Getting started in the ag industry is a challenge, but it's worth it
November 23, 2016
The future of agriculture is bright, but it isn't easy.
"It's hard but don't give up on it, I've wanted to quit quite a few times," Jack Geis, owner and operator of Flying E, Inc., said.
Jack and his wife Nicole have built a cow-calf operation from scratch. But it didn't happen overnight. It took Jack years of work and now they have their own ranch to run 500 of their own mama cows.
"I think one of my biggest accomplishments is that I bought our own place when I was thirty and I had my cows paid off before that," Geis said. "Then I met my wife, whom I get to work with everyday, and she runs all the financial stats. We calve out a lot of heifers, so she does a lot of that as well. It's just her and I that run this operation together, we don't have any hired help. So, we just do it all together and we've worked out a real good partnership."
Many young people today strive to accomplish what the Geis' have. It is important for the future of agriculture that those young people are able to enter the field and be successful. Even though it's a difficult journey, it can be done with enough hard work and patience.
"The youth of today are who will make the future and unfortunately, especially for those that don't have families to go back to on the farm, it's hard to get started," Mike Yackley, branch president of Onida and Selby, South Dakota BankWest locations, said.
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There are many programs now available to help young and beginning producers get their feet on the ground whether they have a family operation to return to or even if they need to start from scratch.
"In recent years, the cost of being in agriculture has increased dramatically. It takes quite a bit of money, so unless you have dad helping you or someone that's willing to finance the acquisition of your farm, or if you have the capacity to get bank financing, it can be pretty challenging," said Steve Apodaca, senior vice president of American Banker's Association (ABA) Center for Agricultural and Rural Banking. "The banking industry is well aware of these issues and there are programs available from both the Farm Service Agency (FSA) and the USDA B&I program. You can combine a package with all those things and put enough financing together to allow you to enter the field."
Yackley, who is an ag lender in a rural South Dakota community, is experienced in helping people get set up to start an operation and he says the FSA is a good starting point for someone looking to build an operation.
"There are many FSA programs to work with your local bank. The terms are usually more lenient and they work in conjunction with the banks in your hometown. Your local banks know all of the county lenders that your FSA office has and are fairly familiar with the programs that they offer," Yackley said. "That's what I would say is probably the biggest thing for those that are starting out without a family operation to go back to – get connected with the FSA office through your lender,"
Meeting with your lender for the first time can be nerve-racking, but if you approach them with the right tone, generally it should be a good experience.
"It's important to make your first conversation about what it is that you are trying to do and what your plan entails rather than about asking for money. Beyond the money, what you are getting is a business partner that will help you succeed," said Carl Horne, Young, Beginning and Small Producer Program Outreach Manager for Farm Credit Services of America.
It's crucial to find a banker that you get along well with. Search around until you find someone that is a match and is easy to get along with. It will make for a much more successful business partnership.
"Your banker needs to be involved in what you're doing. Be straightforward, honest and open and trust in what they can do for you. Communication is key to success. The more information you can provide your lender, the better they understand your operation," Yackely said.
Jack Geis met with several bankers before he found the right one, but once he did it was an effective partnership.
"Shop around to see what the best deals are out there. There are many bankers and people that want to do business with you," Geis said. "Our banker is a younger guy, too. He gets what we want to do and what we're thinking so that makes it easier and he's really easy to talk to. It's really nice to find someone like that."
Still though, finding the money and the right lender seems to be only half the battle when starting up an operation. There is so much to learn, research and decide upon that it can be a daunting task. But there is a bright side, there are many resources available to help with all the calculations from start to finish.
The Farm Credit Service's Young, Beginning and Small Producer Program was created to help people obtain loans and there is an entire team of experts for each customer to rely on for advice and help along the way.
"We put a team around the customer. So not only do you have the financial officer, who is the lead person in the relationship, but we also have people that focus on risk management and people that are on call at any time to answer questions about the loan and provide advice," Horne said.
The program takes the customer from start to finish. They have professionals trained to help them run all of the necessary ratios and then customize a loan to fit their needs. They also have opportunities for clients to take business training courses as well as participate in their "side by side" conference with other young producers in the region. This program stresses the importance of managing a business by closely monitoring all the financial data.
"One of my favorite sayings is, 'you can't manage what you don't measure.' A huge element to effective decision-making is having really good data around you. For example, it's really hard to execute an effective marketing strategy if you don't understand the fundamental goal, which is to be above your cost of production or limit how below you are on your cost of production. That should be measured on each enterprise that you are involved in," Horne said. "We work hard to make sure our customers understand what their performance measurements are and how that should impact their decision making."
Geis started participating in the program and said it offers information for all levels of the industry.
"Now we're with Farm Credit Services and they have many different programs to help young people get started and they're a nice group of people to work with," Geis said.
Surrounding yourself with a group of educated advisors and mentors in the field will definitely make it a smoother journey. Finding someone experienced in production agriculture is a major component of starting a successful operation.
"I recommend striking up a mentoring relationship with another farmer that's successful. Then they can meet with them on a regular basis and give them advice," Apodaca said.
Most any lender in the industry will say that this is one of the most important steps in getting started.
"It's key to ask for guidance from someone you respect in the area, just don't do it because they are doing it across the fence because it may not fit in your operation. So, get opinions from lots of people," Yackley said.
Geis also followed this advice, working for a relative until he was ready to get out on his own.
"I worked for my uncle right out of high school and I was there for about four years, so I learned how to do a lot from him," Geis said. "He let me run some cows with him, then I was able to get out on my own."
Geis' story is an inspiration to any young people struggling to enter the industry on their own. Even if you are one to look at the glass as half empty, remember that there is always a positive side.
"Remain optimistic. Agriculture is cyclical and if the industry that you're participating in right now is down, rest assured that in time, these industries do improve. Quite frankly, with some of the turmoil that we are having, right now is an excellent opportunity to get a front row view watching producers make a lot of decisions that really matter," Horne said. "If you pay close attention you're getting a masters education in decision making and risk management experience. Turmoil like this most typically brings opportunities to those that are prepared, work hard everyday but keep your eyes peeled for opportunities as they arise."