Ten years ago, brothers Dan and Dave Anderson of Anderson Wheat Farms were at a crossroads. One path, in Nunn, Colo., they knew and understood; they just didn't like where it might lead. The other path was a one-way street that hadn't been mapped, with no chance for a U-turn.
The brothers had always lived with the challenge of farming nearly 8,000 dryland acres in fields that rarely topped 20 bu. per acre on the Front Range of the Rocky Mountains. Then came a new kind of land competition from suburbanites who streamed in from nearby Greeley and Ft. Collins, even Denver. They loved the beauty of the Front Range and wanted their piece of it, too.
"We had three choices,” Dan says. "We could stay and fight it out. We could sell out and do something else. Or, we could do what we did.”
They left behind the scenic Front Range in northern Colorado and moved their 50-year-old business and four families 2½ hours east to the Colorado plains near Haxtun. They haven't regretted it once.
"We got out here and we almost didn't know what to do,” Dan says. "It's a lot easier farming out here. There's a saying in Colorado that you farm from west to east … the further east the better. We get more rainfall. We have irrigation. The soils are better, and the fields are so much bigger.”
New Farm Plan. It was a two-year process to find a new farm due east, and the brothers probably spent as much time in meetings and negotiations preparing for the move as they did farming during that period. Their search for land took them to parts of Colorado, Kansas and areas near Lincoln, Neb., until they finally settled on a Colorado farm whose third generation was not interested in farming.
The Andersons were able to use a 1031 like-kind exchange to save money on the land purchase. They sold most of their operation in 80-acre parcels to private individuals and developers—a prime opportunity during the late 1990s—and used the tax-deferred income to buy the Haxtun farm.
Farming in eastern Colorado's semi-arid environment requires a high level of planning but also agility that allows the brothers to capture market opportunities and adapt to changing conditions. Anderson Wheat Farms always has a written three-year cropping plan. Dan calls it a "liquid plan,” and changes can be made, but it's a useful point of reference. That level of homework allows them to book fertilizer and other inputs far in advance when pricing is advantageous.
"I wish I had 10 more [farmers] just like them,” says Kenny Stumpf, the Andersons' banker at Farmers Bank near Nunn, Colo., who still works with them today. "Dan has taken my spreadsheets and worked with them to do in-depth number crunching. Not only does he figure out what they should do, he takes a best-case and a worst-case scenario and factors that into their plans.
"They've adapted GPS into their operation, and Dave knows exactly what their fuel costs will be for every field and every row. He travels the same row and puts the planter wheel in the same spot each year so they are planting into the mellow parts of the rows.”
That type of insight and meticulous planning makes them an easy risk to take, Stumpf says. "You could put Dan on the other side of the table and you know he'd look at things with the same critical eye we have to. It's a lot easier to work with people who understand that.”
The process includes taking their long-term average crop yields (updated after each harvest) and applying price projections to determine potential income, then developing a detailed breakdown of all costs into crop enterprises. This allows the Andersons to determine break-even commodity prices and opportunities where sales or marketing strategies can be implemented. The detailed breakdown of costs also helps control overruns in case a crop underperforms for the year.
"While we don't know what our final yields will be to determine exact break-even costs, our long-term averages provide us with a very solid base to begin to make decisions from,” Dan says. "Our early sales are usually well above our average break-even and help cushion a production shortfall.”
The budget is constantly updated during the year to account for any changes. "It is a valuable exercise that helps drive the business every year,” Dan adds.
Communicate and Enjoy. Spend just a few minutes with the two brothers and it's clear they are business-focused. It just doesn't come at the expense of fun, though it often comes at the expense of each other.
Dan, with a degree in agricultural economics from Colorado State, is the business manager; Dave, with an engineering degree, is the production expert.
"Expert?” Dan hollers and laughs from the nearby wheat field, as he turns to the third member of their team, Dan Firme, who has a background in chemical, fertilizer and production agriculture. "I don't think we're experts at anything.”
"We both do what is natural for us,” says Dave, the older of the two brothers. "It works for us.”
While the responsibilities are defined, the two do work together on all aspects of their business, which includes a small crop protection retail outlet. Dan plans the crops and the marketing decisions, and Dave runs the daily operations.
"We let each other know what we are doing,” Dan says. "But if I think we need to make a marketing move or Dave thinks we need to make a decision, we don't wait for the other one to do what needs to be done. That doesn't mean we always agree, but generally it works.”
Top Producer, Spring 2010