Kentucky farm with deep roots grows vertically and professionally
To say the Petersons have a long history of farming is a severe understatement.
“One of our direct ancestors farmed Manhattan Island, N.Y., in the 1600s,” says Bill Peterson, a partner of Peterson Farms. “There’s been 13 generations since the Manhattan farmer, and there have been farmers in every generation of our family.”
Peterson Farms At A Glance
Operation: Peterson Farms produces GMO and non-GMO corn, soybeans, wheat and canola on 3,100 owned and 12,400 rented acres in central Kentucky. Nearly 6,000 acres are planted and harvested twice each year. They sell wheat and corn to bourbon distilleries. Non-GMO soybeans go to Japan and Korea for tofu and other products.
Team: The farm is a partnership among three brothers and a son: David, Bernard, Bill and his son Albert. David’s wife, Sandy, and Albert’s wife, Karen, hold key office and financial roles. The team also includes 15 full-time and 14 seasonal employees.
Community: The Petersons are involved with several farm and commodity organizations and serve on numerous community boards, including school boards and local arts councils. The family donates grain to its local FFA chapter.
Technology: “With a family full of engineers, we are always looking to be more productive,” Albert says. They use GPS on nearly every machine and have used yield maps since the early 1990s. An inventory management software system links to their phones and tracks seed, chemical and fertilizer on all fields. They use software to manage truck logistics, accrual accounting and more.
Although the operation has grown in sophistication, the passion of its owners is definitely genetic. In the past decade, the Petersons have doubled their crop acres. Total acreage tops 15,500 in seven counties that span 90 miles.
The current management team includes three brothers and a son—Bernard, 55; David, 61; Bill, 67; and his son Albert, 41. Their strong business focus led them to produce GMO and non-GMO crops for specific end users, such as world-famous bourbon distilleries and international markets.
The Petersons grow wheat, corn, soybeans and canola on a patchwork of more than 400 small fields below tree-topped hills in central Kentucky.
The ability to seize opportunities is central for the Petersons. They stay true to their core values, in addition to establishing a sustainable growth strategy and progressive succession plan. As a result, they were recognized as the 2015 Top Producer of the Year winners.
Southern Living. In the 1950s, the brothers’ grandfather John C. Peterson founded the Kentucky operation as a dairy. He bottled and delivered milk to capture extra value. When large milk processing plants came and made his on-farm bottling facility non-competitive, he exited the venture and focused on dairy and crop production.
“He was successful because he knew how to adapt to change when the tide had turned,” Albert says.
Eleven children and 55 grandchildren later, the operation is a modern-day success story.
Recipe for Success. The Petersons view their land as an investment, devoting time and technology to maximize yields on each acre.
Since 2006, they have installed more than 2 million feet of drainage tile. “The success of these efforts is dramatic,” Albert says. “Even in our wet soil types once considered poor, we have achieved 200-bu. yields.”
Each field averages 30 acres in size, so planting and harvest logistics is the equivalent of a 400-piece jigsaw puzzle. “We plant fields in an order, starting up river and moving down river,” Albert says. “We have a plan, but it is always altered by weather. Our field moves are often, but we try to make them short distances.”
Central Kentucky’s topography requires the Petersons to navigate small fields and winding roads, but they wouldn’t trade their location for anything. One reason is they’re centered in the heart of the world’s bourbon whiskey distilling area.
“Within 45 miles of our grain facility, 90% of the world’s bourbon is made,” Bernard says. For 35 years, the Petersons have been the main supplier of soft red winter wheat to Maker’s Mark, a world-famous and growing bourbon distillery.
The grain ingredients of Maker’s Mark include approximately 70% corn, 16% soft red winter wheat and 14% malted barley.
“Because Maker’s Mark is a high-end whiskey, we need high-end grains,” explains Greg Davis, the company’s master distiller. “We want to go from the farm to the distillery to the consumer and keep that as tight as possible.”
Maker’s Mark has used the same recipe and yeast strain for more than 150 years, so every load from the Petersons must meet strict quality guidelines. The distillery has only 26 hours of grain storage capacity, so they deliver wheat daily.
The Petersons sell grain to six other local distilleries. To do so, they’ve invested in 2 million bushels of grain storage capacity. Their high-tech bin system allows them to monitor quality and segregate GMO from non-GMO grain.
Storage is key in their marketing plan. It allows them to capture carry in the grain markets and secure multiyear contracts.
To meet local and constant demand for their crops, the Petersons invested in grain storage. Their total capacity is 2 million bushels.
Team Development. All four of the Petersons attended the University of Kentucky, earning engineering and ag degrees. After college, Albert worked as an engineer for John Deere Harvester Works in Moline, Ill. “I came home every other weekend [eight hours each way] for harvest,” he says. “I was 25, and I loved it.” He couldn’t wait to farm full-time, so he took a pay cut and moved back in 2001.
The Petersons were building a first-class team, but their management structure wasn’t keeping up.
“For years, my uncles and father had a loosely-structured partnership,” Albert recalls. “I was back at the farm for over a decade before officially becoming one of the business owners. It wasn’t settling, since you can’t read people’s minds.”
After years of saying “we need to do something,” the Petersons hired experts and prioritized succession.
“We can look at our nieces, nephews and grandchildren,” Bernard says. “But they may not have a desire to be part of the farm, so we wanted it open so others could join us. Long-term, to get top management people, we needed to have that ability.”
Invaluable Partners. The Petersons spend quality time with their 92 landlords and offer many leasing options. They include investors, former farmers and celebrity radio host Rick Dees.
Landowners seek out the Petersons for renting their land, which has led to most of their acreage growth.
“They know the Petersons will do a professional job of taking care of their land,” says Johnne Syverson, president of Transition Point Business Advisors and the family’s lead consultant for succession
and financial planning.
The four managers have clearly defined roles. Bill heads up land management. David oversees marketing and the elevator. Bernard is the face customers see, as well as the lead on financial analysis. Albert manages farm operations.
David’s wife, Sandy, is office manager and Albert’s wife, Karen, is human resources manager and an accounts payable specialist. There are 15 full-time and 14 seasonal employees. Future growth will depend on finding qualified employees.
“We’re looking into more benefits, like retirement options and safety and wellness programs to entice employees,” Karen says.
The team focus is working.
“I admire the harmony among the owners and employees,” says Moe Russell, a farm adviser and president of Russell Consulting Group.
Now, the Petersons are keeping their eyes on the future.
“We have come a long way in being more formal and like a business with the organization and systems we’re putting in place,” Sandy points out.
Disciplined Expansion. The Petersons evaluate opportunities based on if they have the energy and expertise to pursue them. “Our intention is not growth for the sake of growth,” Albert says. “We want to grow vertically and professionally.”
Goals include allowing senior team members to ease out of day-to-day operations.
Peterson Farms remains successful 13 generations later. Why? Bernard cites: “Family support, hard work, people working together, good fortune and the grace of God. We are blessed we love what we do.”
Snapshot Of A Comprehensive Succession Plan
The Petersons hired Johnne Syverson with Transition Point Business Advisors to lead their succession planning process. It spanned two years and included a collaborative group of experts. He provides an overview.
Phase I: Diagnostic
- Syverson’s team interviewed key stakeholders and their spouses.
- The family provided a package of current legal documents and financials for review.
- Syverson’s team presented a report, which highlighted interview themes, personality styles, gaps between the partners’ vision for the future and existing circumstances, and potential solutions.
Phase II: Plan Design and Implementation
- A team of experts developed recommendations to match the Petersons’ goals. They created three new business entities to provide a structure into which Albert and others could be integrated into ownership of the operation.
- A buy/sell agreement for each entity clarified what would happen if an owner or partner exited.
Phase III: Sustainability
- The four partners, their spouses and advisers hold an annual business review meeting. They evaluate decisions from the previous year, report on previous action items and review a financial report.
- The group discusses strategic issues, such as land acquisitions.
- A celebration dinner follows the day-long meeting as a capstone to another successful year.