At Seven Springs Farm in Cadiz, Ky., the calculator drives decisions. With acute focus on ROI, Joe Nichols has expanded and contracted his farm’s size and scope through the years.
Case in point: In 2019, on a Thursday afternoon, the operation’s CFO, Bart Peters, completed the year-end financial review and outlook for the next year. After several years of tepid prices, the outlook was bleak, and profit was in jeopardy.
For the next two days, Nichols stared at a map of his farm, which was spread over a 50-mile radius. He then dug into the productivity and financial data for each field. His goal was to find the hidden drags on efficiency.
On Monday morning, Nichols had a plan, which he presented to his farming partners. It included:
- Contracting the footprint of the operation from 24,541 acres to 17,378 acres (dropping less-productive, rented farms far from their headquarters).
- Reducing the number of landlords from 70 to 44.
- Downsizing the employee base by 15 to eliminate a middle management level no longer needed.
- Selling three combines, two planters, two grain carts, two lime spreaders and one air drill.
“My bankers were totally shocked when I called and shared what I was going to do,” Nichols recalls. “Most people are forced to do this. But I will always manage my operation the best I see fit; I knew what we needed to do. It was one of the best decisions I’ve ever made.”
Down to the decimal point, Nichols knew the impact of each of these complex and calculated moves. Once approved by his advisers, he worked with local farmers to transition all the rented acres he did not continue to farm in 2020.
“The thought of giving up that much ground would intimidate most, but not Joe,” says Josh Waggener, president and CEO of Huston, Inc. “His ability to leverage this way of thinking as a business tool has allowed him to keep his operations successful for both the short- and long-term future.”
STUMBLING BLOCKS TO BUILDING BLOCKS
To understand how Nichols grew into a strategic businessperson, it helps to start at the beginning. His parents lost their farm in the 1980s and decided to move 350 miles to Gatlinburg, Tenn. At 18, Nichols decided to keep southwest Kentucky as his home.
“Farming was his life,” says Chuck Fitzgerald, friend and former colleague at Hutson Ag. “So, he started with a high school diploma, a love for farming, zero acres and not one piece of equipment. Instead, he had a will and determination like no other. What most would see as stumbling blocks, Joe has used as building blocks.”
BUSINESS LESSONS
To prepare for his farming dream, Nichols started doing odd jobs and expanded his mechanical expertise. He also spent time as a deckhand and first mate on a river boat.
Nichols opened his own farm machinery repair business for a few years. Then, he became the general manager of a nearby John Deere dealership. The pennies and experience started adding up, and he began to rent farmland and buy some of his own equipment.
“I spent five years with the Hutson organization, and I earned a Ph.D., in business management,” Nichols says.
GROWTH PLAN
By 2000, Nichols had pieced together several thousand acres and decided to leave his job at the dealership to grow Seven Springs Farms. In the next decade, he steadily expanded acres and operations to match market opportunities.
Today, the farm grows corn, wheat, barley, soybeans and tobacco. In 2015, Nichols added a heifer stocker cattle backgrounding enterprise. Each year the team backgrounds 10,000 to 15,000 head.
As with crops, the focus is efficiency. “If you know your feed costs and your sell price, the only risk is death loss,” Nichols says. “We try to keep our death loss at 2% or lower.”
In early 2021, Nichols added another venture — an erosion control blanket business. The team retrofitted a former ag retail location into a manufacturing plant and warehouse for straw blankets, which are used in construction.
“Being his banker, I was incredibly overwhelmed when I walked in and saw this huge, complex, German machine that took up most of the building,” says Andrew Ellison, Nichols’ lender with Community Financial Services Bank. “After two hours in there with Joe, I quickly understood he had the ability to make this all work. His technical aptitude is rare for someone who manages such a huge operation.”
Since they produce their own straw, Nichols says, they are one of the only vertically integrated companies in the U.S.
“We’re able to control the quality, and then we take any waste that falls through the machine and haul it up the road a half mile to use as filler in our cattle feed,” he says. “So, we have zero waste.”
FOCUS ON TEAM
The Seven Springs Farms team includes 46 full-time and 45 part-time employees. Several employees have been on the team for decades.
Nichols’ goal is to hire the right people and tailor the jobs to their skills. He pays employees an above-average pay rate for the area and gives yearly bonuses, says Nancy Geoger, CPA for the operation.
“He emphasizes to the employees that Seven Springs Farms is nothing without them,” she says. “There is a lot of stress a man endures when there are over 80 workers and their families relying on you to help them put food on the table and keep a roof over their heads. Joe does not take this responsibility lightly.”
Nichols is the eighth generation of his family to farm in Kentucky. The ninth generation is already in place. Nichols’ daughter Heather and her husband, Nick, are on the management team. His daughter Macy manages the cattle operation.
From humble beginnings to a sophisticated business, Nichols continues to plan how to create a business that will stand the test of time.
“We don’t farm, we change lives, whether it be a landlord, employee or business associate,” he says. “If we can leave a farm, business or relationship better than when we found it, we’ve succeeded. That’s better than a 300-bu. corn crop.”
Listen to Joe Nichols on the Farm CPA Podcast with Paul Neiffer:
Snapshot of Seven Springs Farms
Operation: In Cadiz, Ky., Seven Springs Farms includes 17,300 crop acres, cattle backgrounding, rock crushing and erosion control blanket production.
Family and Team: Joe Nichols planted his first crop in 1994. Today, the operation employs his two daughters and a son-in-law, as well as 80 full-time and part-time employees. His wife, Ashley, is a private tutor for preschool children.
Leadership Philosophy: As CEO, Nichols steers the ship, but he strives to understand every task in the operation. “You get more respect from people if you understand what they do,” he says.
Inputs and Output: Nichols bought a former commercial fertilizer location to allow for bulk buying, and he’s built
2.6 million bushels of on-farm grain storage.
