Ag Over Easy Podcast

Amity Shed:
Ag Over Easy is the new podcast from Channel where you get breakfast with a side of agronomic insight. Enjoy some food for thought while you get fresh takes on different topics from a wide range of farm industry experts. Coming soon to channelpodcasting.com and Apple podcast, Google, Stitcher, Spotify and anywhere else you listen.

Hi. Welcome back to Channel Chat. I'm your host, Amity Shed, and today I'm joined by guest host, Matt Anselm. For this episode, we are in Madelia, Minnesota with channel seedsmen Todd Arduser and channel farmer, Kevin Poppel.

Now, we've been working on this podcast for a while now and we've heard from a lot of different seedsmen, farmers and agronomists, and each one of them has a unique relationship. And this one between Todd and Kevin is no different.
Matt Anselm:
Yeah. It was pretty evident to us right off the bat that these guys had worked together for awhile. They had a pretty honest and open relationship when it comes to talking about what needed to be done and what they were currently trying to do, as far as their goals on the farm. So one of the questions we always ask first is how did the relationship start? It seems like their relationship actually started with Todd's dad and Kevin's uncle, so it was interesting to hear how that relationship allowed them to forge their own relationship in this farming business.
Todd Arduser:
Well, the relationship started before us, with my father and his uncle, through the seed business and being about the same age and just being in the same town and friends and stuff like that. And then as I started taking over the seed business and Kevin started taking over the farming operation, it was our turn to build a relationship.
Kevin Poppel:
Todd's right. That's really how we started our relationship and it's blossomed into something more, I would say, from my standpoint anyway, than anything that the first generation had, because we're focused different on our operations. We're much more business based. Not to say that that generation before us wasn't business based, but there was a lot more farming that happened then, in a very positive way. Now there's a lot more business being done and it's big business. Now we're talking in millions of dollars, not hundreds of thousands of dollars.

When I had the opportunity to start farming that land that my uncle farmed for 40 plus years, the firs question that I have is, who do you do business with? Who do you trust? Because I knew with my background in agronomy and precision ag, that relationship's really important. What I didn't know when I came to start farming in this area, is who do you work with and what do each of these people stand to bring my operation for value? And what always rose top of the list was, well, you know, I've done business with [inaudible 00:03:08] for years and even in tough times, they always helped me out. And that was kind of my trigger. When you look at agriculture overall, it seems like there's always a challenge that you face, whether it be a positive or negative thing. And so, you need to have people that you can trust. And why wouldn't you trust somebody that's had a business relationship for 40 plus years and with Todd's dad any my uncle, whom I look up to both of those people, as does Todd.
Amity Shed:
There was a single instance that really kicked off Todd and Kevin's business relationship. It was kind of an aha moment for Kevin, when he knew that his seedsman Todd has his best interests in mind. The story starts with an old planter that Kevin wanted to retrofit for variable right planting on his farm.
Matt Anselm:
So start on where that first conversation happened.
Kevin Poppel:
Yeah. So I mean, I think thinking back to even before I took over the operation, I was helping my uncle and so, because Todd and his dad were still an integral part of my uncle's operation with Pioneer Seed and helping calibrate the monitor. I mean, I remember exactly where we were when we did that. And Todd did some drone flights while we were harvesting, which I thought was cool. And that was before we really used drones to make decisions. They were just more of something cool. You know?

But I remember having the conversation with him, and this was before I even knew that I was going to take over the farm. You were riding in the combine with me. We were over on that irrigation piece, the sandbox, and I just expressed to Todd how happy I'd be if I got the opportunity to farm. And obviously, he'd like to see the business passed onto someone that's likely going to do business with him or at least have an opportunity. And I think as our relationship progressed, I knew, based on the research and after working in the industry, that I was going to have to do something with my planter. And the biggest thing that I wanted to do is variable rate plant. I knew that we had five main soil types, and that's a lot.
Todd Arduser:
Kevin's got really unique ground to start with. On one pass, he's going to go from blow sand to heavy ground to muck and peet. You know? So he's got unique sand. He's got farms that should be absolutely [inaudible 00:05:32] and tiled every 30 feet, but also have to, you need an irrigation system.
Kevin Poppel:
I grew up on the Red River Valley. We had Fargo clay loam and Fargo clay loam. You plant one variety, you plant it at 34,000 population and you're good. Here, that doesn't work. And I got to see it first hand, especially on irrigation where we'd go across a field and plant 36,000 population and we left tons of money on the table. So I think that's really where the idea got started as, hey, I bought this planter. What can we do with it to accomplish first, the variable rate planting and row shot offs, because I can't afford to pay for more seed than I need.
Todd Arduser:
And I don't know how we got going on the precision planting side of things. I think that planter, when your uncle first got it, had e-sets in it. We had run the e-sets a couple time on our meter stands, and to try to tweak them in and get things correct. And then the planting season would happen. And let's just say that it's not best practices always to fix vacuum hoses with duct tape.
Matt Anselm:
Sure.
Todd Arduser:
Not 100 percent perfect situation there. And so, we started drilling into little things. What are the little things we can fix on this planter, in order to get it to go? Well, let's put new tubes on there. Let's just, the vacuum tubes, let's make sure they're sealed. Let's do simple things like that.

Well, then it worked into, we just said, he's got five different soil types on one pass across a field and he's got parallel springs for his down force. And we know our margins are going crazy. Our down force margins is going crazy across that field, and stuff. And so, we started looking at air force, at the time, putting air bags on there.

And so, we had started looking at this and then Kevin had started doing more research. Well, what about the variable rate motors and putting this on? And by the time we were done, we looked at it and the invoice for the equipment was roughly around $40,000. And I'm like, okay. We were sold on it. We knew it was probably going to be a two, three year ROI on it, but it was definitely going to pay him back on his operation, on his equipment.

And he brought the planter in one day. I don't remember if it was Fall or-
Kevin Poppel:
It was Winter.
Todd Arduser:
Winter. It was.
Kevin Poppel:
It was cold. I remember that.
Todd Arduser:
And we started ripping into the planter. Because, you got to tear it down to build it back up. And one of the employees at the time come in and said, "Todd, come out and look at this planter." And went out and looked and he starts showing me things and we start lifting up each row unit and shaking it and moving things around and we have bushings that are bad and we have wear points on there and stuff. And it's like, we looked and looked and got another opinion from our business partner and stuff. And then it's like, I'm going to sleep on this tonight.
Kevin Poppel:
Yeah. Because at this point, we're new business partners. Right?
Todd Arduser:
Yeah.
Kevin Poppel:
So I trusted him enough to bring it over here to take a look at this thing, but where things really changed for me in my mind, whether you knew it or not at the time ... And this is really what's forged such a trusting relationship back and forth now, is he just flat our said, "Listen, I knew what it was going to cost $40,000." And he could've put that on my planter, just as easy. Most would have. I have to be honest. Most would've put it on the planter and we would've just tackled the issues, two three years down the road. But he said, "Listen, this is not going to work. Yes, we've got the parts on order. We'll take care of that. But you need to find yourself a different planter, if you want to accomplish these five things."
Todd Arduser:
We started looking at, okay, we got to add new bushings. We got to add new this and that. And we started adding up 10, 15 thousand dollars of maintenance on the planter, that we wanted to do, before we even got to the $40,000 bill.
Kevin Poppel:
Now keep in mind, this planter's only worth $7,000. Right?
Amity Shed:
Right.
Todd Arduser:
Yeah, right.
Kevin Poppel:
Legitimately.
Todd Arduser:
Yeah.
Kevin Poppel:
So now we take it one step further. Not only did he say, "Listen, we're not going to do this" but I found a planter down in Illinois, that had a a lot of precision planting on it already. And let's be honest, they're in the business of selling precision planting. I called them and I said, "What do you think?" And you got to be thinking, if you're in business, you got to be thinking, "Darn it. I'd really like to sell him these parts." That's what they're in the business to do. But instead, Todd and his business partner Tyler said, "FaceTime us when you get down there. We'll take a look at that planter with you."

I mean, to me, it just, they continually had this partnership mentality. If I do well, they do well and vice versa. And when you look at where our relationship is now versus then, it's the same exact thing. If it isn't good for both of us, it's not good business.

I'm aware that they need to make money, but he's also aware that I need to do the same. And it's just a great relationship. And it's really forged into something where I don't make major decisions unless I include this core group of people. And Todd is by far the one where I'll drive over here and say, "Hey, I'm thinking about this. Is it dumb or not?" And he'll tell me.
Amity Shed:
The business relationship between Todd and Kevin is more than just a business relationship. Kevin is more than a customer to Todd, and vice versa. And as Kevin says, if it isn't good for both of them, then it's just not good business. There's a real friendship and honesty between the two. And Kevin and Todd also have similar stories when it comes to their place in ag business and how they got there. As with many in ag field, their love of farming runs in the family and it runs deep.
Matt Anselm:
Can you tell us a little bit about just how you got to the ... So you've been doing business for five years, you said. And farming channel for five years. Kind of a little bit of the story of yourself, where you were, where you're at, and kind of how you got to this point?
Kevin Poppel:
Sure. I've loved farming ever since I can remember. My family started farming, oh, I guess it would be third generation now, up in the Red River Valley. And they're still currently farming. Back in the 80's, my folks were farming and the 80's were very difficult and they decided to work in the industry versus stay being farmers, in the late 80's. And like many. I think they made a wise choice. My extended family now farms the majority of that land.

And all the way growing up, I was on the farm every chance I could get. I would rather be at the farm than anywhere else. And so, it was natural for me to want to farm. The challenge was is that mom and dad quit farming back in the 80's. My extended family obviously was fairly large. And mom and dada just flat out told me, "You need to go work in the industry before you even think about coming back to the farm."

Because I think the opportunity would've been there, had we pushed it. But I have to commend my mom and dad for really pushing me out the door and saying, "Listen, you need to get some experience because staying here in Wilkin County is okay and you're always welcome back, but you need to go out and get some different experience."

So I went to college. I got a degree in agriculture business and I had an emphasis in agronomy and precision ag, which is still a great passion of mine now. But I got a job out of college, for a retailer and worked specifically with farmers and kind of grew that position into a precision ag management job, within the organization that I was in. And that's really when precision ag wasn't cool. It was actually very difficult. And it was really fun to be on the cutting edge of that, but cutting edge then is so different than the cutting edge now. And we did things at a level that was very minimal to where we're at today. But it was really neat to be one of the first people to kind of pave a path that way.

And it started and spurred a lot of my thought process around sustainability and some of the things that we need to be thinking about, that may have been different than the generation before us, and will likely be different than the next generation, if there is one, that takes over the operation.

And frankly, I never had the desire to go back home. It wasn't until about ten years ago, when I moved closer to this area now and started working for a fertilizer company, that I started helping my uncle. And that really progressed into where we are now. From my standpoint, I had the best of all worlds because I got to see the farm growing up. I then was able to go out and work with farmers on the other side, you know, work my way through and work for a couple of large corporations, after my retail experience, and gain some knowledge and a lot of very good relationships, to now go into a farming career where I have resource relationships, to now go into a farming career where I have resources that a lot of people don't have the privilege of having. And it really has helped me accelerate what we're able to do, and how quickly we can do it in. So the first generation farming thing is extremely difficult. I took over my uncle's operation, and he gave us the opportunity, but like most people that own a business, he needed to retire, and that's not an easy thing to do when you're helping somebody start farming. And he gave me the opportunity, and we could either run with it or fail, and thankfully we're still running with it. So it's been a lot of sleepless nights, but it's been extremely rewarding. And again, you talk about first generation, that's not something you hear very often, and there's good reason for that. Because it not only costs a lot of money, but it's not for the faint of heart.
Matt Anselm:
Passing off the land and the operation that you've been working for, in your uncle's point of view, for a long time too, to someone, is probably a pretty difficult thing. So talk about your relationship with him.
Kevin Poppel:
As much as if my uncle was sitting right here, we would joke about the fact that he gives me a lot of free advice. And you think about the young bull, old bull analogy, where I'm trudging forward as fast as I can to keep up with technology and keep up with the industry, and he's saying, "Hey, listen, there's some experience here that you need to grasp onto." 43 years is a lot of years, and what I'm so thankful for is that my uncle has become a very close friend, because we talk daily about things that we're extremely passionate about together. And that's not saying sometimes we disagree about things, because there's no doubt that we do, but again, that blessing really comes in that I've got a set of parents who are supportive, and now I have kind of a second set of parents that are really watching over me.

And with agriculture, and especially farming, it's a very emotional ... When you pass the torch, like my uncle did to me, I was honored for that. And I can remember the day. I can remember the day that he chose me over the 40 people that would have loved to have rented that farm. And there was no better feeling business-wise that I've ever gained by him saying, "You know what? I choose you, and I want you to do that." And that's something that I'll never forget. And from my standpoint, having that resource, it's a real critical piece. It's an absolute critical piece. He's my uncle, but he's really like a dad to me because he's watching over what we're doing, and albeit, sometimes I'll call Todd and say, "Hey, you know what? This is kind of frustrating. I mean, he's old school." And then I kind of have to take a step back and say, "But he really knew what he was doing. He was a great farmer." He was a great farmer. So to be able to pass something like that on is pretty neat.
Todd Arduser:
And he's not afraid to share his opinions with you.
Kevin Poppel:
That is for certain. But that's a good thing. And I think you talk about the young bull, old bull thing, and you have that with your dad too.
Todd Arduser:
Exactly.
Kevin Poppel:
And as much as it frustrates us sometimes, I think you have to take a step back. And that's one thing that I've learned from my uncle. You have to take a step back and take a deep breath, and look at it for what it really is. So you got 15 inches of rain on October 10. There's nothing that you can do about it but be patient and make a plan. That's all you can do.

And then he'll sit and reminisce about, "Back in 1978, we had the same type of thing, and we got all the crop out." I mean, I think it's one of those things where if you don't have that support network as a farmer, you feel alone. My uncle, I can't tell you a day during harvest that I don't go into the house when we park the combine and say, "This is what we got going on." Or during planting season, I pick up the phone and call him, and let him know, "We got the north 40 planted today, and here's what's going on."
Matt Anselm:
Yeah. You're probably not even asking questions. You're just kind of giving him updates and information, and then just kind of waiting and accepting back information as it comes back to you.
Kevin Poppel:
Right. And the first year, the first couple of years that you take over, you don't want to ask for that advice, because you want to show him that you know what you're doing, and you soon realize that you're missing out on a wealth of knowledge from someone that's made the mistake that I've probably made three times over the past 43 years already, and can probably help us from making that mistake again.
Matt Anselm:
That's actually a good segue into talking a little bit about, you said your guys' families, you've done business for a long time. Kind of how did you get into it, and kind of give us a little backstory on kind of how you became a seedsman, and how you kind of got into this business.
Todd Arduser:
This story is going to sound very similar to Kevin's story. Starting with the late seventies, eighties, the economic issues and stuff like that. I believe I was nine years old, 10 years old, when right here on this farm, we had a farm auction with the struggles of the economy at that time. And I believe that was about '81, and my dad has rented out the couple of parcels of the land that he owns to the same brothers for, I don't know, I can't do the math, 30-odd years since then. So I grew up on a farm that I didn't really farm, and always had the love of farming, and always got to see what my dad was doing and stuff like that, and got kind of the same advice that Kevin did. "Go to college. Get educated. Go work for somebody else, and then we'll see if we can work you back into the operation."

So went and worked at a co-op for a couple of years, and then a small seed company. Went and worked for them for about a year, and got the agrinomic, the real life agronomic background at the co-op. And then for a small seed company, got that salesman type knowledge, cold calling. That is basically all I did was cold calling. I worked for a small seed company that most people had never heard of, so it was a lot of knocking on doors. And there was a time where, I think it was '97, I'd just worked to come back and at home. Like I said, Dad had been out of the actual farming business, but I'm a fourth generation seed sales, going back to my grandfather, or great-grandfather, so that-
Matt Anselm:
You had said your great grandfather was early, early in pioneer, right?
Todd Arduser:
Yup.
Matt Anselm:
That's awesome.
Todd Arduser:
Yeah. And then my grandfather and father and I had followed in those footsteps and such, and being a fourth generation, we just sell seed. We've put up some hog barns, and did some diversifying that way and stuff like that. It's just been kind of the last about six years where Dad has kind of said, "Enough. I'm tired of trying to remember every hybrid. Tired of trying to keep up with the precision side of things. All this new stuff. I'm going to go this direction, and you take the seed business and see what you can do with it.
Matt Anselm:
That's awesome.
Amity Shed:
Todd's approach to selling seed is very hands on, and it's the perfect pairing with the way Kevin does his business. One thing Kevin does differently than other farmers when it comes to his farming operation is involving what he calls his, quote, "trusted advisors." These advisors all get together at least once a year to work together on a plan, their priority being Kevin and his farm. Kevin shares who those advisors are, and he tells us some more about the first meeting, which didn't really go as he planned.
Kevin Poppel:
The people in my trusted advisor group are my biggest cheerleaders, but I don't expect those cheerleaders to tell me what I want to hear. I expect them to help me make money, to help me make better decisions for the future.
Todd Arduser:
I've been selling seed for over 25 years, and not that the trusted advisor meeting is a means to sell seed, that we got to do with everybody. But it was different meeting than I have ever had in my life of selling seed, and working with a grower, and working for the betterment of his operation.

We have a couple of different ... We're doing a Channel podcast, and every Channel seedsman is going to say, you can narrow it down to a couple of different ways you sell seed. One guy is going to do a lot of the research himself, and he's going to come in and say he wants 20953 to put on the north quarter, and the next guy is going to come in and say, "Yeah, I'm not exactly sure, but I know I have a sandy loam soil. What hybrid is going to be next?" And the third guy might come in with an order that he got from his consultant. But when we started this, when Kevin started this trusted advisor meeting and we started breaking down every single angle, it just became unreal. And I'm not sure how you thought of bringing everybody together. I guess we've never even talked about that side of things.
Kevin Poppel:
Yeah. So my wife and I own a dental office. My wife's a dentist, and we started that business back in 2011. And what we realized very rapidly is that if you don't have good business partners, you likely aren't long for the business. But it wasn't until Rachel brought on a business partner and we really grew that business, we decided that we were going to really ramp things up. And in doing that, we had to entrust in some people to help us make some very big decisions, not only financially, but for our family. We talk about money a lot, but at the end of the day, our families are our most important asset. And when you make big decisions to make big investments, it's going to have an effect on your family.

So we started taking some key employees that we had and still have, and we would do a retreat, and we would focus on a lot of different aspects of the business. Sometimes we would invite people that we needed some answers on a piece of equipment or some financial advice, whatever it might be. And so we would invite these people in, and we found out really fast that, "Wow, we maybe should invite them in all the time and share with them what we're trying to accomplish, because sometimes we don't know what we don't know." And by having them in the room together, they feed off of each other, and pretty soon now we have a better product than what we would have had trying to piecemeal everything together. Because sometimes we hold things so close to our chest that people don't understand what our true goals are, because we don't articulate them in the way that that people can always understand.

So our trusted advisor group for our farming operation, and now our custom application business, because they run in tandem together, was really a product of, "We know this works in a dental office. Why can't it work for a farm?"
Matt Anselm:
And the first meeting didn't work for the first 30 minutes.
Kevin Poppel:
No.
Matt Anselm:
Until you put your foot down.
Kevin Poppel:
So let's tee up the first meeting, right? So I send out an email. First of all, Todd's gracious enough to say, "Listen, I've got a boardroom here. You're more than happy to use it." That's great, because we needed a big enough space and we needed some resources. Todd has all of my data, and the data is really important. We needed to talk about that data if we were going to get to the end goal.

But imagine that my banker, again, super important to my business, because if I don't have the money, I don't have the farm. My Precision Planting people, Todd and Tyler, who are also very critical to me, because Precision Planting has turned into more than just planting now. It's more of a systematic approach. You have seedsmen, and at that time, I was dealing with another Channel seedsman in addition to Todd. Todd wasn't selling me seed on the first meeting that we had at all. Todd was simply my precision ag person. And I don't mean to discount that, but at the time, I had a Channel seedsman that was someone who I still trust very much and is a great friend of mine. And then I had an agronomy partner who we still work with on a very regular basis, but they sell different brands of seed. And then we had another precision ag person that worked a lot with our fertilizer and chemical.

Now, imagine yourself sitting down in a room. I sent an email out to everyone saying, "Hey, we're going to meet at County Line Ag, and this is the time, and this is what I want to accomplish. Here is your homework. Please come prepared with these things." So, first of all, I know I caught a few of them off guard. You weren't really one of them, because I had kind of teed you up on it. But a few of the people were like, "Really? Okay." So we get started with the meeting, and I should have started this way, but I didn't, because I thought, "We're all adults. Everyone's going to get along. Everyone's going to be respectful." And it wasn't that people were disrespectful, but people weren't opening up.
Todd Arduser:
We were too respectful.
Kevin Poppel:
Everyone was just kind of holding everything close to their chest.
Matt Anselm:
Kind of like going to the principal's office with another person, and like, "Who's going to talk first?" Kind of thing.
Kevin Poppel:
Yeah, precisely. It was like sales 101. Whoever talks first is going to lose. And I'm thinking, "Hold on. This is not working. What in the heck? What did I do here?"

So finally I took a step back, and I remember we're sitting back here, and I stood up and I said, "Everyone, hold on. I want you to know that you're here for me and me only. I don't care, I truly do not care about your guys's relationships. This is about me."
Todd Arduser:
You were a little bit more blunt than that.
Kevin Poppel:
I was. I pretty much said, get your [inaudible 00:30:08] together. You're here for me. If you want me to buy it from you, help me out.
Matt Anselm:
Right.
Kevin Poppel:
I invited you here because I trust you. Now, keep in mind, you guys, that we're not just going through yield. I showed these people my balance sheets, my profit and loss. I mean, we dug deep into, this is what I want the future of my operation to be. And we have to start today. Otherwise, we won't get there. I've got a four year old son and a six year old daughter that I hope some day will want to be a part of our operation. And, if I don't do it right starting out now, I will have nothing to pass on to them.

You want to talk about a legacy? Legacy is the most important thing to me. Making money is not the most important thing to me. It's my legacy. It's 100% my legacy. If I have something to pass on, whether it be my children, my nephews, my nieces, whomever it might be, just like my uncle did for me, I want something to pass on. And I can't do it by myself.

So, when we had that first meeting, I was very passionate about the fact that I wanted some answers because I have a wealth of knowledge in the room. And not a one of them would open up and tell me what they really needed to tell me. And finally, I said, guys, this isn't working. I invited you here to open things up. Here's my balance sheet and my profit and loss. This should help you guys open up. My whole life is sitting in front of you. Now, give it back.

And the wall started to come down slowly. Because the first meeting was successful, but not nearly as successful as the second. And now, as we continue to plan, and I think now with me having a financial control and having numbers that are up to date all the time, and we're going to be more regular in what we do. But, for me, picking a trusted advisor is extremely easy for me because they have my best interest in mind before their own. They look at my business, not only as an opportunity to grow their business, but they look at it as, we want Poppel Family Farms to exist beyond next year. We want to be a business partner with him.

And, to me, that's the most important part of this. But I need the wealth of knowledge. I can't just have a seedsman to help me make every decision. Not that he shouldn't be a part of it, because it's a systematic approach. Without the systematic approach, and without everybody being on the same page, how in the world am I going to improve my profitability? So, for me, the reason I showed them my financial position is because I needed them to understand that we're in very difficult times right now, especially being a gen one farmer.

We don't have a lot of equity. We have a lot of borrowed money and I'm not shy about that. When you start out a business, it's just the way it is. It's the way my wife and I were when we started the dental office. And it's the way we are now on our businesses. But they needed to understand that, if I have to put the brakes on, this is why. But now, let's collectively decide where our money is best spent. If we have $50,000 to spend, where should we spend it? And, if they're all helping me do that, generally I make a better decision. Not all the time. There's a lot of variables in farming that we can't control. And so, you make a decision and you hope like heck mother nature decides to play nice. But collectively, we make better decisions than if I'm in a bubble.
Matt Anselm:
I can totally see that. And I was thinking about this as you were talking, kind of a very CEO moment kind of for you in that sense where you kind of had to basically tell the rest of the group that you guys might all fight for business and other different parts. But this is the centralized reason we're here is to make sure that this collective with me at the center is going to make sure that everybody else still continues to operate, and make money, and do what you need to do. Right? And how do you guys best communicate? And how important is that communication, as you guys are continuing to like work together and raise that bar, as you continue to do business together.
Todd Arduser:
As you can see, we communicate a lot over lunch.
Kevin Poppel:
So, Todd jokes about that. And we both like food. There's no doubt about that. However, one of the things that I look forward to, not because I just like to eat, but I look forward to that meal. It's like a family meal, right? You go with one of your trusted advisors that, I mean, I talked to Todd more than once a day usually, to go and just vet things out. Sometimes it's as simple as I'm frustrated with X, Y, and Z. And he can help me laugh it off.
Matt Anselm:
Well, not dissimilar to what you were kind of talking about with your uncle too. It's like just having the open lines of conversation and communication are just part of the way that you guys continue to learn, and talk, and figure out, and help solve problems together. Right?
Kevin Poppel:
I think the one thing that we've all failed in, in that trusted advisor group, and something that we're going to continue to improve upon is the formal communication. The informal, we do a pretty good job. And it's pretty easy to text message and pick up the phone or send an email. But that's one of the things, that's one of my goals for 2020 is to... and we've talked about it, we've just failed at, is really communicating between, excuse me, between that group so that everybody is aware of what's going on all the time. And it's just the general progression. We made the first step of actually getting the group together. Now, we have to take it to the next level and get down to the detail. Like, it's that decision making that gets my motor running. How are we going to make a better decision than what we maybe made last year? Or how do we learn from the mistakes? Or how do we build off of our successes more than anything? Let's not dwell on the mistakes. But how can we build on the successes that we've had?
Matt Anselm:
Yeah. One of the things that you said that rang true to me though was like, yeah. We failed at that. Like being able to admit that you failed is a pretty hard thing to do, especially with... I mean, I haven't been around agriculture for a super long time, but admitting failure is something that I haven't really come across as being something that guys in this industry are really willing to even talk about. How have you kind of gotten over that?
Todd Arduser:
It's tough. I mess up three, four times a day, honestly. You try to learn from it. You try to grow from it. You try to get better from it. But sometimes you make the mistake four, or five, six times. In today's society, it might just be a word or two on how you mess up in stuff. And, in Kevin's situation, in farming right now, one mistake can be thousands and thousands of dollars. You look at the precision side of things. And, if your planner is not at an inch and three quarter, two inches, if you're off a half inch, if you're at an inch and a quarter, we're talking eight, ten, 13 bushel an acre. And that's hundreds of thousands of dollars and stuff. And those mistakes are also why we do the precision, also why he has the meeting and stuff like that, to keep that stuff from happening. What technology? What's there? How can I prevent this from happening and such? But-
Kevin Poppel:
So, it still happens. We still make a lot of mistakes. So, why do I admit my mistakes? Because I can't afford not to. I don't have the luxury of having a pool of money to dive into. And I don't hold any ill will to people that do. But, in my case, I don't have a choice. I have to fail fast. If I fail slow, it's a slow death for me. And so, for me, I don't have a choice. I don't have a choice, but to put together a trusted advisor group to help me so I don't make a colossal mistake.

I always tell our employees, generally speaking, I'm going to support your decision. It's no different than what goes on here. So, I'll give you an example. We sit down and we pick seed varieties. Do you think we hit the mark on every one of those? I can take you out to a field right now. That is my most frustrating field because I drive by it almost every single day and we failed together at picking one of those hybrids based on the year that we had, one out of eight, nine.

But, instead of getting upset about it, I think it's okay collectively, what did we miss? Did we miss anything? Or is it simply the year? Well, as it turns out, I think it's all of the above. We missed a couple of things. We had a year that was very unforgiving for some of the things that we missed. And frankly, we're not going to win them all. But it was a very small mistake, if you will. And we likely won't let it happen again, based on the information that we have.

Now, next year we still may have a variety that doesn't work out. But that's also part of the reason that we have multi-hybrid planting too. Because, on a percentage basis, the percentage is going to be much lower of failure because you have more hybrids that you're spreading out that risk over.
Matt Anselm:
That diversification. Yeah.
Kevin Poppel:
So, that was a huge driver in why we did that in the first place. And, when you get that group of brain trust together, it's like, wow. We're spreading that risk out now twice as much as we used to. I never thought about it that way. I was more looking at it from the technical side of, oh, this is really cool. I can plant two hybrids.
Amity Shed:
Kevin works hard to make the most out of his land every year to get better results every year, and most importantly, to leave the land better than how he found it. And his uncle definitely helped set him up for success in that sense.
Speaker 1:
I want to talk about what you're doing with the land you farm now that was your uncle's land to make it better. And Todd, what part you play in that relationship and how you guys work together.
Todd Arduser:
In the five years I've known him in the five years he's taken over the operation, he's also flipped kind of the operation upside down from what he first started the first couple of years to where he is now with split nitrogen, and strip tail, and all these practices that he's using, which are better for the environment, better for the soil, and stuff like that. He has brought into the operation and made it work and making it work very, very well.
Kevin Poppel:
So, let me be clear, my uncle did a phenomenal job of farming. He raised great crops and was very progressive up until he got to the end where it just did not make sense for him to continue to make these investments. He talks about the years when he was my age or maybe slightly a little bit older where we had to keep up with it because I had to make money for my family, is what he would quote to me. And I said, I'm in the same boat right now. But now, we're diving into the details.

So, we're taking his knowledge of the land and we're flipping it upside down, if you will, and diving into the details. Because that's where our profit is right now. Our profit is in the minor details. The major yield limiting factors, the major contributors to higher yield or higher net margin is what we're focused on. And that's different than it used to be because we have different tools than they used to have. I mean, we can take DNA samples of our soil. Five years ago, if you'd have said that to me, I'd have kind of giggled at you. And now, we will likely use those to even sharpen our tools a little bit more.

So again, I think, to recap, what we're doing different is simply just diving into the details because we now have more information than we've had in the past. And, not only do we have the information, but we have the tools to use the information. So, the yield monitor was cool when it came out, but all it did was print a map out. Now, we not only have that information, but we're layering 17 other layers on top of that and using it, utilizing it to its fullest to really understand each acre by acre.
Matt Anselm:
You talked about the first thing you want to do is your legacy, right, like being able to have that. And part of that has to do with how you treat the land, and how you steward the land, and understand the inputs and resources. Like stewardship can mean a lot of different things to a lot of different people. Sounds like you have a pretty strong vision of what that is. Can you kind of give me your elevator speech in that sense of what really it means to you and why it's so important?
Kevin Poppel:
So, sustainability and stewardship are buzzwords that are pretty critical to our business right now. And we realize that. And I think, from our standpoint, we understand that the consumer of today and tomorrow will demand more information than what we're currently giving them. In preparation for that, we have a duty to be sure that our land is left in better shape than what we found it. And the people that farmed before us did a phenomenal job of that. It's one of the misnomers that farmers are not good stewards. We're the best stewards of anybody out there. When you look at what we have to work with, the land is the only thing we have. Without the soil, we have nothing else.

So, from my standpoint, when I talk about and think about sustainability, when I think about stewardship, for me, it really boils back to the legacy. How do I farm for the next 30 plus years in a way that is going to leave the land better than what I found it in, frankly. It's really that simple to me. My vision of stewardship and sustainability is that we take the tools that we have, and we take a systematic approach, versus a segmented approach in all of the farming practices that we have, all the way from harvest to harvest.
Our year of sustainability starts with our combine and we look at technology that can improve how do we keep all of the organic matter on our own fields. It seems like a simple concept, but it truly isn't. But we have technology now that makes it more simple than it used to be. We used to go across the field with a stock chopper and we'd grind everything up. And the first wind we had we would lose a lot of that organic matter. We don't want to do that anymore and there's tools now to help us. It's no different than tillage, granted there needs to be some tillage done. We talk about my farm, the land that we farm is extremely variable so we know that our land has a tendency to blow. Or if we get a heavy rain, it has a tendency to wash. What can we do to mitigate that risk?

We can go to strip-till. Not only can we go to strip-till, but now we can put our fertilizer on in a timely manner and we're injecting it into the soil. How do we do our nitrogen? We went from putting fallen hydrus on to putting no nitrogen on in the fall because frankly we knew we were losing at least 30% every year, every year. I can't afford to lose that 30%. Our water streams can't afford to have it in them. And frankly, there's a better way to do it. So now we look at it a completely different way. We look at it now as, when does the plant use nitrogen and what does that look like?

It means that we probably go to the lake less in the summertime, I'll be honest with you because we're in the sprayer putting nitrogen on. But at the end of the day, we cut our nitrogen use by over 30% than what we did. So not only did it help us financially, but we're not losing much of that fertility like we used to. So for me, it's taking that systematic approach. I preach this ... people ask, "Well what's sustainability mean to me?" It's a systematic approach. It's not one thing. It's not strip-till, it's not nitrogen management. It's all of those things put together. It's choosing the correct methodology for everything together.
Amity Shed:
Another question we often ask on this podcast is why Channel Seed? We ask the seedmans, we ask the agronomist, we ask the farmers. Why do you choose to plant Channel Seed? So we asked Kevin the same question and he had his answer ready.
Kevin Poppel:
For me the proof's in the pudding, the Channel hybrids work for me. That first year that I farmed was a learning experience for me. My uncle did have some Channel corn that he bought, not from Todd, because you guys weren't Channel dealers then. But he had bought it in the past and so I had got to see it on his land first, on his dime. And so I knew that it had a very good chance at performing and it did extremely well. So we were 50/50 the first year and after the first year we switched and haven't raised anything since, anything other than Channel. And truly what drives that is the relationship that I have with my seedmans. That's a critical piece because they are pinnacle to my trusted advisor group. But not only that, with the type of technology and what my goals are on my operation as far as sustainability and accountability to the land and to the people that I rent my land from Channel is lockstep with me in our goals.

When I decided to go with a multicult of our planner, a multi-hybrid planner, it was very important to me that whichever seed company I was going to work with was going to be able to work with that. And oftentimes the answer that I got was, "We don't do that. We don't have the data." And instead Todd pushed really hard to say, "Guys, how can we help them?" And ever since then it's evolved to not only Todd knowing my operation, but the district sales manager understands and knows my operation, the agronomists at Channel knows and understands. In fact, the agronomist stops out to the fields occasionally. He doesn't say he's going to stop by but he's stopping by and taking a look, "Did we make the right decision? And if we didn't, how do we change that for next year?" I mean, that doesn't happen with as busy as people are unless they truly care about your operation. So in my case, first it's the relationship that I have with Todd and his team. Secondarily it's frankly the Channel is very aligned with where I want to go with my operation.
Matt Anselm:
Yeah. It's cool to hear it too because Channel is kind of that younger sort of a little bit more progressive sort of brand. Right? It came out and they listened to what sort of was what the new growers and certain growers were asking for and how they can do kind of what you're doing is meld all the different technologies and all the different opportunities. So many inputs that you have to deal with coming in there and you got to be able to work with a company that really feels like they're actually taking that to heart and helping you make sense of it as well.
Kevin Poppel:
We will thrive because of a systematic approach and Channel has embraced that and has pushed us to the limit of yield and net margin. Because at the end of the day net margin is what drives us. And I'll be completely honest, and I know people would disagree, but I would rather raise 150 bushel corn and have more net margin than raising 300 bushel corn and breaking even. And Channel has the ability to help me with that and there aren't many other companies out there that do. They have the resources, but there aren't many companies that will take the time to sit down with me for several days a year.

This is not just a one time deal, they sit down with us several times a year and take a deep dive into every acre on my farm. And guys, that's an emotional thing. If you go and buy a car and someone seeks to understand really what you're trying to do, you have a good feeling. Right? And this is my whole life that we're talking about. It's my livelihood. It's my passion. It's what I love. I mean, these guys are digging into it as deep, if not deeper than I am sometimes. So Channel ought to be darn proud of what they're building. Because from my standpoint, I can't do it without them.
Matt Anselm:
I love it.
Amity Shed:
Amazing.

Thanks for listening to this episode of Channel Chat. We hope you enjoy listening to it as much as we did meeting Kevin and Todd and recording our conversation.
Matt Anselm:
Thanks Amity. It was a pleasure to be able to join you on the podcast today. It's always impressive to meet guys like Kevin and Todd and see what it's really like out in the field and how they've been able to build their relationship over time. And I look forward to doing it again with you sometime.
Amity Shed:
Now we're going to hear from Matt Bennett who is continuing his conversation on grain market strategy.
Matt Bennett:
This is Matt Bennett, the Channel Seed Green Marketing Consultant coming to you with a final episode as far as putting a marketing plan, a risk management strategy together. So we talked just a little bit in the previous episode about the first thing you need to do, of course, is to step in there and figure out your breakeven price then you put a marketing plan together. What we have to consider as we start to figure out some of these timing issues that we talked about in the last episode as far as the timing issue goes, how much money are we going to need during harvest time frame? And so as a producer when I'm setting up a marketing plan I've got to know, as far as I'm concerned, not only where I'm making money but when do I need my money?

And so one of the biggest mistakes that we make as producers is we get forced into making decisions sometimes, particularly during harvest, where it's sell versus store. We don't know for sure what we want to do, but we do know we need some money. And so unfortunately a lot of times we make the decision to sell whenever the basis is pretty darn pathetic because we're forced into that situation versus the idea of earlier in the year, maybe just the rally that we've seen here in the month of May in 2019. During that rally, it's a really good time to say, "You know what? I know I'm going to need whatever, 20, 40, 100,000. You name it. And I'm going to go ahead and sell some bushels at levels that I know that I can make money at if I have that crop plan, it's up and looking good."

And so we definitely need to be thinking about the timing aspect. The next thing we need to think about is do we want to do this all as far as physical bushels are concerned? Whether it's hauling it across the scale or hauling it, maybe even having them come to my bin and picking it up? Or do we want to put marketing plans together that are going to have just a little bit more flavor to them? For instance, it doesn't necessarily have to be a hedging strategy but it might be a strategy for instance, like basis contracts, HTAs. You name it, but it doesn't have to just be a hedge account. Because the bottom line for me is that there's a lot of tools out there even that I don't understand that I need to continue to educate myself on because if they can help me manage risk on my individual operation, I certainly need to be willing and ready to figure out what I'm going to do to manage that risk.

And so as you try to put your marketing plan together, make sure that you're covering all the bases. You're thinking about whenever you need the money and you're thinking about what can I do to become a better marketer on my operation given what I know and given the resources that I've been given to work with. here's also a lot of you that have hedge accounts or are probably interested in getting some sort of a hedge. You can, I will tell you that first and foremost, having a hedge account has got a bad rap with a lot of producers. Typically the hedge accounts can be abused by people who start out maybe with the right intentions of hedging and then they decide they want to do a little more speculative flavor because they see the money that can be made. And as you know anywhere that you can make a lot of money, you can lose it just as fast.

And so I would say that any producer though in 2019 should strongly consider figuring out a way to get a hedge account opened up. One nice thing about it is is with most anybody that I know it doesn't cost you any money to open the hedge account. I know maybe if you're going to sign up with a particular service there'll be a fee, but there's plenty of brokers out there probably in your given area that you would be able to open up a hedge account and it not cost you any money to open that up. I know with our particular service that I offer in my office, we don't charge anything to open up a hedge account.

So why would you want to do something on paper? Well, let's think about 2019 for instance. A lot of producers saw a really strong basis. They wanted to sell some cash corn cause they needed money, but yet they wanted to participate in an upward market. And so we saw that, heard that from a lot of producers. So what they would do is is sell the corn to the elevator. The basis was telling them to go ahead and sell it, sold the corn, and then they reowned it either with futures or with some sort of an option strategy. And I would say for someone who's never traded before, it's probably best to start with options strategies. Whenever I'm purchasing an option the initial investment is all I can lose. With futures it's got unlimited risk and unlimited reward. And so obviously you've heard of margin calls. If you're a producer, people don't really like those. And so I definitely want to know exactly what I'm doing whenever I enter into these strategies.

But here in 2019, a lot of folks have reowned corn that they've sold and it's done really well for them. It's not always going to work like that and producers need to understand that. The other thing that you can think about is as this market rallies, as a producer maybe I don't want to sell a whole lot of corn to the elevator. Maybe I don't want to actually ride an HTA with the elevator because I don't have any corn planted if I'm in certain parts of the corn belt. So how can I latch onto some of this price that's so attractive without locking myself into some sort of situation that I can't deliver on? And one good way to do that is to put a foot underneath the market. So if I'm purchasing a put option, I know that I've got a floor and if the market plummets I'm going to be able to have that floor locked in.

And so if I'm a producer that can make money at $4 corn, as I'm talking about this we're actually having an opportunity to buy put options to give you a really close to $4 floor. Some of those put options have actually been bought for 20 put options for 20 cents. It gives you a $4 floor, now that's basis the board. But what it does is it sets a floor in there underneath you. So whether we're talking to a hedge account, whether we're talking selling to the elevator, there's lots of risk management and marketing tools to utilize. If you're not familiar with all of them, don't feel like you're alone there. But certainly it's something that we all need to try to do to educate ourselves on.

Because with most of the producers that I speak with, they tell me the toughest part of their operation is their marketing strategies, their marketing plan. Let's try to educate ourselves on ways that we can better manage our risks because if we can become better marketers in this era of lower profitability that we've entered into the last few years, I think it's going to serve us well. Again, this is Matt Bennett, Grain Marketing Consultant with Channel Seed.

Amity Shed:
Thanks for listening and don't forget to subscribe to this podcast to hear more from season two of Channel Chat. Learn more at channelpodcasting.com.