodity corn, soybeans, wheat, double-crop soybeans, and double-crop corn. They do operate some rolling land, too, a few miles north of their farm’s operational base, and that provides the foundation for their cow-calf operation. The Ungers’ 60 to 70-cow herd originated with Del’s folks and their years of work and improvement, and the best offspring are sold to 4-Hers and as show calves. Business Entity Structure Their operation is organized into five major entities, with a mix of ownership, assets, and functionality that are orchestrated together for the betterment of the whole and to facilitate the continuation of the farm past Del and Tammi’s involvement. The entities include: • Del Unger Farms, which stems from

Tammi and Del’s original investment of land and equipment

• U-1 Unger Farms, focused on livestock, haying equipment, and the land supporting the cow-calf herd

• Unger Farms Trucking, the transportation arm of the farm that owns the trucks and trailers

• Unger Farms Grain, a three-way partnership of Del, Tammi, and Lance

• Lance Unger Farms

This multiple entity structure was established to expedite the involvement of the next generation in the ownership and

management of the farm business, as well as to accomplish other important business objectives. N utrient Management Nutrient management for their crops is an important focus for the Ungers. They fully appreciate the amount of nutrients that are consumed and removed by productive crops and adjust their fertilizer programs accordingly. But they are also farming soils that are sometimes lighter in texture that don’t hold the volume of nutrients that heavier soils do. That’s why, along with grid sampling and nutrient removal tracking, they utilize in-season plant tissue sampling as a way to double-check plant nutrient status. Plant tissue testing is not a common practice on most Indiana farms, but the Ungers depend on it. According to Del, “there is nothing necessarily simple or straightforward, or one best plan for nutrient management. That’s why we use a variety of tools, and we constantly monitor and adjust to best understand and adjust for crop nutrient needs.” When in-season tissue sampling identifies a need, foliar nutrient applications can be part of the mix in tweaking nutrient plans, whether that is in corn, soybeans, or wheat. Those applications can sometimes include sulfur, magnesium, zinc, and boron—sometimes applied at sidedress time with nitrogen or sometimes applied with the center pivot irrigation. The in-season foliar applications are not a replacement for keeping soil nutrients in good order. “If there’s one thing people might criticize me about on the farm tour, it is that I’m not a low cost producer on a per-acre basis,” said Del. “And I know that’s something that many would say is important when you are producing commodities like we are—corn,

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soybeans, and wheat. You hear a lot about how being a low-cost producer is a key to success. But I will compare my per bushel costs to anyone’s.” Any economist knows that part of the formula in keeping per unit costs low is to keep throughput high. “With our favorably long growing season here, productive soils, and plentiful irrigation water down just 60 feet or so, we feel an obligation to take advantage of that,” said Del. That’s why production technology is taken very seriously by the Ungers. To help ensure that the technology they adopt and the practices that they follow are paying the bills, the Ungers are in constant evaluation mode—doing on-farm testing to evaluate existing and potential crop management practices. “We need to know what works and doesn’t work and cannot afford to be making assumptions,” said Del. Field comparisons are designed, and yield information is collected and compared. “We work closely with our agronomist, Betsy Bower, to help us determine the right mix of crop inputs to get the desired results.” Betsy is the Ceres Solutions agronomist who works with crop retailers and producers in central and southwestern Indiana and into Illinois. Precision Farming Practices Precision farming practices are a spatial intensification of management and have long been a part of the Unger crop management plan. Grid soil sampling has been done since the mid-1990s, when GPS technology first became commonly available. Yield monitors tied to GPS are used to measure crop yields and form the basis of crop nutrient removal maps. The combination of grid soil sampling and site-specific nutrient removal is utilized for their

variable rate fertilizer applications. They utilize RTK guidance. The Ungers take an intense approach to planting as well. They feel strongly that the precise placement of seeds at planting pays off with uniformly spaced plants that grow up more evenly, enhancing yields. They are fastidious about the operation of their own planters. Their interest in planter enhancements and fine tuning planters led to an opportunity to offer products and services to neighboring farmers. Adair manages a Precision Planting dealership based at the Unger farm that is owned by her and her husband, Adam Everhart, a district sales manager for Specialty Hybrids. Adair and Adam also own and operate Everhart Cattle. Double-Crop Corn While a variety of crops pay the bills on the farm, the Ungers seem to especially love their corn crops. One of the more unusual practices is their use of corn as a double-crop after wheat. “The wheat comes off mid-June, and we get the corn planted right back in. With the planter I can more than keep up with the wheat harvest, so I’m pushing the harvesting crew,” said Del. With a fair amount of corn after corn irrigated in bottomland fields, they feel they’re good candidates for foliar fungicide applications to control corn leaf diseases. Management Information System With 5 business entities, 17 landowners, several crops, and a livestock operation, bookkeeping, payroll, invoicing, and taxes might seem a challenge. Tammi keeps it all straight and also serves as the communi-cations and organizational hub. “Managing the books is something that is probably best in the hands of one primary person—there’s no second guessing if it has been completed or not, and I keep the collective memory for the whole organization,” added Tammi.

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Landowner Relations Relationships with landowners are something that the Ungers value highly. “We benefit from many long-term relationships with landowners, and we believe in taking care of that leased land as much as the land we own,” said Del. “Just as with any inter-personal relationship, it is a two-way street. It is my responsibility to get to know my landowners and to understand what is important to them for their land.” Del adds that some landowners are very interested in production practices and what they are doing on their acres, and it is more of a business approach. That may not work with other landowners, who value that the Ungers have taken the time to get to know them personally. “Keeping fences clean of trees and mowing roadsides may be a big deal for some farm owners, and if you don’t open yourself up to them they may not know that,” said Del. Do It Right by Doing It In-House The Ungers like to do their work mostly in-house, and hesitate to bring in outsiders to custom apply pesticides, construct their bins

or buildings, or even help with the bookwork. “Maybe we’re just that tight or perhaps we want to maintain our own control of the outcome, I don’t know, but it seems like doing these things internally works best for us,” comments Del. They own their own pesticide and fertilizer application equipment and feel that works best for them internally as well. “With our mix of crops and with the unpredictability of the weather, we need to go when we need to go. Doing our own construction projects also allows us to justify our employees year-around, too.” The Ungers are especially grateful for the full and part-time laborers who help them through their operation. It’s all hands on deck when tasks need completing, but the taskmasters include Darren McCammon, who has provided 41 years of dependable service, and Damon Golish, an 11-year employee.

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Melon Acres Prior to the advent of Melon Acres in 1976, there were just tomatoes grown near Bicknell, Indiana. Abner Horrall, and his late wife Frieda, and sons Mike and Mitch started out trucking the lion’s share of their lone product to Indianapolis. Over time, there’s been considerable diver-sification and expansion such that today Melon Acres is the state’s largest produce grower raising an assortment of fruits and vegetables on 1,000 acres supplemented by another 1,500 acres of primarily cash grains. Business growth has been successful enough to enable welcoming a 3rd generation into management positions. Expansion and Innovation The story goes that following his day shift at the Prestolite Battery factory in Vincennes, Abner would sleep just long enough to leave time for him to deliver a truckload of tomatoes to Indianapolis before returning to his responsibilities at Prestolite. Frieda and sons Mike and Mitch helped with production efforts as their school days allowed. In 1976, Abner and Frieda took a huge gamble, purchasing Snyder Orchards just north of Oaktown, Indiana to create Melon Acres. That first season, the farm produced apples, cantaloupe, tomatoes, and watermelon on 75 acres as Abner continued to work full-time at Prestolite. With the goal of creating an operation large enough to keep his 2 sons involved in the farm with them, Abner traveled to other growing areas of the U.S. to study methods for growing cantaloupe and watermelon. During the next several years, expansion was predominantly the result of 2 factors: increasing acreage of cantaloupe and watermelon, and using cultivation methods that provided the operation with

an earlier harvest, resulting in better prices and greater profitability. In 1983, Abner achieved his goal as Mike and Mitch joined the operation as equal partners. Melon Acres has expanded relatively quickly both in terms of scale and scope. Today, the business is located in Oaktown just a few miles from where Abner grew the first truckload of tomatoes. Motivated in large part by the goal of bringing grandchildren into the farm business, the growth pattern has been not wholly different from Abner and Frieda’s approach, but the methods of growth have varied. Growth during the 1990s was dominated by mechanization and a change from the traditional markets of entrepreneurs in pickup trucks, 10-wheelers, and semis carrying bulk-loaded produce to marketing to large grocery store chains purchasing multiple semi-loads each week of cooled fruit in bins or cartons. Expansion during the 2000s involved a new product, asparagus, and even greater mechanization that allowed Melon Acres to save on labor while increasing the consistency of its products. Today, as Abner’s grand-children, Autumn, Jacob, and Whitney, become a part of Melon Acres, expansion is being driven by increasing the diversification of both products and marketing techniques while increasing efficiencies within the present operation. Today, Melon Acres’ 2,500 acres of production ground is allocated as follows: 250 acres to cantaloupe, 390 acres to watermelon, 140 acres to sweet corn, 40 acres to cucumbers, 180 acres to asparagus, and the remaining 1,500 acres to seed corn, green beans, corn, wheat,

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milo, and soybeans. In addition, 3.5 acres of high-tunnel covers were installed recently to grow a variety of tomatoes and peppers, primarily for retail sale. Most of their ground has sandy soils and is irrigated. They operate on a 3-year crop rotation with Mike, son Jake, and cousin and farm manager, Tom Horrall, determining the annual field schedule. In terms of produce production, multiple sweet corn varieties are used, allowing Melon Acres to stay in the market longer. All of the produce is hand-picked, but once harvested, packing lines are highly automated. Melon Acres’ first grading and packing line was added in 1996, and since then the Horralls have turned to innovative technologies that give them first-mover advantages in their markets and allow them to pursue continued growth. Forced air cooling technology was introduced in 1991 and later expanded in 1994. For cantaloupes, forced air cooling meant that they could pull the heat out of the melons quickly and, at the same time, increase sugar content. In 2009, purchase of a hydro-cooler offered similar benefits to sweet corn and asparagus: bins of produce are run through cold water that washes and cools the produce simultaneously, then the produce is transferred to the forced air cooler. In 2001, they were the first grower in the state to use a watermelon weight-sizer, thereby insuring product size consistency. 2 years later, they installed the first computerized asparagus sorter and sizer in the Eastern United States. Today, asparagus is packaged and banded in one- pound bundles, with the system automatically programmed to measure the length and width of each asparagus spear.

Regarding cash crops grown, all ground planted to seed corn is managed to take full advantage of irrigation, in addition to being coordinated with seed dealers. Melon Acres harvests their own cash crops and does custom harvesting for Pioneer Hybrids on other farms. GPS systems used to prepare for transplanting produce crops and to plant row crops increase plant density and, thereby, increase profitability. Marketing 101 In order to market this kind of production volume, the Horralls work backwards, starting with market demand characteristics and growth opportunities. How are new markets identified specifically? Each year in the off-season, the family sits down and explores market opportunities, evaluating potential success in terms of what their farm business does well, market risk, demand, market potential, etc. The emphasis on value-added products only heightens the need for focusing on end-user characteristics. The majority of produce grown is marketed through wholesale channels, finding its way to grocers and restaurateurs in the region. There is now interest from Seasons 52, a restaurant chain moving into Indiana, to purchase locally grown fresh produce from Melon Acres through Indianapolis Fruit. From a supplier’s perspective, Melon Acres is an attractive candidate for sourcing produce because they can supply larger volumes than many other produce suppliers and minimize a buyer/vendor’s administrative overhead cost. Outside of wholesale operations, Melon Acres currently operates 2 farm stands in Oaktown and Terre Haute. A possible 3rd farm stand is being considered for the Bloomington area.

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A smaller, but more novel outlet is Melon Acres’ e-store. On the melonacres.com website, customers may click on the “shop on-line” button to purchase fresh asparagus at their getfreshasparagus.com website in 3, 6, 12, and 27 pound increments. On-line purchases are delivered to the customer’s door by FedEx in 1 to 3 days. On-line sales have been available for 5 years, with most of the sales attributed to in-state chefs wanting fresh product. However, by the end of the 2011 harvest season, Melon Acres had shipped to nearly all states, with the obvious exceptions of Alaska and Hawaii. Melon Acres employs a website administrator who oversees sales orders and manages price fluctuations in shipping rates. Generally, few resources are spent on promotion. Melon Acres supports local community events via sponsorship but retail operations rely heavily on long-standing, repeat customers. As of this year, a new office facility adjacent to the truck scales will be dedicated to marketing and sales operations of the produce crops. One of the most critical production-marketing links concerns food safety. Having completed training at the University of Georgia in Athens to become HACCP (Hazardous Analysis Critical Control Point) certified, daughter Autumn Horrall is Melon Acres’ food safety manager, coordinating the business’s annual 3rd-party audit. Development and documentation of protocol associated with production and packing procedures and facilities, sanitation, pest-control, and employee food safety practices are among FDA’s concerns. From Melon Acres’ perspective, passing annual PrimusLab 3rd-party audits

serves 3 primary purposes. First, many of their existing vendors have demanded 3rd-party audits. Second, as has been Melon Acres’ practice from its inception, it offered a means of staying ahead of the competition. Third, consistent with the incremental approach to Melon Acres’ growth, starting into the process early has allowed Melon Acres the opportunity to spread the substantial expense of compliance with industry and govern-mental food safety requirements over more growing seasons. Consequently, one of the biggest benefits to Melon Acres is that they are better positioned as anticipated new food safety regulations come into existence. Valuing the Employee Melon Acres is highly dependent on their seasonal laborers. Because all produce is hand-harvested, approximately 250 seasonal workers are needed each year. Previously, Melon Acres coordinated their own seasonal labor supply, but they now contract with U.S. Department of Labor (USDL)-licensed crew leaders who, in turn, assume responsibility for supplying labor teams. There are 2 separate crew leaders. The first supplies labor for the watermelon harvest, and the other supplies labor for the harvesting and packing of the other produce crops. In addition, there are a minimum of 26-27 employees needed to run packing shed operations. The volume of laborers needed annually invites a high degree of oversight from the USDL. Melon Acres works closely with a representative to ensure compliance with The Migrant and Seasonal Agricultural Worker Protection Act (MSPA) that establishes employment standards with respect to wages, housing, transportation, disclosures, and recordkeeping. The MSPA is described in USDL Fact Sheet

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#49, which is available on-line at: http://www.dol.gov/whd/mspa/index.htm. Office manager Lucinda Rodrick, now in her 19th year with Melon Acres, notes that if not compliant, the penalty is likely to increase as business sales increase. The very nature of the penalty for a large operation like Melon Acres incentivizes migrant labor training, which Lucinda has completed. Their seasonal laborers led the Horralls to build 2 housing facilities to accommodate laborers working the April to September harvest season. Hacienda 1, built in 1992, is a dormitory-style building with no kitchen facilities available for individual use. To remedy this situation, the Horralls hire a chef each year, offering meals for those interested. Hacienda 2, completed in 2003, offers a more apartment-style set-up whereby cohabitants can prepare their own meals. The crew leaders, while responsible for ensuring enough labor, assume the responsibility of paying individual laborers from funds paid to them by Melon Acres. Such an arrangement means that experienced and reliable crew leaders are especially valuable, and the Horralls’ goal is to work collaboratively with all employees to facilitate a positive work environment. Outside of the labor crews coordinated through Department of Labor licensed crew leaders, Melon Acres estimates they process approximately 100 W-2 returns annually. A 3rd Generation Comes Back to the Farm Mike and Vicki Horrall’s ability to bring all three children (Autumn, 24; Jacob, 23; Whitney, 21) into the business inside a 5-year window was preceded by years of planning. Following brother Mitch’s

departure to start his own venture, Mike and Vicki prioritized the need for a formal succession plan. The financial feasibility question precipitated much of the farm business’s pre-succession plan growth and expansion. By the time middle child, Jacob, was in high school, the succession plan had been complete—technically 3 years in advance of when their oldest, Autumn, formally came back as part-owner. Mike credits a team approach that draws on the expertise of attorney, accountant, and lender among others in developing their succession plan. Management Fundamentals The scope and scale of Melon Acres’ business operations hints at the management team’s ability to leverage 3 key management skills. First, Mike Horrall uses strategic planning as a management guide. How the farm approaches new marketing opportunities, technological investment, human resource management, and succession planning are all evidence of a calculated plan. The frequency of off-season meetings is as important as Mike’s habit of developing meeting agendas that include goal planning. As with many young farmers, Mike and Vicki invested heavily in their farm business in the early stages. Not only are there obvious benefits to the business’s bottom line, but from a management perspective, Mike is role-modeling a forward-looking management strategy to the next generation of managers. Second, the Horrall family uses a team approach to help with the full range of business issues encountered. The succession plan alone necessitated a complete team of business advisors to ensure the Horralls achieved their planning goals. Family members note that Mike’s assertiveness at growing the farm business

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mirrors what he saw in Abner’s efforts to build on farm capacity for the benefit of the next generation. Third, the Horralls place a premium on family harmony. The potential risk of working with one’s family is tempered by frequent communication and involvement in strategic discussions. By establishing individual areas of expertise for incoming owners, Mike and Vicki have created a highly team-oriented approach to their family business. The family-oriented approach, though, is extended to include all of Melon Acres’ employees, signaling the owners’ appreciation for employee contribution towards improving the business. Mike, particularly, is well known among his employees for teasing them good-naturedly, asking their opinions, and thanking them for a good day’s work. The goal of creating a positive work environment is nurtured by treating employees with fairness and respect.

What’s next for Melon Acres? The possible answers to that question include a third retail farmstand, as mentioned earlier, or possibly a brewery/restaurant to showcase some of their locally grown produce. Whatever it is, though, is likely to have grown out of a strategic planning session in the off-season. It’s also likely to exemplify two of the Horrals’ important management principles. First, it highlights the value of starting with an end-user market opportunity and working to meet that demand. Second, the Horrals family-oriented team approach to strategic planning provides valuable management lessons for the incoming generation that is watching carefully for the know-how and flexibility to manage the next growth and development phase.

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T. S. Boyd Grain

T.S. Boyd Grain is a 7,500 acre operation that includes production of continuous corn, popcorn, wheat, double-crop soybeans, single-crop soybeans, and earlage. With 2,500 owned acres and 5,000 rented, they have 4,700 acres in continuous corn with yields of 200+ bushels per acre. In addition, they own and manage a 100+ truck freight-and-warehouse business and 2 grain elevators. Theirs is an outstanding example of a family farm that has grown due to hard work, superior management skills, and strong personal relationships within their family, their businesses, and their community. It is a tribute that Purdue’s Farm Management Tour is returning for a 3rd time. Family and Business Overview In 1947 Tom Boyd’s parents (Robert and Lavern) came to the farm that is now the home base of Boyd Grain. Tom finished school in 1968 and started farming with his parents. By 1978, Tom’s parents, Tom, and a brother had grown the size of the farm to 1,700 acres. At that time Tom’s parents decided to split the farm between the 2 boys. From that base of about 850 acres in 1978, Boyd Grain has grown to 7,500 acres, with 2,500 owned and 5,000 rented acres. Tom’s brother Steve has developed a successful farming business as well. Today, Tom and his wife Marsha are joined in the business by their two children Trent and Libby. Trent, the farm manager, is married to Kim, and Libby is married to Logan Graber, who serves as the operations manager for the trucking business. In addition to the farm, the Boyds have built a large trucking business that includes over 100 trucks and provides

warehousing services. They also operate a grain elevator at their home facility and the Plainville Elevator, which they purchased in 1995. Tom says, “I got started in the grain and trucking business in the early years by simply hauling my own grain and seeing the opportunities.” While Tom’s parents decided it was best to split the farm business between their two sons back in 1978, Tom and Marsha have decided it is best to keep their farming, trucking, and elevator businesses together in a 3-way ownership among Tom and Marsha and their two children and spouses. You will enjoy learning more about T.S. Boyd Grain and their various businesses at: http://www.boydgrain.com/. Farm Business The Boyds’ farm acreage consists of 4,700 acres of continuous corn, 1,500 acres of popcorn, 1,000 acres of wheat plus double-crop soybeans, and 300 acres of single-crop soybeans. Boyd Grain has been raising continuous corn for over 20 years. They have a variety of soils across their land base, and the very best soils are well adapted for continuous corn. They are averaging 200+ bushels per acre. These high yields require high-yield technology, including high levels of nutrients. Given the large amount of corn residue, they cut or shred stalks into small pieces in the fall, get fertilizer down and then make one-pass tillage, and plant early in the spring. They believe high yields are directly related to high plant populations, so they plant at the high end of the seed company recommendations. They are considering how they will be able to continue to

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increase plant populations in the future, perhaps by moving to 20″ rows or by twin row planting. Where possible they like to use turkey manure from nearby turkey houses. With regard to turkey manure Trent warns, “You better have lots of time and lots of specialized equipment, and this makes it costly.” They like to chisel plow to incorporate the litter and reduce odor. Soil sampling is on 2.5 acre grids. They have moved from a 3-year sampling rotation down to 2 years to more closely monitor soil pH. Sandy soils and rolling ground are better adapted for wheat and double-crop soybeans. Wheat yields average about 60 bushels per acre and double-crop soybeans 40 bushels. This same land is used for popcorn. The mix of soils is to their advantage. “Some soils work earlier, and for some it is better to work later,” says Tom. This year they are raising 1,500 acres of popcorn under contract with Weaver Popcorn Company in Van Buren, Indiana. Boyds have a special flexible working relationship with Weaver where Weaver uses between 1,000 and 2,000 acres a year. This gives Weaver flexibility in establishing the exact acreage they need. Popcorn yields have averaged about 5,000 pounds per acre over the past three years. Popcorn requires special treatment both to protect the quality of the seed coat and because it is food grade. Combines and trucks must be cleaned before being used for popcorn, and Roundup Ready technology cannot be used. Popcorn is contracted in January, and pricing can be made based on the December corn futures.

Machinery Tom, Trent, and Logan see their machinery trading strategy as one of their competitive advantages because they have new machinery with large capacity to quickly complete planting and harvest activities. They have been trading for 2 new Case IH combines each year. The Case IH harvesters work well with the food grade popcorn, and the dealer has regular customers that take their 1-year old units. Tom says, “We trade for 2 new Case IH combines every year, and we let the dealer decide if he also wants to trade out new Quad Trac tillage tractors as well.” That does not mean the Boyds let the dealer make the decision; rather they offer the dealer a dollar level on trade difference at which they will include up to 5 new tractors if the dealer can find buyers for their 1-year old models. All equipment uses precision guidance systems. They plant with 2 John Deere 24 row planters and Deere planter tractors that are traded on 2-year intervals. Their sprayer and air seeder for drilling soybeans and wheat are also made by Deere. The Boyds like to work with multiple dealers, including 2 different Deere dealers and their Case IH dealer. This gives them better access in securing service, parts, and trades, and “helping keep multiple dealers in business is healthy for competition in the long-run,” says Tom. Land Arrangements With 5,000 acres rented, they rent an average of about 200 acres from each of their landlords. However, that varies considerably. Tom and Trent form special relationships with their landlords. Trent says, “Our landlords are just like family, and we always treat them that way.” A few

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of their landlords are non-farming land investors, so the Boyds help them find and buy land and work out long-term arrangements to farm that land. Trent adds, “We do a lot to help landowners improve their land. We will put in tile, take out fence rows, tear down abandoned buildings, and generally help add value to the properties. Often if the land owner will pay the basic costs, we will contribute the machinery and labor to finish the job in exchange for long-term leasing arrangements.” In this way both landlord and tenant share the costs of improvement, but can each receive long-term benefits as well. Their rental arrangements are mostly cash rent, with some share rental arrangements. Unfortunately, the new I-69 Extension from Evansville to Indianapolis is going right through their land. So, the family went through negotiations with the state of Indiana for about 200 acres that was affected by the planned route. They settled with the state in March of 2010, just before land prices began to shoot upward in the late summer and fall. As the old saying goes, timing is everything, and, when they tried to repurchase replacement land in their neighborhood, they were unable to do so. In the end they purchased replacement land that was about 20 miles away in the next county. Tom says, “Not only did we end up with our largest field cut diagonally by the highway, but also lost 200 acres in our back yard that is now many miles away.” Another interesting arrangement is growing 600-800 acres of earlage for a large dairy about 60 miles away. Earlage is the corn, corn cob, husks, and a small portion of the stalk they ensile in a bunker silo. As such, it is more valuable than corn

silage since it does not include the entire stalk. One advantage for the Boyds is that they harvest the earlage earlier than their regular field corn, which helps to spread out equipment and labor use. Second, they supply one truck load every other day to the dairy, and this helps to utilize one of the Boyds semis. The Boyds also custom plant 500 acres for this dairy. Relationships Are What Matter When asked the most important key to success, Tom quickly says “It’s the dedication of our employees.” While there are many keys to their successful business, relationships play a very special role. You see that in the way they think about their landlords as partners in the business of farming. It shows in the relationships with employees who bring their talents to the business, a number who have been dedicated to making the business succeed for 20, 30, or more years. But those close relationships also are in play with their lender, with their CPA, and with their technical advisors, including their seed advisor, their agronomist, and chemical representatives. Tom says, “It is a complex world. You cannot know all of the information yourself, but have to rely on individuals that have the knowledge. Then it is our task to manage that information to a successful end.” Tom and Marsha also place a high value on the most important relationships and that is within their family and their faith. Keys to Success 1. When God gives you good weather… “You have to GO!” 2. When God gives you good weather … “its 7am to Midnight, or more.” 3. Spot problems early. Don’t let anything you can control delay the corn planter.

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4. Reliable equipment gives you a competitive edge. 5. Be involved in your kid’s lives. Get the kids involved in the business. Make a place for them if they want to join the business. 6. You have to have DRIVE to be successful. 7. Never accept “Can’t Do It”….Push-Push-Push…Until it’s done. 8. Often you have to rely on your faith, but it is always important to have a banker that has “faith in you.” 9. In modern farming you almost have to get bigger to drive costs lower. 10. If you are good at business, income tax liability grows, and you better get bigger to manage the tax bite. 11. If you have diversified businesses you will almost always have one that makes money in any given year. 12. Relationships are what count. Form deep and genuine relationships with those who are important to you and those who are vital to your business. Community Relationships Their focus on relationship building extends to their community as well. In 1990 Tom was recognized as a Master Farmer of the Year by Indiana Prairie Farmer. Tom and Marsha are recipients of the Indiana's Friends Award from the Purdue University Cooperative Extension Service. Recently, the local Chamber of Commerce honored Tom with the Hagel Award for outstanding contributions to

“making Daviess County a better place to live.” They are strong supporters of Daviess County 4-H and are active members in the Antioch Christian Church. Tom and Marsha’s contributions and support of local schools, civic clubs, and churches are broadly acknowledged. The Boyds may be the number one fans of the Washington Hatchets, the sports nickname for Washington High School. And why not, since the Hatchets have won the Indiana State Boys High School Basketball Championship 7 times, the most recent being 2011. Tom has acknowledged this amazing record by painting a tribute on the side of one of his truck vans listing those championship years. For you Hoosier basketball fans, the years are 1930, 1941, and 1942 with a single state champion and 2005, 2008, 2010, and 2011 with class 3A state titles. A statement from the 1989 Purdue Farm Tour provides a nice summary about their farm. “Businesses like the Boyds’ don’t just happen, they result from a tremendous amount of hard work, planning, good management, and a willingness to take risk.” And, an overall tribute from their community, “The Boyds have a ‘can do’ attitude on their farm that carries over to their community. They feel this community has given them so much and are determined to give back to the community in equal measure. They help make Daviess County a great place to run a business and raise a family.”

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Carnahan & Sons

Change is a key feature of the Carnahan farm. In some cases the change can be easily observed, such as the addition or deletion of an enterprise, the purchase of an implement, or the tiling of a field. The lonely concrete stave silo standing close to the farmstead represents changes of this type. Other changes are not easily observed. Changes like production processes, crop nutrient prescriptions, or the type of business organization will go undetected, but still contribute to efficiency and the bottom line. Farm History The Carnahan farm was started by Ross and Dennis’ parents, Lowell and Ruth Carnahan, in 1937 with 200 rented acres and a dairy herd. The farm headquarters moved to the current location in 1958. Ross joined the business in 1961, farming in partnership with Lowell. The initial grain system construction was completed in 1973. In 1975, Dennis joined the business. In 1977, the business was reorganized as a corporation under the name of W. Lowell Carnahan & Sons, Inc. Tax savings were a strong motivation for the change in business organization. The farm steadily grew in size, primarily through land purchases rather than rental. Their largest land purchase, one million dollars, occurred in 1990. The debt from this purchase was retired in 2004. Storage and drying capacity underwent a major expansion in 1998. Willow Valley Farms, a partnership between Ross and Dennis, was created in 2000. Recently, planning has focused on getting John, the next generation, incorporated into the business. The farm corporation has also shifted from a “C” corporation to

a “sub-chapter S” corporation. It should also be mentioned that along the way Ross developed a successful quarter horse business. Production Today production is focused on corn and soybeans. The division between corn and soybeans is approximately 40% corn and 60% soybeans. They adopted no-till production in 1996. This helps minimize machinery investments and labor requirements. Dennis indicates that prior to adopting no-till they had a whole fleet of tractors. Today the 4,000 acre farm is operated with 4 tractors, 24-row corn planter, 40′ air-drill with 10″ row spacing, 2 combines, a sprayer, grain cart, disk, and field cultivator. There is also a back hoe and bush-hog. New technology developments are important in making a decision to replace machinery. The price of technology, the residual value of the trade-in item, and projected cash flows are also important in making a replacement decision. Changes to the wheat enterprise also illustrate the types of changes that occur on the farm. Historically, wheat has been a significant enterprise in the business. The farm is located in a region of the state where wheat and double-crop soybeans are routinely raised. Dennis indicates that in most years wheat + soybeans are often their best per-acre net income producer. Because of commodity prices, no wheat was planted in the fall of 2009, the first time in their memory. In fall 2010, the improved price prospects caused the Carnahans to return to the wheat enterprise with the planting of 400 acres. While this is fewer acres than usual for the

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Carnahans, they fully expect to add double-crop soybeans after mid-June wheat harvest. Genetically enhanced crops are used in production. Corn has several traits, and soybeans are Round-Up™ Ready. Ross indicates they are always experimenting with something. They are not the first to adopt a new idea or technology, but they are early adopters. They like to try new ideas to see how they perform and then move forward from there. They currently utilize auto-steer, swath control, and variable rate application of inputs in their production process. The first GPS receiver was used in the sprayer. They adopted AutoTrac™ steering in 2006, and it is now used in spraying, planting, fertilizer application, and harvest. Anhydrous ammonia and other fertilizers are applied using variable rate technology. Yield maps are not used in making decisions about application rates. Rather rates are adjusted by soil type and yield potential. When applying nitrogen, there are 5 to 6 different rates used. Dennis estimates that the technology package they are using for fertilizer application saves them about 12%. Fields are sampled every other year to monitor P, K, micro-nutrients, and pH. The Carnahans watch the pH closely. They indicate that the pH needs to be right so that other things work correctly. Prescription planting for soybeans was adopted in 2000. Part of this process includes variable rate seeding. For soybeans, the seeding rate is increased on the lower productivity soils and reduced on the higher productivity soils. They estimate they have a soybean seed savings of 8%-10%. Prescription planting for corn

was adopted in 2009. The corn seeding rate will vary about 3,000 kernels per acre. There is only a minimal cost savings in seed corn. Harvest typically starts with soybeans. Getting the soybeans harvested is a high priority. During harvest, two combines are used with a single auger wagon. Trucks are used to haul from fields to the bin site. When each load is delivered to the bin site, the field the load is from, test weight, moisture, time of day, and which truck was used is recorded. Marketing Ross is responsible for grain marketing. He got his start when one day his father told him that it was his job to market a bin of corn. Evidently he did alright because he has been doing it since that experience. The core of their market plan is built around 2 philosophies. The first is that they calculate their cost of production. While there is some variation in this number depending on yield, it provides them with more confidence when pricing the crop. Second, they don’t look back and think about what might have been. If they priced part of the crop and then the market moved higher, they don’t spend time second guessing themselves. They recognize that once the first contract is filled the next contract will provide a bigger profit. Grain produced in excess of the 220,000 bushels of on-farm storage capacity is sold for fall delivery. They use forward contracts to price this grain prior to harvest. When making pricing decisions, Ross uses his close relationships with people in the grain industry to increase his awareness of the possible price trend. For

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the Carnahans, these relationships serve as their marketing service. Inputs are obtained from local dealers. They view their input suppliers as trusted production consultants. The Carnahans strive to be fairly loyal customers and develop long-term relationships with dealers. They feel that the dealers have sought to provide them with sound production advice and keep them informed of changes in supply and prices. The timing of input purchase is based on the terms being offered for early purchase and early payment. Because of the good relationship with input suppliers, these items are delivered as they are needed, reducing the investment in on-farm storage. Human Resources Ross, Dennis, and John serve as the primary labor force for the business. In addition to each providing general labor for the business, each has his area of specialization. Ross serves as corporate president, manager of the corn enterprise, and grain marketer. Dennis is the secretary-treasurer of the corporation, bookkeeper and financial manager, and manager of the soybean enterprise. John is the manager of pesticide operations and fleet maintenance. Or as John describes it, “I get to spend a lot of time in the cab of a sprayer in the spring and summer and in the cab of a truck during the winter.” Pat, Dennis’ spouse, is a 25% owner of the business and CEO, (Chief Encouragement Officer). Dennis likes to know where things stand. As a result, they adopted their first computer for bookkeeping in 1984. Since then there have been several upgrades. They have been using yield monitors and

mapping since 2002 and Dennis has built numerous crop budgets using Excel©. They are able to get spring planting and spraying completed without hiring additional labor. In the fall, they hire additional part-time labor. To attract and retain these employees, they strive to provide a pleasant work environment and provide competitive compensation. The process of training employees is typically accomplished by having the new employee shadow a more experienced employee. It is recognized that some employees will require more direct supervision than others. The business operates with a decentralized management system built on trust. So for the more experienced employees, an agreement is reached setting a target for a result or goal and the details about how this goal is achieved is left to the individual. Coordination during the day is maintained using cell phones. With John’s joining the business in 2009, the Carnahans have begun the process of developing the next generation of management. Since John grew up on the farm, he had some familiarity with the business, but he has discovered there is a lot that he does not know. Part of his learning process involves giving John responsibility and decision-making authority for parts of the business. This is helping him to develop management skills in these areas. Just like other new employees, part of the education process is shadowing Ross and Dennis and asking lots of questions. As a part of developing their transition plan, the form of business organization was reviewed. The Carnahans explored several different alternatives with

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accountants and lawyers; many of these involved the use of multiple business entities. At this time, they have decided that simple is better and plan to continue to operate with only the corporation and partnership. Everyone recognizes the succession plan is critical to the future success of the business, so the development and performance of this plan will be carefully monitored. Management Philosophy One task every small business owner faces is defining success. While business profits and business growth are often important, in many cases these are not the items that define success but rather are a means for achieving success. This is the case with the Carnahans. From a family perspective, success is defined as allowing for the personal and professional growth of each person. Another aspect of success is providing for quality time together at work and in leisure. From a business perspective, success is having a growing business that adapts to the needs of the owners. The Carnahans have identified 6 keys to managing a successful business. These are: 1. Enjoy what you do. 2. Know your per unit cost of production. 3. Be optimistic. 4. Surround yourself with pleasant and talented people. 5. Acknowledge your dependence on the blessings of God. 6. Know your limitations and keep a “long view” of goals. Mission Statement With this view of success and keys to successful management, it is not surprising that the mission of Carnahan and Sons,

Inc. is “to maintain an adequate standard of living for each partner, to adopt advancements in technology, and to prepare for future opportunities.” Business Strengths The strengths of the business include the partners’ respect and trust in one another, the ownership of a significant farmland base, and the appropriate use of technology. As the Carnahans look to the future, they intend to build on these strengths using incremental growth. Adding John to the business has brought new energy and management skills to the business. They also think that they are well-positioned to add additional acres to the business when the appropriate opportunity arises. Given the uncertainty of the current business environment, threats to the business can arise. To make sure that business performance is meeting or exceeding the success standards the Carnahans have set, they monitor the per unit cost of production, year-end profitability, partners’ salaries, and the status of the transition plan. Future Plans The Carnahans plan to continue pursuing business growth using their strategy of incremental growth. They expect to remain focused on traditional Indiana commodities, but they are watching for diversification opportunities. Each member of the management team will pay attention to the details associated with their area of responsibility. Business planning will include being prepared for the unexpected. The management organization will continue to focus on helping members of the management team succeed and empowering them to make decisions while enjoying their work.

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Villwock Farms

Aside from the standard ups and downs in any given year generated by dynamic, competitive markets and policy impacts, the Villwocks have also endured the highs and lows of relocating their farmstead. In some respects, the opportunity to design a farmstead from scratch holds appeal, because new facilities with customized features can be very enticing. In other respects, there are non-monetary costs, such as a farmer having to leave the only ground he’s ever lived on and knows intimately acre by acre. In the case of Villwock Farms, the Villwock family knows both sides of losing the family farm to the threat of eminent domain. From Here to There Having just graduated from Purdue, Don returned home to farm with his father Carl and mother Virginia in 1972. For some farm families, this might have been an ideal situation. Carl’s experience with low commodity prices and yearly struggles to achieve financial success, however, left him wanting greater financial security for Don. Despite Carl’s off-farm career goals for Don, the two farmed “together but separate” for the next 12 years until Carl retired in 1984. Don and Joyce married in 1973, and their strategy in the early years was to farm rented ground because Carl was hesitant to co-sign for additional land purchases. In hindsight, Don credits his father’s cautionary approach with helping him dodge the 1980s farm crisis that forced so many farmers to default on land debts. After 100 years of farming the same ground and having achieved Hoosier Homestead Farm status (1907-2007), the Villwocks never considered they’d be forced to

relocate. But in 2006 Duke Energy entered into discussions with Don and Joyce to buy their farm, shop, grain system, and storage buildings. The public utility had eminent domain in acquiring land for a new power plant. The Villwocks began a crash course on what that involves and how to proceed. Discussions with Duke Energy took nearly 2 years, but by the same token, it took nearly as long for Don and Joyce to find their next farmstead location. Finally, they were able to purchase a new farm in 2007. Probably most distressed about moving the farmstead was 88-year-old Carl. To help offset the impending change, Carl worked to find small ways to see pieces of his farm endure. One such example was Carl’s donation of several trees from the farm for use in building the covered bridge at the State Fairgrounds in Indianapolis. Though the effort required jumping through several administrative hoops, Carl managed to see that his farmstead trees were used in the bridge construction. In addition, Don and Joyce chose to relocate theirs and Carl’s homes on the new farm site rather than build new ones. Today, the ground previously farmed by Carl and Don is the new site of Duke Energy’s Edwardsport, Indiana power plant. Standard Operating Procedure Day-to-day operations at Villwock Farms are managed by farm manager Jason Misiniec. Jason also markets grain for select landlords and oversees management of 3 full-time employees. They are Danny Abrams, Scott Williams, and Larry Schultz. Joyce Villwock handles the bookkeeping, and Don readily admits he’s more comfortable with overseeing management and strategizing about the big picture versus fixing machinery. While all decisions are

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made collaboratively, Don’s current role as Indiana Farm Bureau President doesn’t lend itself well to managing daily operations, even though Don takes his vacation to help plant and harvest. To this end, Jason, Don, and Joyce have found a system that capitalizes on their respective skills and business strengths. This recognition of complementary skills goes beyond a superficial level. One of the especially interesting management pieces at Villwock Farms is the fact that Don, Joyce, and Jason have all participated in the Meyers-Briggs Type Indicator (MBTI), which helps identify how individuals perceive their environment and subsequently make decisions. At the management level, all 3 agree that it has helped them improve their management styles and communication practices. Jason also said that, “together with previous farm management experience, it has helped me grow into a better manager of other workers.” Recognizing individual learning styles and tendencies means the management team can be more effective at communicating and implementing business practices. The Villwocks and the Misiniecs farm approximately 3,900 tillable acres. Some of this is rented jointly, some individually, and some is owned by each family. All of the farm ground can be found in one of four counties: Knox, Daviess, Greene, or Sullivan. Villwock Farms grows only value-added products, allowing them to capture a slightly higher margin over commodity crops. Specific crops grown include food grade white corn, seed beans, and seed wheat, and in the past they have grown popcorn. The trade-off to a slightly higher profit margin is the additional labor and time cost associated with value-added grains. First

example: white corn must be dried down in the field to 22% versus starting harvest at 28% and using their dryer, which means a delayed corn harvest. It also means choosing soybean variety maturity groups so bean harvest can get underway before corn. Second example: seed soybeans have to be very clean, requiring extra time and labor to sanitize bins, trucks, grain carts, and combines. This is critical to achieving maximum premiums and future contracts. Third example: there is no Round-up Ready® version of white corn available, so extra precautions are required with chemical usage and border isolation. Non GMO white corn commands a premium over BT white varieties, so strict identity preserved protocols need to be followed in the harvest, storage and handling process. Don says his end users play a critical role in their production practices. To assist with these types of production concerns, Villwock Farms also employs the services of a certified crop consultant, Gene Flaningam, who assists with soil testing, herbicide and fungicide application decisions, and scouting crops, among other tasks. In addition, Villwock Farms uses turkey litter as a soil nutrient, though this too involves additional equipment, more labor, and Flaningam’s advice. A separate grain storage facility is located near-by on 7 acres. Confronting a nearly $90,000 expense to install a three-phase electrical power supply at the farmstead site, Don and Joyce instead purchased a near-by 7-acre tract on which to build grain storage facilities, closer to a three-phase line. What initially appeared to be problematic has since been determined to have some benefits. One such perceived benefit of a separate location is the marketability of the

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assets as a stand-alone facility should Villwock Farms choose to sell at a future date. A second potential benefit is the ability to minimize truck traffic around Don and Joyce’s home in the future, if Villwock Farms is transferred to Jason as is currently planned. The grain storage site will also be the home of their proposed fuel, fertilizer, and chemical storage building. Much the way Don, Joyce, and Jason use a crop consultant for production feedback, they turn to other team members, including Purdue University experts and marketing consultants, to help with other management activities. Specifically, Purdue’s Grain Energy Audit Program, managed by Chad Martin, offers assessment and recommend-ations for tracking and minimizing energy usage by grain storage systems. Likewise, the management team leverages marketing know-how with help from AgriSource grain marketing consultants. Managing for Success When asked to identify key management practices that help make Villwock Farms successful, Don identified 4 principles that guide his and Joyce’s farm business. First, taking a team approach to better manage the farm business is tradition at Villwock Farms. The Villwocks have built a strong relationship over many years with their certified public accountant, David Frette, and rely on his advice when making major decisions. Their machinery dealers, lenders, and attorney also play key roles in evaluating business investments. And Don notes that he’s long turned to his fellow farmers and producer groups, Purdue University and Vincennes University, and the private sector for assistance. Don and Joyce switched to no-till over 20 years ago, following discussions with other farmers who had successfully transitioned. Likewise, the new shop and grain storage system were

based on feedback from others offering advice on the pros and cons of alternative designs. Ripco, Ltd., a grain design/build firm, played a key role in designing the grain system. Second, Don believes there are 3 critical economic principles driving commodity production. Those principles include: (1) selling at a higher market price, which speaks to Villwock Farms’ production of value-added grain products, (2) being a low-cost supplier, some of which they have achieved through adoption of no-till methods, and (3) increasing yields, which is more likely given their team approach involving a certified crop consultant and Jason’s relentless quest for higher yields. Third, Don notes that the management strategy is the same regardless of grain price levels. That is, Villwock Farms is focused on margin management, centering on the input-output cost relationship rather than the per bushel price received from their buyers. Fourth, Don operates on the principle that one should “do the best you can at what you’re doing and people will notice” —a strategy he thinks has helped attract landlord attention. The Villwocks and Misiniecs have contracts for 16 rental farms, and these landlords all play a critical role in their success. Don, Joyce, and Jason acknowledge that almost all of the ground they farm for others has come at the landlord’s invitation. They try to keep a positive outlook if rental ground is lost for some reason, believing that “another and often better opportunity will come along.” Looking Ahead In looking ahead, the Villwocks are hopeful they can successfully manage a non-family transfer to Jason and Heather, along with their children, Jacob and Lexie. Several

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factors motivate the transfer plan, including an interest in keeping the farm in operation and the positive working relationship among Don, Joyce, and Jason. In addition, Don and Joyce’s married daughters Sarah and Betsy are as yet undecided about their involvement in the farm operation. The potential transfer would include purchase of all farm assets except for the farm ground, which would be rented to Jason. The Villwock-Misiniec combination is somewhat the result of Jason’s ambition and motivation. When Don first ran for President of Indiana Farm Bureau, Jason knocked on their door and asked if the Villwocks would need managerial help if Don was successful in the election. His timing was perfect in that Don would be increasingly pulled away from the operations side of the business and Jason brought day to day management and production experience to the table, having worked with other farm operations previously. Since then, the 3 have found the mix of skills and personalities a good fit. The presence of complementary skills and interests (e.g., Don’s preference for spreadsheets, Joyce’s interest in bookkeeping detail, and Jason’s preference for hands-on production) means Villwock Farms is leveraging their management know-how. Don also notes that the non-family dynamic has resulted in better communication among the 3 than is often

experienced with close family members. More specifically, Don believes that farm management discussions now are about the business and the business alone. Absent are the personal nuances that sometimes inadvertently influence family business decisions. Since Jason’s beginning with Villwock Farms, Don and Joyce have worked to include him on newly acquired rental agreements and to facilitate Jason and Heather’s purchase of their own farm ground. While the additional ground adds to the workload, it also helps the Misiniecs build equity. Ultimately, Don and Joyce are looking to help make the Misiniecs as financially healthy as possible to facilitate the transition. The transfer process, as with the other aspects of the operation, will draw on a team of advisors to ensure risks are minimized and errors are avoided. In the end, Villwock Farms appears to have transitioned from one farmstead location to another rather smoothly. Some of this transition success might be attributed to the team approach that draws on outside expertise, their commitment to running their farm business as a business first, and their confidence in the management team. Based on the team’s management philosophies, one would guess a business transfer will be equally as successful.

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Acknowledgements

Purdue University’s Department of Agricultural Economics organizes the annual Indiana Farm Management Tour in cooperation with the Indiana Farm Management Association and Purdue Extension. The tour visits farms and agribusinesses 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 businesses visited during the Indiana Farm Management Tour in 2011. The tour organizers sincerely appreciate the willingness of the host business owners to share what they have learned about managing their businesses. The organizers also appreciate the sponsoring agencies and companies whose donations of money and goods make it possible to conduct the tour without charging tour participants a large registration fee. As you visit the sponsors listed on the facing page, please thank them. The organizers also thank the many individuals who give of their time to help make the tour as enjoyable, safe, and informative as possible for tour participants, including the outstanding Extension Educators and Specialists who work the tour. For information on future tour dates, please visit <http://www.agecon.purdue.edu/extension/programs/farm_tour.asp>.

Tour Director & Profiles Editor

Alan Miller

Tour Organizer

Angela Gloy

Host Extension Educators & Local Arrangements Directors

Sarah Gaughan Scott Monroe

Publication Design, Editing, & Production

Laura Hoelscher Russ Merzdorf Marsha Slopsema

Farm Visit Coordination & Farm Family Interview

Del Unger Farms Melon Acres

T. S. Boyd Grain Carnahan & Sons Villwock Farms

Bruce Erickson Dan Egel Chris Hurt

Craig Dobbins James Mintert

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2011 Indiana Farm Management Tour Sponsors

Beck’s Hybrids

Ceres Solutions

Citizens N ational Bank of Paris, IL

Cornelius Manufacturing, Inc.

Farm Credit Services of Mid-America

First Financial Bank

Indiana Farm Bureau

Indiana Farm Management Association

We sincerely appreciate their support!

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Purdue extensionCES-370

Purdue Agriculture

2011 Indiana Farm Management Profiles2011 Indiana Farm Management Profiles

Sullivan, Knox, and Daviess Counties

Melon Acres5388 E. Gauger Rd.Oaktown, IN 47561

Unger Farms6610 S. County Rd. 350 W. Carlisle, IN 47838

Carnahan & Sons9809 E. Wheatland Rd.Vincennes, IN 47591

Villwock Farms 11600 N. Freelandville Rd. Edwardsport, IN 47528

Wednesday, June 29, 2011

Tuesday, June 28, 2011

T.S. Boyd Grain1957 E. 200 N.Washington, IN 47501

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Indiana Prairie FarmerMaster Farmer BanquetSouthwest Purdue Ag Center4259 N. Purdue Rd.Vincennes, IN 47591

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41150

58

15050

55067

6758

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Sullivan CountyKnox County

Davie

ss C

ount

y

Knox

Cou

nty

Carlisle

Vincennes

Washington

Bicknell

Edwardsport

Oaktown

Freelandville

CR 20

0 E

CR 200 N

CR 35

0 W

E. Gauger Road

Freelandville Road

Wheatland Road

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3

45

6

N. Purdue Road

57

Shipping Street

CR 35

0 E

Carnahan & Sons ▲

Del Unger Farms ▲

Villwock Farms ▲

T.S. Boyd Grain ▲

Melon Acres ▲