Adaptation & Strong Relationships: A Conversation with Ben Brown, AgCast 205

Audio Transcript

Chad Fiechter: This is the conversation series, and Ben Brown is here speaking at the Top Farmer Conference. I have invited because Todd’s on a boat somewhere, Avery Pound and Jonah Armstrong, who are master’s students in ag econ at Purdue, to be a part of this conversation because they’re really good question askers. So Ben, you were just mentioning like your background and I think that might be kind of a cool place to start. So can you repeat some of what you just said?

Ben Brown: Sure, yeah, absolutely. So I grew up on a family farm in West Central Missouri, about an hour and a half south of Kansas City. We had row crops and cattle, went through 4H and FFA. Undergraduate education in agriculture economics and agronomy at K State. Grad school at the University of Missouri. Worked for a period of time at Ohio State University. They always said, they could tell I wasn’t from Ohio ’cause I never said

Chad Fiechter: How, how long was that? How long was the Ohio State?

Ben Brown: Almost four years.

Chad Fiechter: Four years. Okay.

Ben Brown: Almost four years. Which is crazy. But, yeah, I was there and then had the opportunity to go back to Missouri, my home state, serve as our state extension specialist for row crop economics at Missouri and work with FAPRI on row crop policy and kind of forecasting work.

[00:01:08] Cotton Acres Moving to Corn
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Chad Fiechter: So you just gave a really compelling outlook talk, related to crops. and I think Jonah might have the first sort of burning question as our resident southern member.

Ben Brown: You gonna ask me about cotton.

Jonah Armstrong: My farm at home, we grew cotton in the mid nineties. And then it was such a pain and it made everybody hate each other. So we stopped growing it in the early 2000s.

Chad Fiechter: Okay. Wait a second. For those of us who aren’t familiar with, growing cotton.

Jonah Armstrong: Yes. Yes.

Chad Fiechter: Can you tell us why? Is this like our loading pigs? Is this the Midwestern loading pigs?

Jonah Armstrong: Well, well, I, I’ve only, I have not loaded that many pigs, so I don’t feel

Chad Fiechter: Like it’s basically the opportunity to hate your family members.

Jonah Armstrong: Pretty much. Yeah. Well, it’s ’cause you have to spray it or you had to spray it

Ben Brown: 14 times a year.

Jonah Armstrong: 14 times a year.

Chad Fiechter: Like that’s a, that’s not an exaggeration.

Ben Brown: No. 14.

Jonah Armstrong: Yeah, legitimately.

Chad Fiechter: Oh, okay.

Jonah Armstrong: Like you had to spray it like at least once a week, if not twice every week over the summer. So it was just a lot of work to get over all the acres and pe you know, people want to go to the beach, which is what you do where I’m from, by the coast. Everybody wants to go to the beach over the summer. And it was just, it was just not a good time. But we started growing it again when the prices went way up.

Ben Brown: Three years ago.

Jonah Armstrong: Yeah. Three years ago. We grew it two years, and then last year we were going through some of the budgeting stuff and the best budget that any of us, me or my dad and some of the local input provider people, the best budget we could come up with was like losing 250 bucks an acre on it. So we’re just like, we just

Chad Fiechter: Whoa

Jonah Armstrong: said, Hey, you know, we’re good. We don’t need to grow cotton. Is it ever coming back? Are people only buying polyester t-shirts? Like what is, what do you think is the outlook there?

Ben Brown: Yeah, so I should preface my answer here with, I’m a Midwest wheat guy, so I grew up in the western part of Missouri where we have corn, soybeans, and wheat. Used to have grain sorghum. So I would actually associate to the conversation about loading pigs.Cotton kind of reminds you a little bit of grain sorghum.So the question around cotton is, is a very interesting one because the demand for cotton, is both the conversation around oil, if oil prices get real cheap, polyester becomes cheap. And that that competes against, you know, natural fibers, wool, cotton, what have you, right? So there’s this conversation around cheap oil prices, which is what we’ve got, right? Relatively cheap oil prices right now, both in the US and the global market. That increases the competition for polyester.

The second part here is global economic activity, and we’ve seen global economic activity really slow down. Here in the United States has been a little bit more stable. But the global GDP has really slowed. Both of those factors, high competition from synthetic products and less buying power by international buyers has really kind of been a dog for, for, for cotton. So that’s what’s caused this. Now the question becomes, you know, where do we go from here? Right?

Jonah Armstrong: Yeah.

Ben Brown: And, and I think in the short run, the way we get out of this is acreage abandonment. You know, right now, the most profitable outcome for a lot of cotton producers is not to harvest cotton.

Jonah Armstrong: Yeah.

Ben Brown: Is, is to plant it to, to let it grow and then just not harvest it, right. And this is a little different from us in the Midwest where we have corn and soybean production. Our harvest costs are relatively small compared to cotton.

Jonah Armstrong: Yeah.

Ben Brown: And so the price really has to drop, or you have to have a really, really low yield not to harvest corn and soybeans. Like very low yield. That’s not necessarily true in cotton where you have relatively large harvest costs. And so if you’re getting to the end of the season and you’ve got a decent crop, you’re kind of hoping for a hailstorm, right? You’re hoping that a hailstorm comes and wipes out that cotton crop because of the large harvest cost.

And so I think our acreage abandonments, what gets us out of this in the short run. We reduced acreage this last year for cotton substantially. I think we need to keep it there for a short run period of time. In the long run aspect when it comes to cotton, we’re gonna have to see some consumer dynamic changes around natural fibers and an attitude shift away from synthetics, workout clothes to more natural fibers. And I think there is a consumer argument to be made there. The cotton and the natural fiber industries are trying very hard to make that argument. And I think they’re making some headways, but we have more work to go.

Chad Fiechter: What I heard is that Lululemon is killing the cotton farmers.

Ben Brown: There’s, I, I’m not gonna signal out Lululemon ’cause who knows, maybe they have my home address. I don’t know. But I would just simply say that yes, that representative brand, right?

Chad Fiechter: Yeah.

Ben Brown: Like people have, have just gotten to where they like workout clothes, that are made from synthetic fibers because they’re, you know, easier to breathe and we see more blends to your comment than what we’ve historically seen. And, you know, not to signal out any celebrities, but, sometimes the cotton industry hires celebrities to promote their product and they do for the photo shoot.

Jonah Armstrong: Right.

Ben Brown: And then the very next week you see them out in public wearing synthetic products, right?

Chad Fiechter: Yeah.

Ben Brown: And so that’s, that’s, that’s been a challenge.

Chad Fiechter: I did not know the degree to which harvest costs were so much higher for cotton.

Ben Brown: They are.

Chad Fiechter: That’s fascinating.

Jonah Armstrong: What would you think an acre, what is your,

Chad Fiechter: I’d have to go back and look, but I think a realistic estimate is probably three times more than corn and soybeans. Wow.

Ben Brown: We’re probably 200, 220, something like that for some of your basic harvest costs.

Chad Fiechter: Then you potential have a price that would be low enough, you wouldn’t recoup your harvest costs.

Ben Brown: Correct. Yeah.

Chad Fiechter: That’s fascinating.

Ben Brown: Yeah. I mean it, the harvest costs are just so much larger relative to corn and soybeans, and so that’s why we see quite a bit of acreage abandonment. Even in potentially years where the yield’s not bad, it’s just the price has gotten low, maybe enough to where it becomes part of this decision around variable cost. And just the marginal cost of harvesting that product.

Chad Fiechter: That’s like undergraduate entry level microeconomics. We should be using that as an example.

Ben Brown: Yeah. Cotton’s really fascinating. I’m a Midwest guy. And so I’ve learned a lot about cotton and rice and peanuts, now canola, ’cause those are very southern crops. And I’ve learned quite a bit about ’em. Still learning. Always learning. I did know about the spraying.

Jonah Armstrong: Yeah.

Ben Brown: So, thrips is the bug. Right? And there’s no control for that.

Jonah Armstrong: No.

Ben Brown: And so you, you spray all my, all my friends that have cotton, you know, all summer, all I get is Snapchat of them on a sprayer. So yeah.

Avery Pound: But then the growth regulators as growth.

Ben Brown: Growth regulators.

Jonah Armstrong: Regulators as well.

Ben Brown: And since it’s a crop that never stops growing, you gotta spray it and kill it at the end of the season as well.

Avery Pound: Right. That’s something interesting I learned that I didn’t know until maybe last year, is that cotton’s technically a perennial crop. And that’s why they shred it at the end of every year after they harvest it.

Ben Brown: Yeah. It’s basically a tree. I mean, it is a tree. When I was in undergrad, I mentioned I had a plant science double major. And one of the courses we did had cotton seeds that we planted and grew. And so I actually grew my own cotton plant. And I was convinced I was gonna try to get it to grow for the next year. Of course, you can do that with one and hand pick it, right? But the way we harvest cotton, it becomes an annual crop. But yeah, it is a perennial, perennial cotton.

Jonah Armstrong: Right? ’cause you go and then you’ve got a, you have to defoliate it at the end of the season so it doesn’t stain the leaves, don’t stain the cotton green. And then, but if you go out and defoliate it and then you get a rain on it, then it just comes back and you have to go defoliate it again. So it’s really a headache to deal with. So it’s, it’s a headache and you’re losing a ton of money on it.

Ben Brown: Yeah. Not only that. How many times, how many trips across the field to till before you plant it?

Jonah Armstrong: Yeah.

Ben Brown: You have at three, at least three sometimes passes with the tillage system before you plant it.

Chad Fiechter: Because you want it really level or what, what’s

Jonah Armstrong: We, we do, I don’t know what it is in Missouri, but we do a ton of, all of ours is bedded. You come in and you, you disc it and loosen up all the dirt. And then you come back with a bedder and form everything into the piles, basically your beds. And then you have to come back separately and knock the top off the bed to create a flat planting surface. So it’s three passes.

Avery Pound: The other thing after tillage, I, I did some time down in West Texas. I, I, I’d say it like I was in prison. I actually love my time down there. I interned for a dairy, but they were in cotton country and I learned from some of the agronomists that cotton, it just wants to die.

Jonah Armstrong: Yeah.

Avery Pound: Up until it’s been out of the ground for a week or two. Then after that, it doesn’t wanna die whatsoever and it’s wind storms and, and that sort of thing can kill it. Cold weather. And it, it’ll be done in early stages of growth, but then after that it, it just takes off. Fascinating crop to me.

Ben Brown: Yeah, it is. Who would’ve guessed I would’ve came to Indiana, we’d spend this much time talking about cotton, but here we are. I love cotton.

Chad Fiechter: I think there is, I mean, we, we always joke that if you put enough people who are interested in farms in a room, like you get strange diversions.

Ben Brown: Sure.

Chad Fiechter: You know what I mean? Like, because, because we just talked about furrows. And topping furrows. I don’t, I, that’s a pretty niche audience that, that wants to like, have that conversation. You know?

Ben Brown: If you wanna run equipment, get into cotton.

Jonah Armstrong: Right.

Chad Fiechter: So, Avery, what do you wanna talk to Ben about?

[00:09:42] Global Energy Markets
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Avery Pound: Well, Ben, thanks for coming to speak at the conference and thanks for being on the podcast today. Something that struck me from your talk earlier is the correlation between energy prices and agricultural commodity prices. And I thought that was super interesting and something I’ve been thinking a lot of lately, reading the Wall Street Journal, I’ve been reading a lot about Venezuela and what’s to come with the oil market there and how the US. could interact. How do you see, the changes to, this Venezuelan government and potentially global oil markets, in relation to the US’ ag economy?

Ben Brown: Sure. And we could spend a lot of time talking about this.The initial impression was that this would be bearish to the oil market. Venezuela has a lot of oil reserves that they’re sitting on. And there was maybe this thought that we’d see rapid growth in oil production. The US is talking about, a lot of investment in Venezuela from, oil and energy companies.

Their oil system that they have in Venezuela is similar to some of what we would see in Canada, you know, the very heavy, dark, crude. And so, you look at the economics between the two and you ask the question, well, if I had the choice between Canada or Venezuela, why would I leave Canada? And so I, I think when the market did open on that Sunday night and even the following days afterwards, and we saw just a little bit higher oil prices, but pretty flat in the grand scheme of things, I think now you’re starting to see people say, well, maybe we don’t see as big of oil supplies to the global market as maybe what we initially thought in the hours leading up to it. And again, you know, Venezuela is a country I don’t normally think about a whole lot, but here we are, you know, in 2026 talking about Venezuela. So that would be what I’d say about Venezuela.

I, I’d say the thing you mentioned about the connection between energy and agriculture, you know, there’s always been kind of this connection between the two. Both of ’em are commodities. Oil, corn, soybeans, commodities, you know, we see ’em in a lot of portfolios as a hedge against inflation. So from an investment standpoint, we’ve got that. But just with the growth that we’ve seen in the biofuel space over the last 15 years, 15 to 20 years, just continues to increase that connection between, energy and then also, row crop commodity economics.

Jonah Armstrong: Yeah. We’ve talked about cotton here and how acreage is going down, and in your talk you said a lot of that’s going into corn. Becoming corn acres, it seems like the solution to everybody’s low profit

Ben Brown: Returns. Yeah.

Jonah Armstrong: Low return. Low profit problem is plant more corn. Is, is aviation fuel? Is the bio, is the, you know, ethanol, aviation fuel, is that the silver bullet? Is that gonna save everybody? The corn’s gotta go somewhere. Right? Like that’s what I keep coming back to in my mind when I hear those numbers.

Ben Brown: Sure. Yeah. So you are correct on the first part of that. Everything’s going to corn. Right. And that was the case in ’25. Like every crop gave up acreage to corn.

Jonah Armstrong: Yeah.

Ben Brown: And I think we maybe see a similar standing in 2026. It, we might not lose acres and all those crops to corn, but corn’s just gonna maintain what they took this last year. Right. It is kind of what I think we’re gonna see in the year ahead.

So from that standpoint, now your question about sustainable aviation fuel. Or synthetic aviation field, whatever you wanna call it these days. But, we would consider that a rather aspirational goal.

Jonah Armstrong: Okay.

Ben Brown: It’s out there. But the economics don’t, don’t really support the growth in that sector. You know, for a period of time we had a lot of airline companies that were voluntarily starting to talk about using sustainable aviation fuel. Some of them have now announced that they’re not going to do that. Some countries are asking for mandates, to do that. So you might see specific countries that do that. But here in the United States, I’d say it’s a pretty aspirational goal yet and would require policy intervention or policy changes to really get to take off. If I can use that pun, but yeah.

Jonah Armstrong: Yeah.

Chad Fiechter: Nice.

Jonah Armstrong: That’s a good one.

[00:13:29] Long-Run Decision Making
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Chad Fiechter: Okay, so, farmers seem to be long-term decision makers, at least the people who are kind of left, doing this. ‘Cause we know that things change, right? And so that can be great. Because you don’t sort of make these quick and pivoting moves. We know this is an uncertain game and if you play the same strategy over and over again, that’s probably a decent play. But it also makes us fairly susceptible to just kind of keep doing what we’ve always done as opposed to be thoughtful about our long-term strategy. When I think about the families that I know who are farming, their long-term mentality has been really successful. Is that still a good decision in this environment or should there be more thought around strategy for the future? Based, based upon everybody’s gonna plant corn, everybody’s, you know, like we, we have these big conversations.

Ben Brown: Yeah. So I think, this is a great conversation and great question. My answer to the question specifically is yes, I think you still have to think long term. I think that has to be part of farmer decision making. And so I don’t want to discourage anybody from thinking long-term, even with all these challenges.

Here’s how I think that’s changing in terms of how we think about long-term decision making. Asset specificity, I can’t say that word, but basically if you have an asset and you can only do one thing with it, that has worked in the past. But I don’t think that’s our future. Okay. So relationships still matter. Strategic partnerships and intentional relationships still matter within this business, and I think those are the long-term decisions. And long-term planning farmers should, and that’s a value judgment, but in my opinion, should be thinking about building relationships, strategic partnerships, is a long-term decision making.

Let me use poultry as an example, right? Modern poultry barns are a big investment. You know, you’re talking about million plus investment in, in a poultry barn, that may take a little bit of an on ramp period to get it built. Right now we’re seeing a little bit of delay in terms of when you can build a poultry barn. But let’s just say the poultry sector, you know, really struggles and goes through a prolonged period of, of transition or some type of recession, depression type thing in that specific sector.

Currently and where I see the long term going, that leads me to be kind of concerned about making some type of investment to where maybe I need seven years, six to seven years to recoup my, my investment in that asset. But if in year two or three if something goes awry, is there an alternative to use that asset?

As I look ahead, I’m gonna say I don’t think that’s where we need to be focusing. I think we need to be focusing as production agriculture and looking at assets that can be used in multiple different ways. Land continues, row crops continue to be something like that, right? So here in the Midwest, primarily corn and soybeans, but there’s other crops we can grow on that same land. Canola is an example of that. I talked about canola today during the talk about how we’re seeing an increase, well that’s, that’s been a product that coming into some of that land. We can run cattle on that land, right? You know, we could do solar, things like that. It provides us options, multiple different options.

To answer the question about long term, I think we have to be focused on it. I think it has to be relationship building, but I would be very, very cautious about investing in assets that can only be used in one or two very niche and special ways.

Jonah Armstrong: I didn’t know I was gonna be the cotton guy, but that comes back to like, I mean, a cotton harvester.

Ben Brown: And what do you do with it after, if you don’t grow cotton.

Jonah Armstrong: Your only option is to sell it to your neighbor who hopefully needs one and grows cotton. Those are your only options. You can’t. Just change to corn or soybeans like you can with your, your conventional harvesters.

Ben Brown: The flexibility becomes the name of the game, I think in the long run, right?

Jonah Armstrong: Yeah.

Ben Brown: We’ve seen this in, in, in several different commodities. Dairy comes to mind. And we’re seeing it in some other types of livestock. If you build a relationship, and that relationship is good, that’s fine, but you also expose yourself to third party risk to where if that buyer exits and there’s no one else to buy your asset, but you’re still sitting there with an $800,000 ownership note on that barn and you gotta figure out what to do with it. That’s where we’re seeing some of the challenges in this space. Same thing with the cotton harvester.

[00:17:28] Farm Financing & Land Markets
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Chad Fiechter: Okay, so another thought that I have is that, you know, I’m a, I’m nearly 40 and so I did not experience the farm financial crisis, but I think my birth signaled the end of it.

Ben Brown: So I’m the same way. And I always say I didn’t grow up in the 1980s, but I grew up in the long shadow of the 1980s.

Chad Fiechter: Yeah. Oh man, that’s

Ben Brown: I can point to specific things in my life.

Chad Fiechter: Yeah.

Ben Brown: That now after I’ve learned, and been a student of this industry, I can point to specific things that my family did that I’m like, okay that was a direct result of them living through the 1980s. Right.

Chad Fiechter: No, yeah, that’s dinner conversations still, right? We’re still hashing the 1980s. So the thing that is interesting is we had a pretty significant solvency problem in the eighties, and we don’t have that today. It doesn’t seem to be at least yet.

I would agree. But we definitely have a cash flow, a significant cash flow problem. To the point where even people with really, really, strong asset base are probably asking, their banks are asking them different questions maybe than they were asked previously. And maybe they didn’t get a, an operating loan. What do you think about the financial sector health and how people are gonna manage low cash returns and crop production, if we go into yet another year of low cash returns?

Ben Brown: Sure. Yeah. So I, I would agree with you on the financing space. We are not seeing the deterioration, in solvency ratios. Broadly. There’s, there’s pockets, you know, I think of, of prime cotton and rice country where that’s, that’s a dominant market. And not a lot of livestock. You know, we are seeing some land sales that are starting to cause a little bit of deterioration in land value. So, you know, that’s starting to see some of these solvency issues start to pop up. But broadly speaking, I don’t think we’re seeing the solvency issues. Nor do I think we’ll see the deterioration of land, like what we saw in the 1980s. And, and people listening are probably like, well, that’s what somebody said 1979. And, you know, that’s true, right?

Chad Fiechter: Yeah, yeah right.

Ben Brown: You never think it, it’s gonna happen. But we have quite a few changes in terms of safety nets, that exist out there. And the other thing that I would say is the amount of ownership of land that is well positioned and either owned by somebody outside of agriculture or a very established, balanced farmer. I think we’d have to see this shortage of cash flow exist many more years before we really started to see some of the solvency issues that we saw in the 1980s. And so I don’t know if that provides any security for anybody or any hope or whatever. I’m just saying I just don’t think we’ll see the solvency challenges. So from that standpoint.

Now to the lender conversations, in terms of accessing financing, right. You know, a lot of people use their asset base to get financing. And I think we’ve seen that really tighten up, because it’s now becoming very much a cash flow game. Yes, you have the asset, but the asset does not necessarily justify cash, or, the ability for debt repayment. And so you’re seeing a lot of lenders really focus on that debt repayment capacity, even outside of selling an asset.

Does that start to encourage more asset sales? As farms struggle to get, you know, traditional financing. From either a bank or even third party financing through a input supplier. If that becomes a little bit harder to get because of this debt repayment capacity issue, and we start to see some land sales and some transactions, that could then cause a little bit of softness in the market. But as of right now, we’re not, I’m not seeing a whole lot.

And I think that’s where it comes down to is like we are seeing banks pull back on, on lending. I had a farmer call just the other day, and of course, you know, I talked with a lot of farmers. He called me at 8:02 on a Monday morning. And I talked to a lot of farmers all the time. And most of the time I believe them to always tell me the truth. Sometimes I wonder if they tell me all the truth, but this particular farmer had $5 million in assets with 75% paid off equity. And his loan officer decline their operating this year. And they had to go find a different bank and different provider to provide that operating loan. So I do think we’re seeing some tightness.

Chad Fiechter: Wow.

Avery Pound: Do you think for land in particular, this provides opportunities to build some of those strategic relationships with more institutional capital in exchange for taking on debt to buy land now because of the cashflow challenges. Do you think this is providing a great opportunity for institutional capital and big time investors to come in and help farmers, with that access to capital they need?

Ben Brown: So I’d say we’ve seen a slow down in the big institutional investors because the returns in the stock market relative to the returns in land have favored alternative investments other than land. Now I always say that they’re smart and they jump into the land market when there’s a good buy. So if land values started to look like they, they were undervalued relative to where they could be. You would start to see alternative investors, outside of agriculture, come into the space. That’s one of the reasons why I think we have somewhat of a floor in land markets. They recognize that an asset can get out, undervalued and buy into it. And so to some extent, farmers don’t like to hear this, but to some extent we need outside investors because that’s what keeps our land market from, from collapsing. They come in when they feel like it’s undervalued.

To your point about relationships, yes, I’ll hit on that again. I do think that we’re in an era to where building those relationships and being good stewards of land for a asset owner just continue to grow in importance and relevance. And I think we’ll continue as we move through the future.

[00:22:31] Creating Strategic Relationships
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Chad Fiechter: Okay. One of the things like, as I, as I hear you say, the relationship piece and thinking back to 25-year-old Chad and in thinking about how I would take in that podcast, where would you, the three of you are really smart, where would the three of you start on trying to build strategic relationships if you are a row crop farmer? How would you go about that process? I think that there was always this idea that we should find some partner, who has, ultimately it was usually the doctor or the dentist or somebody who you can convince to come by 140 acres when you can’t. When I think about, the idea makes tons of sense, the tasks that I would go through to accomplish that idea seem difficult.

Jonah Armstrong: I would start with like personal network, like just people you know, who are smart people. I’ll use an example of, of some people I know at home. A guy and one of his buddies, they I think went to college together and then just kind of went their separate ways and he went into the vegetable buying industry. He was a representative of grocery stores going to farmers buying vegetables for some different grocery stores. I think that had kind of run his course and he didn’t really feel like he wanted to do that as much anymore. And he moved back home and his friend was looking to diversify and they went into together and bought a vegetable packer that had been run down and put a lot of money into it. The farmer was excellent and he could grow the vegetables, and his buddy was excellent and had lots of connections in the grocery store industry. He could get them sold. And that’s been a fantastic deal for them. That has really, helped them a lot in some of these less than ideal market times.

Ben Brown: Yeah, I would agree. That’s an excellent, excellent story. I, I would agree with that fully. You know, and I think there’s opportunities to grow niche products and look outside what we traditionally think. I get the opportunity to teach our upper level farm risk management course at the University of Missouri. I love my students.

But the majority of them come with ideas of how to work in production agriculture that are very different than what we have historically thought. Outside of just corn and soybeans, I had one student that was growing, grain sorghum to produce the molasses or the sugar to be used in sorghum whiskey. And he had built a strategic partnership with a distributor and a distiller in St. Louis. And that market share was growing for them and they were constantly adding more sorghum acres and working with producers that would allow ’em to grow sorghum on acres. So there, you know, there’s another example.

Llamas, right, is another thing, right? That’s a livestock category component here. And so, you know, there’s these examples and these strategic partnerships in avenues and channels, that aren’t necessarily just corn and soybeans. Now, if I was somebody that was looking to grow my strategic partnerships in corn and soybeans, right now, the way I think I would do that is used equipment or just equipment and we’ve seen the values come down, so it’s relative cheap to where it was. It’s still not cheap. People would argue it’s not cheap at all. But it’s relative cheap to where it was. You can get a pretty attractive financing note to finance some equipment, and I would look at getting into the custom agriculture, whatever, planting, spraying if you’re cotton and, and they, you gotta get across your field 14 times in the summer or 10 times in the summer,

Chad Fiechter: Spraying.

Ben Brown: Right? Buy a sprayer at a relatively cheap and run as many acres through that, that machine as I possibly could. Build that network of producers that I’m helping. Maybe they can’t get over all their acres ’cause it was really wet and they need some additional help to spray their acres. Well now all of a sudden I’m providing them value and strategic partnerships to where I am building that network and then maybe at the end of that producer’s timeline, he’s like, Hey, you’ve been a great partner in this endeavor, would you be interested in taking an ownership in this operation? Or buying into this operation?

My answer to this question is unique now because equipment values have come down. You can get a cheap relative interest note, but custom work right now would be a way to get into to the corn and soybean markets. But there’s avenues outside of corn and soybeans too.

Chad Fiechter: Yeah.

Avery Pound: This is a little bit off of being a starting farmer, but I think that strategic partnerships with livestock producers is really important and is going to continue to be really important. Chad, you have some experience with that. If you’re a corn and soybean producer, having manure on your farm is a hedge against input prices. Well, fertilizer, but it’s a hedge on that. And then additionally, it’s a little bit of a hedge on the commodity prices too, because lean hogs or beef cattle or dairy or whatever you have on your farm is usually fairly uncorrelated with corn and soybeans. Especially if you’re feeding corn and soybeans to your cattle. If prices are cheap, you know, that’s good margins for your dairy. If prices are high. It’s good margins for your corn and soybean operations.

So I think that having partnerships and strategic relationships with livestock producers and integrators, is really important and going to continue to be really important.

Chad Fiechter: Man, that’s good. So in my head, what I was thinking is, is how do you, approach the Purdue retirement fund and, and you know, how to convince them to buy farmland.

So you guys, all, all three of you answered a different perspective on that strategic partner, which I think is awesome. That’s really, it’s because I think that was always the part, as a producer, it always felt, well, like, who am I to go and, and talk to, you know, this big, management fund. And I got laughed outta rooms in, in multiple places, you know? But you said very practical sort of things. Within the network, people who are in the industry and would look at you favorably as, as opposed to being like, what are you doing here? Pitching us to buy 160 acres? So I love that.

Any other questions you guys have for Ben?

[00:27:52] Regional Differences & Conclusion
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Avery Pound: Yeah, I want to pick your brain, Ben,

Ben Brown: Will that hurt? Go ahead.

Avery Pound: On, on, on different parts of the corn belt and different parts of ag in the country. You’ve done some time in Kansas and Ohio and Missouri, and here you are in Indiana. I want to hear cultural differences, but also some economic differences as we’re, we’re sitting around talking about these things today.

Ben Brown: Yeah, so I mean, you do see these cultural pockets. The Delta region, for instance, Mississippi, Arkansas, Louisiana is very different than where we sit up here. For a very long time Indiana had always had this mix of poultry and egg production, plus row crop, and that was very unique kind of to this space. Iowa also had kind of some of that, that same type of blend of mix. Now we’re seeing it in places like, you know, Missouri, Oklahoma, Northwest Arkansas. A lot of growth in poultry and egg production. They had to do that. Companies had to do that to provide a safety net or a risk management standpoint around some of the avian flu and diseases. They don’t want their whole enterprise to be wiped out if disease breaks out. So a little bit of geographical diversity there too.

To the specific question about demographics, there are some differences in terms of how people think about stuff. I would say most of it’s related to, to rainfall. That’s where I see the biggest difference. The folks out in Kansas that are only getting 12 inches of rain a year, have a very different mindset in terms of how they plant crops and how they invest in the crop throughout the growing season. Than you would here in Indiana where I’m guessing the average rainfall somewhere around like 36, 38 inches a year or something like that. The rainfall has a tendency to be, a signal of culture.

Also, just like the growth that we’ve seen in alternative investments outside of ag. Here in the Eastern Corn Belt, you guys have had a lot of growth in urban sprawl and solar initially. And now we’re getting solar out west as well. Some of the things are different across the corn belt at specific times. But I think we all experience them eventually. You guys might be a, a precursor to us by five to 10 years and then all of a sudden those same types of things and mentality and questions start to pop up in Missouri.

And then of course the rainfall and the weather patterns that we’ve seen. We used to, I always joke about this and it’s really not a joke, it’s actually very sad, but, our corn crop in Missouri is always made if a hurricane hits Texas in August. That’s when we get the rain that makes our corn crop. So we start getting excited when there’s activity happening in the Gulf.

Chad Fiechter: Sure.

Ben Brown: Because that means we’re gonna get rain in Missouri and it’s gonna make our August corn crop. So, you know, weather has a pattern in that as well.

The difference across regions is the whole reason we, at the University of Missouri, in partnership with USDA, have started looking at state level farm incomes. Because the national farm incomes were fine, but they hid a lot of the, the very nuanced details at the state levels. And so, we’re now in like year three of this and we can look at how, a state like Nebraska that has a lot of cattle feeding, compares to a state like Indiana, where there’s a lot more hogs and a lot more chickens. How does that farm income categories kind of shift over time? And it helps us at least be a little bit better at targeting some assistance if, it needs to roll out.

So I don’t know if I answered your question about differences culturally and geographically, other than to say that there’s probably more similarities across the corn belt than people realize.

Avery Pound: Mm-hmm.

Ben Brown: It just comes sometimes at different times.

Chad Fiechter: I think we should close this up. So, thank you, Ben, Jonah, Avery. Thanks guys.