1

Agriculture in the 21st Century

KFSA First Annual Technology Conference. July 21-22, 2008 in Hutchinson, Kansas

Dietrich KastensKastens Inc. FarmsHerndon, Kansas

www.kastensinc.com

I farm with my father and uncle in northwest Kansas. We operate 14,000 acres of farm ground (160 fields) in Rawlins and Cheyenne Counties, Kansas and in Hitchcock County, Nebraska. We are 100% notill and grow wheat, corn and grain sorghum.

2

I was at Kansas University from 1989 – 2001MA in Geography (focus on GIS, GPS and Remote Sensing)Worked at The Kansas Applied Remote Sensing Program

Exposure to lots of “new” and old technologyGPS/GIS systemsWindows, Unix, Linux, MacOSNetworkingRemote sensing

Worked with different groupsNASA, the USDA, the U.S. Army and EPA

That list sounds impressive, but back then the main activity wasmundane data entry, either through manual digitizing of paper maps or simply key-stroking. Spatial databases just did not exist yet.

I moved back to the farm in 2001 and things have really changed in the past eight years.

3

Technology on the farm

• Spreadsheets, spreadsheets, spreadsheets

• Every decision is made using a spreadsheet– Custom sheets from KSU (www.agmanager.info) and others– Custom sheets written in-house

• Spreadsheet Activities– Farm planning / logs / documentation– Evaluating crop insurance– Evaluating fertilizer application rates– Buying land and equipment (get back to ROA/ROE, $/ac)– On-farm research– Building systems (like fertilizer systems)– Evaluating new technology (how much can we spend on

something?)

4

System 1 System 1 System 2Product 1 (10-34-0) Product 2 (32-0-0) Starter (10-34-0)Hypro D70 (pump disp 0.0345) Hypro D115 (pump disp 0.054727272) Unknown SystemPercent of Total Product 25% Percent of Total Product 75% speed (mph) 4.8Speed (mph) 4.8 Speed (mph) 4.8 Row spacing (in) 30Row spacing (in) 30 Row spacing (in) 30 number of rows 24number of rows 24 number of rows 24 Total Rate (gpa) 5Total Desired Rate (gpa) 30 Total Desired Rate (gpa) 30Product lbs/gal 11.7 Product lbs/gal 11.1

StarterTotal Rate Prod 1 (gpa) 2.5 1 Total Rate Prod 2 (gpa) 22.5 Total Rate Prod 2 (gpa) 5Total Rate Prod 1 (gpm) 1.45 Total Rate Prod 2 (gpm) 13.09 Total Rate Prod 2 (gpm) 2.91Total lbs/ac N 2.93 Total lbs/ac N 79.92 Total lbs/ac N 5.85Total lbs/ac P205 9.95 Total lbs/ac P205 0.00 Total lbs/ac P205 19.89

motor disp 4.9 motor disp 4.9pump disp 0.03 pump disp 0.05M2P Ratio 1 M2P Ratio 1Flow Divide (#) 1 Flow Divide (#) 1Planter width (ft) 60 Planter width (ft) 60Rows acre/in 83.48 Rows acre/in 83.48Total Flow (gpm) 1.45 Total Flow (gpm) 13.09Flow per row (gpm) 0.06 Flow per row (gpm) 0.55Flow per divide (gpm) 1.45 Flow per divide (gpm) 13.09Hyd motor rpm 55.9 OK Hyd motor rpm 239.2 OKHyd motor Oil (gpm) 1.19 Hyd motor Oil (gpm) 5.07

System 1 Totals Whole System Product totals System 2 TotalsTotal Fertilizer delivered (gpm) 14.55 Total N (lbs/ac) 88.70 Total Fertilizer delivered (gpm) 2.91Total Fertilizer per row (gpm) 0.61 Total P205 (lbs/ac) 29.84 Total Fertilizer per row (gpm) 0.12Total Tractor oil required (gpm) 6.26 25% Total Tractor oil required (gpm) -

•Geographic Information Systems (GIS)

•MapInfo

•Used for data preparation, research and custom procedures

•Mapshots Easi-Suite

•Used for data archive, processing, storage and transfer

•Various other software for more specific tasks

•Global Position System (GPS)

•John Deere Starfire receivers w/ SFII corrections (<10”accuracy)

•Trimble, Garmin, other units for scouting and other activities

5

• Started yield mapping in 1998

• Started grid soil sampling in 2000 (abandoned in 2005)

• Started messing around with VRA fertilizer in 2002

• Auto steer in tractor in 2003, sprayer in 2004

• Section control in sprayer 2006, on planter/fertilizer rig in 2008

• GIS farm management in 1999

• On-farm research in 2003

• Tested all sorts of technology over the years– Remote sensing, greenseeker, Veris EC, etc

Auto-trac, VRA seeding, row-pair shut-off driven by GS2 2600 console

Two-Product VRA fertilizer with section control (5) driven by AgLeader Insight console.

VRA maps were generated in the office and exported to the consoles.

All data were then imported from the consoles into Easi-Suite where it will be stored and organized. Harvest data will also be appended in and then the whole field datasets will be exported to MapInfo where data analyses will take place after harvest. Everything will then be plugged back into Excel sheets where further analyses will be applied and ultimately decisions made.

2008 Planter –Bringing it all together

6

Why is any of this important?

7

• Our farm doesn’t look a lot different than other farms in western Kansas.

• Farms are getting bigger across the country and are becoming “big business” for those involved. As such, they are being run like businesses rather than traditional “one checkbook” farms.

• Technology, competition, high input costs, high machinery and land costs as well as high commodity prices are driving producers (on the whole) to get bigger, manage tighter and in general run with more efficiency (and more profits).

• This trend might slow down in the short run, but will acceleratequickly over the next decade.

Modern AgricultureKeys to Success

In our strategic planning we see three primary items that will make or break big modern farms.

• Communication• Partnerships• People

8

Communication• Computers, cell phones, the internet and email are fast

becoming important tools to producers.

• Modern complexity in agriculture makes communication play a more significant role in operations– Among partners, employees– Between business personal and customers– Information sharing (websites, newsletters, publications)

• Who are your customers and how do they communicate?– Agriculture production is becoming highly polarized between large

operations and very small operations. How will you cater to both? Should you cater to both?

EmailTo me this is the most important communication tool we have

today.– At some point (for us) we will not work with service/input

providers that don’t do email. Why?

1. Email is a more efficient communication medium• Emails can be written, read and replied to on the terms of those

involved.

• Data are more easily shared (like maps, locations, field names, etc) eliminating unnecessary phone calls and/or trips to town and wasted time looking through paper maps.

• Emails are immune to lunch breaks, time zone differences, holidays, etc.

9

Email2. More precise communication

• A more concise and precise document. Fewer missing “pieces of the puzzle”, less redundancy than spoken language

• Documentation! Emails provide a way to document exactly what was agreed to thus minimizing misunderstandings that often occur using the phone and that often require more calls. With email you can list to the provider what fields need to be sprayed, their legal's and other important information (like roundup ready crops). A lot less confusion is the result. Discrepancies overagreed to terms or prices can be quickly resolved by going back through emails to see what occurred. Can’t do this with a phone.

Email3. More effective communication

• For troubleshooting, I can send the same email to 5 or 50 peoplethat I think might be able to help me with a specific need. We are no longer tied to hours on the phone or only local expertiseto get problems solved.

• 90% of all purchase activities can be handled through email. There are still some things that have to be handled person to person or via phone call, but most “leg work” can be done without infringing on peoples time.

Does this mean we should give up phones and person to person…No Way! But the time we spend on the phone now can be more productive in terms of planning, sharing information, etc rather than bogged down with day to day types of stuff.

10

Internet, specifically the web• Talk forums for trouble-shooting problems or discussing management

issues– It is critical for us to be open and sharing with our operation with other operators

and providers as it is essential to bounce ideas, problems, philosophies, etc off others. As part of human nature, when you work by yourself you can convince yourself of anything (good or bad).

• Weather, markets, news, pivot monitoring• Business websites

– A website is like a permanent, cheap form of advertising that should “show” why someone should choose your business. This should also be an information center.

• What’s missing (from my perspective)– Input prices. I want to know the spot and contract prices for products (by unit or

volume). I want to know availability, quality. I don’t just want the KCBT wheat price, I want to know the basis for the elevator we’ll be working with. I want to see more information like research (University and local) and products folks are selling. More tie in to our operation.

PartnershipsOur short and long run goals are to develop partnerships with the

providers of goods/services to our farm. This is quite opposite the traditional antagonistic “buyer/seller” relationship.

– We have less interest in getting the lowest price than we do in getting a fair price and excellent service.

– We openly share information with our providers and they with us.This way everyone knows what is going on and can make comments/suggestions as to how to improve each operation.

– The goals are for EVERYONE to make money, for everyone to be happy and enjoy what they are doing and for everyone to run moreefficiently (which leads to more profits through lower costs).

11

Partnerships– Having good working partnerships is so much more fun (and

involves far less time-consuming haggling) and in general is far more profitable for everyone involved. Over time, we come to think of our input/service providers as extensions of our farm, not a lot different from our landlords. Trust is the key to a good partnership.

– As farms continue to expand it becomes possible to bring more things “in house” such as grain handling, fertilizer/chemical handling, etc. Realizing of course that our specialty is producing crops, one would hope that there are groups that are far better at the multitude of tasks that surround the producer. Our goal is to find these people and work with them. If they can’t be found, we’ll build it ourselves.

People– I would guess that everyone in this room has the same

problem we have regarding employees

– Having the right person in the right place at the right time.

– In our area, there is a tremendous demand (and low supply) of highly skilled laborers and consequently salaries for these folks are some of the highest of all jobs out here.

– Farming is no longer a “strong back” job– We need tractor drivers, mechanics, and agronomists but

the most important trait is being self-motivated. We need folks with computer, analytical, sales and public relations skills.

12

People– We as farmers have to get in line with other businesses in terms of

salary levels, benefits, perks, etc., or we won’t be able to get these folks in house or keep them for the long run. This is a big challenge for all producers as we (as an industry) are not used to paying the for the specialized skills that agriculture is currently demanding.

– Traditionally on a farm everyone had to wear every “hat” at some point. This is changing as needed skills become specialized to the point that profits will suffer if you expect folks to know too much about everything.

– At this point, we just want to find good people and then after assessing their likes/dislikes and their skills we will then mold their position around their strengths. Forcing people to work outside of their comfort level leads to unhappy employees which ultimately leads to less profits because they most likely are less efficient with their tasks.

People– This is obviously a fine edge as there are times when folks do have

to work out of their comfort zone (and this is healthy) but if pushed too hard at best you will lose the employee and at worst you will have an accident on the farm.

– Some rules– Someone that knows how to use a word processor and is comfortable

with a computer does not mean that person is automatically ready to be your next IT person.

– Someone not good with math should not be the one determining sprayer loads

– The person that can’t balance their checkbook should not be entrusted with the company books.

– Folks are “what they are” and it’s the employers job to use them in a fashion that capitalizes on their skills and experience.

13

What are your challenges?– I’ve laid out the challenges we face at the producer level and what

“plan” we feel has the highest probability of success.

– What challenges do you guys see that differ from ours?

– I know there are a lot of COOP folks here. How difficult will “change” be to make with a membership that continues to polarize (big farmers and little farmers)?

– Does any of this alarm any of you? Does it make sense? Is this just a bunch of crazy talk from some guy with rose colored glasses on?

– Do folks agree or disagree that the relationship between producer and input/service providers will be evolving over the next decade.