Future Proof

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Partners & Friends,

I just finished reading The Future Proof Farm by Steve Groff, and it stimulated many thoughts. The book in itself is a good read about regenerative agriculture. But it also generated thoughts about what we are doing at Hess Family Farm to secure our future with the production and financial/marketing aspects of what we do. In no specific order, here are some of the larger points:

  • Cover cropping for soil health, erosion control, and nutrient availability 

  • Strip-tilling for soil health and labor/equipment savings

  • Applying variable rate fertilizer to deliver nutrients specifically where they are needed

  • Utilizing financial management tools to track and analyze specific costs and income

  • Tiling every acre possible 

  • Placing high value on quality labor—both full- and part-time

  • Cultivating strong lender relationships

  • Locking in long-term low-interest loans

  • Hiring crop consultants to give us the capacity we do not have

  • Securing low-hour equipment with the latest technology 

  • Ensuring each crop is planted to provide the most potential for best yield

  • Having a written marketing plan

These days are filled with equipment and building maintenance, soybean and corn delivery, office tasks, final input purchasing, and attending live and online production and marketing meetings. Green energy is a hot topic on our farm as we analyze offers from wind and solar firms and stay abreast on the daily changes to CO2 pipeline proposals. 

A national energy policy is sorely lacking nationally and globally. Since 70% of everything we do involves energy, this leaves us vulnerable to whatever political winds blow the strongest. What is the long-term play for ethanol? Brazil's soybean harvest is coming on strong and looks to be the best and biggest yet. China's population decline is finally gaining attention…there goes a lot of long-term export demand.🙁 The remaking of global supply chains will change world economics far into the future. Food inflation is here to stay (for a while, anyway), but that does not mean the farmers are raking in more dough—check out this short video (or view the script here) from our friend, John Phipps.

Ali starts her last quarter at UChicago shortly. Goat showing season begins next month in our neck of the woods. Basketball season for our grandson, Walker, is almost over. Lindsay is due April 17th. Phyllis and I are enjoying our annual getaway to Riverview, Florida.

Fall Prices:

Corn—5.76

Soybeans—13.65

All questions and comments are welcome,

Steve 

Business and Birthdays

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Partners & Friends,

Last week, Marcus, Phyllis, and I attended the AgView Executive Business Conference in St Pete, Florida. We find it a good strategy to step outside the business, get some external perspectives, review, and plan personal and business goals. There were several speakers who challenged our future personal and business plans. We met some great people at the conference as well.

For full transparency, here are some of the notes and bullets we brought home: 

  • We need to keep better track of our corn and bean break-evens as the year progresses and see different yield scenarios play out 

  • We need to shock test our balance sheets with different black swan scenarios in order to see how our financials react, and how we then should adjust our business to compensate

  • We should take a 2-hour break from technology every day to reduce stress and help maintain our personal perspectives

  • The most important pieces of equipment on the farm are our bodies—we must do our best to maintain physical and mental health

  • Nobody knows where commodity markets are headed

  • Success is measured in money and capital, while significance is measured by what you give back

  • $8 of every $10 we spend in agriculture is related to energy

  • We cannot flip a switch to convert to green energy, it is going to take much time, technology, and funding

  • Cost of labor is not coming back down

  • Soy diesel is the new green fuel star

  • What is DALL.E.2?

  • Life is short—family comes first. Your legacy are the memories you want to leave

The Hess Family Farm team is busy shipping grain, crunching input numbers, ordering chemicals, working on life goals, and relaxing. After stepping back and gathering all this new information, we now need to be diligent about setting new goals, and then find accountability to ensure we actually implement them.  

Brazil is harvesting beans. It appears there is a large crop and an abundance of acres to harvest. There will also be another 3-4% more acreage next year. Brazil surpassed the US in soybean production about 8 years ago, and now their production and exports are more significant than ours. Interest rates, at these levels, have changed several global economic plays. Current rates are far more historically normal, and we must take interest and energy prices into account throughout all of our planning.

January is birthday season, so there are cards to send and celebrations to participate in. We celebrated Marcus and Phyllis' birthdays on January 25th while still in St. Pete. There is nothing miniscule about the wonder and significance of creation and life!

Fall Prices:

Corn—5.66

Soybeans—13.45

Steve

Legacy

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Partners & Friends,

As I believe most are aware, my parents, Charles and Wilma, passed away on January 7th and 8th (respectively), a day and half apart. This is just as they would have wanted it—still together after 69 years of marriage. The outpouring of condolences has been so uplifting, and we are overwhelmed by the memories shared and lives they touched. It has truly brought to mind how careful we must be in our everyday lives regarding what and how we share with others; we never know what the takeaway will be for those we interact with. I am so thankful for the positive impact Charles and Wilma left on their earthly journey. They will be long remembered by family and friends. We are planning a celebration of life on July 15th—more details to come.

The Hess Family Farm team is keeping busy this winter with plenty of off-season projects. We’ve gotten some good days in with the tile plow—that task will be in the wings for several years as we continue to improve the fields. We are shipping corn to TriOak feed mill to take advantage of the strong basis. Next week, we will also deliver one of the soybean seed varieties we raised this year—there will be many trips to El Paso involved with that. It is the season of meetings as well. The Precision Planting meeting is this week to announce new products and past season agronomic data. And as a cherry on top, tax preparation season is upon us, with plenty of accounting details to attend to.🙃 

On a global standpoint, things seem very unsettled. The varying weather from cold, to warm, and back again equals energy price volatility. Congress, with its latest members, is preparing to address a new farm bill this year. Ukraine and Russia continue to trade blows and threaten grain exports. On a local standpoint, there is still adamant opposition to CO2 pipelines. La Nina seems to be fading from the weather influence.

School for our grandchildren is back in full motion. Ali is preparing for her last quarter at UChicago. More goat shows are coming up quickly.

Fall Prices:

Corn—5.77

Soybeans—13.39

Let us know what your thoughts, questions, or any other comments are.🙂

Steve

What We Do Right

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Partners & Friends,

This is the time of year where we reflect on what choices we made are paying off. Not everything we do gives us the returns we expect; we will share some of that later. But first, here are some of the main takeaways from 2022 that helped deliver the successful year it turned out to be:

  • Early Planting—we strive to take planters to the field as early as April 4th, as field conditions are fit (soil conditions almost always trump weather forecast)

  • Multiple Nitrogen Applications—with the high cost and low availability of our main fertilizer (nitrogen), efficiency and timeliness of application are huge cost savers and allow us to be more environmentally friendly

  • Crop Consultant—we cannot do everything, and seeking help in areas we are weakest in or lack time for is often necessary

  • Lender Relationship—it is vital to have a strong relationship with our lender to be nimble and take advantage of opportunities presented

  • Flex Rents—the sharing of risk with an open upside to benefit from price strength and good yields is beneficial for landowners and tenants

  • Equipment Capacity—we must be able to get crop planted, tended to, and harvested in weather windows, hence the upgrading of our planters, sprayer, combine, and trucks

  • Technology—we are constantly upgrading and adopting new technology to deal with one of our greatest challenges, labor

  • Work Hard, Play Hard—time away with family is refreshing, rejuvenating, and provides better perspective on who we are and what we do

The Hess Family Farm team is busy selecting and purchasing inputs (seed, chemicals, fertilizer, and equipment) for this next crop year. Higher interest rates are adding a new dimension to this and other marketing decisions. Energy is still one of the biggest uncontrollable factors we deal with. The world economy is slowing, which will affect demand for our commodities. I recently heard that chip manufacturing is now in a surplus! It is funny and ironic how we overcompensate to find new balance.🤔 The crop in South America is looking to be a big one. The fluctuating dollar is just another item for us to monitor in regard to marketing decisions.

Our family is doing well. Grandchild #13 is due in April! We all had an opportunity to gather for a Christmas reunion this past week in Monmouth, IL. A visit to sing carols to Oma and Opa was made and enjoyed. We survived the extreme cold and have all waterers operational again. The multitude of animals, even new babies, made it through the cold quite well also.

 Fall Prices:

Corn—5.86

Soybean—13.92

Keep in touch,

Steve

Relationships

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Partners & Friends,

We are wrapping up 2022 and spending time counting our blessings of family, friends, business partners, neighbors, and team members. Hoping you are all doing the same. We had our annual meeting with our crop consultant to review and reflect over what we’ve learned the past year—hopefully more on that soon. The recent weather has been causing some extra chores and challenges.

May you all have a blessed and rewarding Christmas holiday involving much time for deepening relationships. That was a big part of the message of the birth we celebrate this season.

We appreciate all of you and look forward to a bright and glorious 2023! Enjoy and celebrate the love and blessings we have.

Steve