Introduction

Jim approached me last summer at a meeting we were both attending about me being the next producer speaker for the profitability conference, I thought he was joking and didn't take him seriously. He kept bugging me all day and by the end of the day I realized he was serious. Serious as a heart attack which I may have before today is over with. Obviously, he had run out of choices for speakers.

I was honoured but no way could I stand in front of producers and tell my story, which isn't much different than any other producer here. But here goes.

History of the Hog Operation

From the middle 1950s to early 70s, my father bought up to 300 weaned steers in the fall and he would background them in the winter and sell them in the spring to a feedlot or finish them out. The last year we had cattle was in 1973.

Starting in the fall of 1968, with my dad and brother Scott, who was a freshman in high school, started on a FFA project that turned in to my lifelong career! I was in the seventh grade and we started with 15 specific pathogen-free (SPF) gilts. We used what we had available - old cattle corrals for pens and barn lean to for a shed. We put farrowing stalls in the other side of barn to farrow in. We sold the gilts through Farmland's F1 gilt program for a few years. I graduated from High School in 1974 and went two years to Beloit Vo-Tech in Production Ag.

We continued to raise hogs and in 1970, we built three open-front sheds to gestate sows and feed hogs in. They were built with 10-feet to 12-feet high side-walls with the thought if the hogs did not work out, they could be used to store machinery, hay or cattle. In 1971, we built a farrowing house with a solid concrete floor and in 1974, a Cargill floor. We were running around 125 to 150 sows: breeding and gestating sows in dirt lots, farrowing in stalls on a solid concrete floor; finishing hogs on a Cargill floor or in dirt lots. This system was very labour-intensive.

When my brother graduated from K-State in 1976, he entered law school at Washburn, and was not coming back to the farm and exited the hog enterprise. That same year, I graduated from Vo-Tech and returned to the farm full-time. I ran the hog operation and helped with the grain side of the farm. I wanted to expand the hog operation with user-friendly, less labour-intense buildings. My father wanted to slow down but thought pigs would be a good way to market the farm's grain. He agreed to co-sign a loan for me with PCA, now Farm Credit, to expand the hog operation.

In 1979, my father exited the hog operation and I expanded to 280 sows. I built a breeding-gestation barn, farrowing house with four- to 12-crate rooms and an eight-room nursery. I populated the farm with York-Duroc gilts from Fred Germann and in 1980, we converted the old farrowing house to a grower barn, and built a 600-head MOF (modified open front) finisher barn. In 1983, we built another 600 MOF with the old Cargill floor and I was finally able to finish all our hogs on concrete.

All feed was made with a tractor and grinder mixer. I had two employees, life was good. Hogs were profitable. I paid down debt and bought a few farms. In 1992, we built another 300-sow farrow-to-finish farm, three-fourths of a mile north of the home farm. We raised F1 gilts for Craig Good with a rapidly changing industry and with most farms switching to hybrid gilts from breeding stock companies. Our F-1 gilt programme did not last as long as we would have liked it to. We were making feed for both farms with a portable grinder mixer. Running two 300-sow farms, and with the home farm needing updated, in 1998 we made the decision to convert N Farm to SEW farm, converted finisher to gestation barn, and built more farrowing rooms, increased to 1,000 sows and converted the home farm to a wean-finish farm.

From 1997-2006, one-half mile east of the home farm, we built two 2,000-head nurseries, 180,000-bushel grain storage and shop-office and feed mill. And from 1997-2006, one-half mile south of nursery farm, we built four 2,000-head finisher barns. In 2005, we doubled our sow capacity to 2,000 sows by adding another gestating barn and more farrowing rooms.

As we have expanded, we have always been short on nursery and finishing capacity and currently, we are transporting pigs to Iowa to feed. In 2011, we constructed four 1,200-head wean-to-finish barns, four miles north west of the feed mill. With this expansion, we should be able to feed all of our pigs close to home.

In the past during expansions, we usually employed four to six construction workers to pour concrete; frame buildings, build gates and install equipment. Our barns did not go up as fast as if we contracted them out as a turn-key project. We build as a Pay as you (go) Standard. For these barns we finished last spring, we sub-contracted out the concrete work and also the framing. We built all the gates and installed the equipment.

How I Incorporate Family, Employees and Neighbours

Family

In 1989, I got a new boss when I married Marian Charbonneau from Concordia; we lived near my parents in the country north-west of Clifton. Marian was the manager of a card and gift store in Concordia. In 2005, she closed the store and Marian was a stay-at-home wife and mother and has in the last few years started working in our office with book-keeping and record-keeping in the finishing end, and also helping run errands as needed.

We have three daughters. Our eldest, Sarah, graduated from high school in 2009, and is now a senior at Fort Hays State University, and was accepted into the nursing programme in the fall of 2010. Sarah loved to go with me when walking finishing barns. She was four and loved to check the pigs and by the time she was seven, she was helping sort and load fats. Sarah has worked in several different aspects of our farming operation, from helping when she was eight, moving tractors from field to field (which her mom did not know about until she was 10); she helped with concrete and framing new buildings, and also helped during summer vacation in the sow unit. Dr Henry is still holding out hope that she will come to her senses and stop nursing school and come to KSU to be a veterinarian.

Our middle daughter, Laura, was born 17 weeks premature and graduated in May 2011. She is now a freshman at CCCC majoring in Elementary Education. Laura is legally blind but really does not let that get in her way. She has also helped sort and load. Her first job was watering down the fats once they were loaded. She helps with sow records and says she has been promoted to the front office.

Our youngest daughter, Andrea, is a junior at Clifton-Clyde High School and has not really figured out what she plans to do after high school but it will have something to do with fashion or cosmetology or as our older girls say living at home with her parents. She does not like to get her hands dirty, Laura tells the story of being gone to camp and Andrea was to do her job while she was gone, which was watering the pigs down in the semi once they were loaded. One very hot summer night, Andrea decided to spray the sky, and not the pigs. She was fired by Laura when she got home. So it is not very likely they will return to carry on the farm operation, but time will tell.

My first employee, Randy Jackson, started in 1979 and in April, he will have worked for me for 33 years. He is more than an employee; he is family and currently is the sow farm site manager. His dad runs our honey wagon, mows around the farm and is 83 years old and his mom was the babysitter for our girls, their adopted grandparents. Unfortunately, in October, Phyllis passed away aged 79.

Employees, as I've said, Randy Jackson has worked for me for almost 33 years and has been involved in all of our growth. We also have several loyal employees.

Doug DeRusseau has been my nursery supervisor for eight years; Bob Leduc has worked for me since 2004. He loves working with animals but when his brother-in-law offered him a job at the local brick plant, he gave it a try of three days and called to see if he could have his old job back. I told him okay, when can you start Monday. He told me “Well actually I told them yesterday I wasn't coming back so I can start tomorrow, Thursday.” He was gone three days.

My office manager, Tammy Elsasser, has worked for me for six years and keeps everything all book-keeping, payroll, sow records and oversees the feed mill.

I had been putting an ad in the local newspapers for employees to work in all aspects of the farm, in the finishers, sow unit and building construction. Many times, we ran ads and no qualified people applied. The last time we placed an ad, we got no inquires at all.

We became aware of a programme called World Wide Farmers Exchange; they find young adults in other countries that are willing to come to the United States on a work Visa to stay one to one-and-a-half years, then return home.

Our first experience came in December 2007, a couple from the Ukraine was already in the States and the farm they had been placed at was not working out. So they would be coming. Well, it came to an abrupt end when the farmer had them leave earlier; they were dropped off at a hotel and driven to our farm on New Year's Eve 2007. Their house was not ready because we thought we had more time but we pulled it together and by the end of the day, they had a roof over their heads and turned out to be exceptional workers. They applied for an extension on their visa and were given six more months so they would go home in the spring of 2009.

During that time, we applied for and had another couple come from the Ukraine and that couple stayed for only one year. Because of high unemployment in this country, visa extensions were not being granted. They went home and they have in November returned to our farm under a new programme for one year. The entire time they were home, they worked on getting back over here.

Every employee we have had through this programme has not worked out, in which case they are sent back home. My wife is like their mother and we are, in turn, their family. If they are sick, she takes them to the doctor. Recently one of our kids fell and broke his arm which caused him to not work for five weeks. We continued to provide housing for him while he was off work.

This is like the Foreign Exchange student programme for high school kids; these young people want to work and learn, and they most generally are here to earn money to take back to help family at home. One of our employees, Max, is married and his wife and small son are at home. He talks to them on Skype to keep in touch.

We have learned a lot about their country and we try to teach them about life in the USA, when we have family dinners they come, they go to our 4th of July celebration, Thanksgiving and Christmas. They also are invited to graduations and some birthday parties.

When we take them to the airport to send them back to their country, we tell them until we see you again, because we are close to them and have plans in the future to visit their country and have them show us around.

We also have had very good luck with workers from Mexico; they speak very little English but are very willing to learn and want to have a better life for their families.

At this time, we have two employees from the Ukraine and eight from Mexico, kind of like the United Nations, we are the minority.

Neighbours

I have several good neighbours. This is just one example: in May of 2010, a wind storm took down power lines, tipped over pivot irrigation systems and damaged many buildings in the neighbourhood. Early the next morning when I finished loading hogs, I got in my pick-up. I looked at my cell phone and had two missed calls (I leave my phone in pick-up when loading to keep from losing it) from neighbours wanting to know if I needed help with building damage. We were lucky; we had some minor roof damage, lost power to all farms and had four centre pivots destroyed and two with damage. Both of those neighbours also had damage but were concerned about the livestock.

I have always been grain-deficient and always needed to feed more grain than I produce. We produce around one-half of our feed grain, and purchase the rest from neighbours. We take delivery for some at harvest, and also have neighbour deliver corn and milo throughout the year.

How I Can Use Land Base to Make my Operation Successful

When I started farming, I did not have a written business plan (and still do not). I reinvested income back into the operation where I felt it would be the most beneficial to the farm at the time. We have around 900 irrigated acres with a crop rotation - one-third planted to soybeans and two-thirds planted to corn annually and 2,100 dry land acres planted one-third to each crop wheat, grain sorghum and soybeans. I have all crop-land custom farmed with no-till amounts to planting, spraying and harvesting. We hire an agronomist to take soil samples of all fields annually to use as a guide for fertiliser recommendations - also required for our Nutrient Management Plan approved by KDHE). He also scouts fields for weed and insect pressure every week during the growing season and also checks soil moisture on irrigated fields so we know when to irrigate. Hog manure is a great way to add nutrients to the soil. Most of our soils are high clay and hog manure seems to improve the productivity better than commercial fertilizer along with no-till practices.

Raising feed grains helps average income between livestock and grain prices. The farms I have bought have been paid for with income from hogs. In the past, hogs have added value to grain in more years than not. Going forward with the export and ethanol demand for feed grains and soybeans, input cost are going to be higher. But the hog price will adjust for higher input costs in time. Until then, grains will subsidise the hog operation.

The environment we do business in is always changing so we must change.

I really am not good at risk management. I am not disciplined enough, there are times I do ok other times I am terrible. There are so many variables and also basis swings. I at times forward price SBM from a processor and also at times buy corn ahead. If I cannot buy enough cash corn ahead, I use futures or options for price protection. It is very hard to beat an average if marketing and buying inputs on a weekly basis.

My Future in the Industry

I do not spend too much time remembering the past; you must look forward and plan for the future.

It really does not look like any of my children will return to the farm. I am 55 years old; I need to start planning an exit strategy, lease or transfer ownership in the future. I enjoy raising pigs, working with employees and allied industry people - extension, consulting vets and sales rep. etc. Kansas has a land grant university in KSU with excellent swine animal science department and Veterinary School. Kansas is a great place to raise pigs.

As long as this industry has adequate price discovery and packers need hogs, there should be a place in this industry for efficient independent producers.

High feed cost due to demand for corn and soybeans for export and ethanol production are going to be an issue in the future. This industry will adjust and the hog corn ratio will become favourable again.

In closing, it's not what you make in this world - it's what you give back.

Further Reading You can view the full proceedings by clicking here.

December 2012