What is your connection to farming?
I grew up on a family farm in northwest Iowa. Our farm was not large enough to support another family, so I had no plans to go home and farm. However, because of a death in the family, I ended up moving home and taking over the family operation in 1977. I farmed throughout the entire farm crisis. In 1985, we were able to become profitable again after a couple of years of losses. At this point, we decided to move out of farming into another career. We were able to pay off our operating and term debt, and we had no land debt. I then started working with Farmers National Company (FNC) as a farm manager in Rochester, Minn.
Company: We’re a comprehensive landowner services company.
Education: Bachelor’s in communication with a minor in ag journalism, Iowa State University
One book managers must read: For new managers, “One-Minute Manager” by Ken Blanchard and Spencer Johnson. For experienced managers, “The Phoenix Project” by Gene Kim, Kevin Behr and George Spafford.
Business leader you admire the most: Warren Buffett. From a business standpoint, it’s hard to argue with his success.
Favorite leadership quote: “Behavior that is rewarded
What was it like to transition from full-time farm operations to FNC?
As a farmer, you’re representing you or your family as you negotiate leases and take care of different facets of business. Our role at FNC is centered on the landowner. So working on lease negotiations and other facets of our work from a different perspective was a bit of a challenge. If you’re used to negotiating with landowners on behalf of your own personal business and now you’re negotiating with farmers on behalf of the landowner, it takes a transition. The learning curve for me personally was not as steep as it might have been for someone who had not been in production ag.
The company promoted me to vice president of business development in early 1989. I managed the sales and marketing side of our company as well as our publications. When Richard Hahn retired as president of FNC, the board of directors hired me to serve as his successor.
How does your employee stock ownership (ESOP) model work?
We were owned by Metropolitan Life (Met Life) from 1986 to 2000 under their ag investment division. They loaned mortgage money to the agricultural community. Because of the farm crisis, they had farms coming back in foreclosure they needed help renting and selling. In 2000, Met Life offered to sell the Farmers National Company to the employees of the company. As a management team, everyone agreed broad employee stock ownership was our goal. The ESOP structure offered the opportunity to achieve that goal. When given the opportunity, employees invested more than management anticipated into company ownership. From there, it was not really difficult to pay off the company’s additional leverage. Today, the company has no debt and has a strong balance sheet.
Employee ownership gives all of our employees the opportunity to own part of a diversified business model that is focused only on landowner services and that has a presence in up to 40 states, depending on the business line. This structure removes some of the risk of owning a business impacted by the local weather or economy.
What advice would you share with farmers about managing people?
Within our business, we need to overcommunicate. The tendency at times, especially as we move to an electronic culture, is to not communicate as much. That’s the same if you’re a farmer or a farm manger. Landowners tend to be older and might not be comfortable with new communication technologies. They might just want a phone call.
We have farm managers in 16 states, and it gets really easy to become flip in your communication and not let people know they did a good job when you communicate by email. Tell them thank you. It leads to a much more successful relationship for manager and employee.
What are some of the biggest trends shaping farmland management today?
Input costs were high in 1982-84, especially for operating capital. Today, with moderate interest rates, high input costs are seed, fertilizer, herbicide and land.
Land values will likely continue to soften through the winter, but I don’t see land values dropping rapidly. Land sales transactions are down, but buyer numbers are still matching with supply. Rangeland and pastureland are selling extremely well, indicative of profits in the cattle market, especially on the cow-calf side.
Non-operating landowner numbers continue to increase, and we are witnessing a significant transition today as the World War II generation passes on, leaving land to its heirs. Farmers National Company really becomes a conduit to that next generation. We have a significant number of 25 and 50-year clients and at least one 80-year client relationship.
Jim Farrell will participate in a panel discussion about farmland values and cash rent trends at the 2016 Top Producer Seminar. For more details and to register, visit topproducerseminar.com.