By Karl Wolfshohl
An easy transfer of reins for a farm business
Planting season arrives early on the Texas Coastal Bend. On this February morning, the father-and-son duo of Bob and Jon Whatley of Odem, Texas, runs into a problem. A monitor in the tractor cab shows corn seed isn’t dropping as it should, with significant skips.
Jon gets busy in the cab, tinkering with the monitor while his dad and employee Raymond Hernandez remove planter boxes and inspect plates and other parts.
"This is just like us," Jon says with a smile. "When we see a problem, I go to the computer and Dad goes to the mechanical systems."
This is a big year for Bob and Jon. Until now, Bob has taken most of the financial risk and been the ultimate decision maker. This year, Jon is solely in charge of farming operations, with most of the operating loans and the bulk of the responsibility. Bob pays him to manage.
"Dad’s not ready to retire, but at 75 he’s ready to lessen his risk," says Jon, who is 42. Jon was prepared to take this responsibility.
Bob says, "Communication has been the key to this whole thing."
Waiting to Come Home. Bob has been mentoring his son for this transfer of responsibility since 1994, when Jon came back to the farm after college and a job away from home. Of course, like so many farm kids, Jon had been learning from his dad since the age of 8, when he helped his father run a cotton module builder.
"I cried when I thought he was going to hire somebody else to do that job," Jon recalls.
"As a kid in summers, he worked on a tractor for me and I paid him like anybody else," Bob says.
Since his first year of farming on his own, with his dad’s encouragement, Jon has arranged his own financing and operated independently in many ways.
"One of the best things my dad did was push me toward financial independence, which helped me make better decisions," Jon says.
"I was more ready to take over the rented land and equipment this year than if I’d been tied to him financially. This year, I doubled my operating loan, and a banker didn’t have to ask if I was capable."
The men made a dry run in 2010 and prepared for Bob to turn over management decisions this year. "We planned how we would handle the change personally, then we worked with accountants so we would handle it right financially," Jon says.
|Tackling problems takes teamwork. From left: Employee Raymond Hernandez, Bob Whatley and Jon Whatley investigate a seed-drop issue together. PHOTO: Karl Wolfshohl
Finances in Line. Financial calculations were at the core. The men looked at 10 years of average profit per acre for their usual crop mix of cotton, corn, sorghum and hay, as well as a small beef cattle herd, on 5,000 acres. From those, they determined a single price Jon would charge his dad for producing a crop.
Each man conferred with dealers, Extension agents and other farmers for their experiences and advice, then wrote these down, Bob on paper and Jon on a spreadsheet.
"What’s a fair deal?" Jon asks. "It has to be fair to him and fair to me, but where is that number? This is our first year, so we are still working that out, and we agreed that we will renegotiate next December."
Equipment Sharing. Until this year, Jon rented equipment from Bob. This year, it’s the other way around. Jon has taken over all farmland rentals. Now employees work for Jon, and Bob pays him to manage them. Jon orders all chemicals and seed and does the budgeting. His wife, Kelly, keeps the books.
The men operate under separate partnerships with their wives.
"Dad doesn’t have any equipment or repair bills now," Jon says. "Those fall on me. He makes quarterly payments to me, and this provides consistency for him."
What does the future hold? Jon hopes it involves his sons Payne, 14, and Jackson, 11, who work for him in the summer. But he’ll wait and see. "Both boys like driving tractors, and I pay them like any other employee," he says. "I put no pressure on them. When they turn 16, they’ll need to go drive tractors for friends of mine to get a different perspective.
"If they decide to come back here and farm, they’ll need a college education first, and then they’ll need to go get a job somewhere else before they start for me." This is, of course, a page from his dad’s book on cultivating a future farm executive.
"I want to expand the size of this operation and be more profitable per acre," Jon continues. "In the long run, I’d like to turn this over to my kids and go play golf with my dad. Tomorrow comes real quick, you know."
What Makes Their Farm Go
Bob Whatley is detail-oriented; his son Jon isn’t. They have different management styles, but here’s how they generally handle executive decisions.
Hiring: They hire to fill in their gaps. A self-described big-picture guy, Jon employs detail-oriented people because, as he says, it would be crazy for him to hire somebody with his personality. Crop consultant Daryl Moseley is "as important as the diesel we put in our tractors," Jon says. "I want him to say, ‘we need this,’ and it’s my job to decide whether we do or don’t."
Labor Management: Jon expects loyalty from his two full-time employees, Raymond Hernandez and Martin Cruz. "But loyalty starts with me," he says. "They have to feel ownership, so I ask their opinions." The Whatleys also provide work clothes and local gasoline for Hernandez and Cruz and time off for their kids’ school activities. Bob and Jon may take a while to agree on how to do something, but their employees see only a unified front.
Purchasing: "We each own a certain percentage of equipment," Jon says. "Together we purchase equipment, fuel, fertilizer and feed because of a volume discount."
Marketing: Never market chasers, the men ensure the consistency of their crop rotation with nutrient and herbicide programs. Each man markets his own crops. "Once we decide to sell, we do so and don’t look back, or we would make ourselves sick," Jon says.
Landlords and Leasing: As is typical on the Texas Coastal Bend, the Whatleys rent from dozens of landlords—13 on one piece of land, for example. Most are computer savvy, and Jon keeps them updated by e-mail.
Technology: The Whatleys are big on GPS and nutrient management. Jon is a cooperator with John Deere and is testing new touch screens and software for guidance systems. In 2010, they started applying fertilizer in variable rates across 15% of their acres and are slowly expanding. They are also trying out a fertilizer stabilizing product, Hydra-Hume, from Helena. Yet, experience has taught them to be a bit cautious about diving into what’s new too fast.
Public Service: Both men volunteer in multiple organizations, business and personal. Bob has encouraged his son to give of his time. Jon is currently president of Texas Cotton Producers and the South Texas Cotton and Grain Association. He serves on other boards, including the Odem-Edroy school board, and coaches Little League.