Rough Start, Lessons Learned

October 9, 2009 03:57 PM
 




Quick Facts
> Location: Mapleton, Minn.
> Partners: Karl and Jackie Duncanson, Pat and Kristin Duncanson
> Children: Four in each family
> Crops: Corn, soybeans, wheat, peas
> Livestock: Hog finishing unit, cattle feedlot
> Size: 4,600 acres



> As Top Producer of the Year finalists, the Duncansons received an expenses-paid trip to the 2009 Top Producer Seminar in Chicago. Click here for information on the contest or click here for information on the 2010 seminar.



As Karl and Pat Duncanson greet this wandering journalist, gazing around at their currently empty cattle feedlot, Karl notes, "This is never going to be a showplace farm." That is not a lament, nor an apology, however. The Duncanson partners never aimed for white-fence-and-manicured-grass pastoral loveliness.

They got what they wanted: Their operation is a hardworking, broad-shouldered farm just west of Mapleton, Minn., that provides a decent living for both their families—a place with enough vitality to pass on to their eight children better than it came down to them.

Their special blend of management skills, attention to agronomic and marketing detail, and volunteer activities earned Duncanson Growers the title of Finalist in the 2009 Top Producer of the Year contest, sponsored by Challenger.

The brothers started farming with their father, Dale, in the mid-1980s, at one of the worst times in modern U.S. agricultural history, and many farmers in the area were forced out of business. "We began a roller-coaster ride of business success and setbacks driven by crop yields and market prices for crops and livestock," Pat says. "We're lucky we're not five years older. We probably wouldn't have survived if we were."

When the Duncansons hit the 1990s, things got tough again. "In the early ‘90s, even with crop insurance, we had a couple of disappointing earnings years," Pat recalls. "We couldn't make progress forward."

Something had to change. They decided that tiling fields, even on rented ground, would boost crop yields and put them on firmer financial footing. They worked with landlords who were willing to tile, and they shared the costs. Yields in some fields improved as much as 30%. "Instead of getting caught taking one step forward and then one step back year after year, our setbacks in the poor years became much smaller," Pat says.

Sales Price. As yields climbed, they turned their attention to marketing. They are longtime "students" of Jerry Gulke ("Market Strategy" columnist) and monitor several other sources.

"We don't hit home runs, but the last couple of years, we captured some great opportunities," Pat says. "And overall, luckily, there are a lot more up days than down days.

"Sometimes I get frustrated with farmers who are too concerned with the details of marketing—the puts and calls and futures," he says. "If it's time to sell, the tool doesn't matter as much as taking the action."

However, he adds, "With the futures market, we can change our minds, and that's a great thing. I
can't think of another business that can do that."

Asset Decisions. Business always comes before beauty here. Driving a pickup truck with a quarter million miles on it, Pat says Duncanson Growers never buys anything just for new paint. "We're careful to make smart asset investments. We look at key pieces of machinery and ask which we use intensively. We keep our spray and tillage tractors fairly new and under warranty, but there was a time when we had in excess of 10,000 hours on our main tractors."

Community. Hard as they work at it, making money is not the family's main priority. Community involvement comes first: everything from the local school board and state and national commodity groups to advising for several organizations at the University of Minnesota.

"It gets to the question of what is the responsibility of commercial-sized farms to their communities," says Pat's wife, Kristin. "For our business to be long-term viable, our community needs to be viable."

"As a farm grows, its commitment needs to grow exponentially," Pat adds. "Thirty years ago, a farm our size might have represented 10 operations, all active in the community. Now they're not there. It means we need to be more than 10 times as active."

Inside Duncanson Growers
Livestock: Custom cattle-feeding was once a standing feature on the Duncansons' spread, but eventually the brothers decided the returns were not sufficient for their effort. "Part of it was scale; part was inefficiency," Pat says. "We were paying the bills on the feedlot with custom feeding but did not feel we were getting ahead." They now buy cattle only when they can lock in profits. "We look at the cattle, ethanol, the elevator, the rail terminal and the feed mill all the same way: as markets for our corn. Wherever the best market is, that is where we go." They finish hogs on contract.

Control Costs: Not only are the Duncansons careful about capital purchases, but Pat also lines up inputs well in advance. He even hedges interest rates (for how to do it, see page 34). Home-raised hog manure reduces fertilizer costs.

Beyond the Gate: Pat and Kristin take frequent learning trips to other parts of the world, including South America, Europe and Africa; Kristin went on a trade mission to China. "It's important to learn how other people in the world live," she says.

Passion for Curling: You might know the sport of curling from the Winter Olympics. Come cold weather, you'll find the Duncansons and friends on the ice, brooms in hand.

What's Next?: "We know someday we will add acres because some of our children will want to farm. We're just making sure they're smart acres," Pat says. "We need
to make expansions within our core business or work with managers in areas where good business models are already in place. It is not an easy thing to step into an operation like this and run it. We need to change some things on our end so it is easier for our children when the time comes."

Converted to Grain Storage: To store an entire crop if desired, the Duncan-sons converted Harvestores to store grain. An Integris Advanced Grain Management system monitors temperature and moisture content. They also use flat storage; only 20% of their crop is stored in conventional steel bins. 



Top Producer, October 2009

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