January 20, 2026 • 31 mins
Adaptability and strong relationships are becoming just as important as yields and costs in today’s farm economy—and that’s the focus of this episode of the Purdue Commercial AgCast. Chad Fiechter is joined by Ben Brown of the University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI), along with guest hosts, graduate students Avery Pound and Jonah Armstrong, for a conversation that builds on Brown’s recent presentation at the Purdue Top Farmer Conference.
Following his talk on the long-term outlook for corn and soybean markets, Brown expands the discussion to explore how global economic conditions, energy markets, and commodity pricing trends influence farm profitability over time. While cotton is used as a case study in parts of the conversation, the focus remains on broader lessons that apply across crop and livestock operations, including long-run decision-making, strategic partnerships, and how changes in capital and land ownership are reshaping agriculture. The episode highlights why understanding market signals—and building the right relationships—matters for farmers navigating uncertainty and positioning their operations for the future.
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(00:00):
This is the conversation series,and Ben Brown is here speaking
at the Top Farmer Conference.
I have invited because Todd's ona boat somewhere, Avery Pound and
Jonah Armstrong, who are master'sstudents in ag econ at Purdue, to be
a part of this conversation becausethey're really good question askers.
(00:24):
So Ben, you were just mentioning likeyour background and I think that might
be kind of a cool place to start.
So can you repeat someof what you just said?
Sure, yeah, absolutely.
So I grew up on a family farm inWest Central Missouri, about an hour
and a half south of Kansas City.
We had row crops and cattle,went through 4H and FFA.
Undergraduate education in agricultureeconomics and agronomy at K State.
Grad school at the University of Missouri.
(00:46):
Worked for a period of timeat Ohio State University.
They always said, they could tell Iwasn't from Ohio 'cause I never said
How, how long was that?
How long was the Ohio State?
Almost four years.
Four years.
Okay.
Almost four years.
Which is crazy.
But, yeah, I was there and then had theopportunity to go back to Missouri, my
home state, serve as our state extensionspecialist for row crop economics at
Missouri and work with FAPRI on row croppolicy and kind of forecasting work.
(01:08):
So you just gave a really compellingoutlook talk, related to crops.
and I think Jonah might have thefirst sort of burning question
as our resident southern member.
You gonna ask me about cotton.
My farm at home, we grewcotton in the mid nineties.
And then it was such a pain andit made everybody hate each other.
So we stopped growingit in the early 2000s.
(01:30):
Okay.
Wait a second.
For those of us who aren'tfamiliar with, growing cotton.
Yes.
Yes.
Can you tell us why?
Is this like our loading pigs?
Is this the Midwestern loading pigs?
Well, well, I, I've only, I have notloaded that many pigs, so I don't feel
Like it's basically the opportunityto hate your family members.
Pretty much.
Yeah.
Well, it's 'cause you have tospray it or you had to spray it
14 times a year.
(01:50):
14 times a year.
Like that's a, that's not an exaggeration.
No.
14.
Yeah, legitimately.
Oh, okay.
Like you had to spray it likeat least once a week, if not
twice every week over the summer.
So it was just a lot of work to get overall the acres and pe you know, people
want to go to the beach, which is whatyou do where I'm from, by the coast.
Everybody wants to go tothe beach over the summer.
(02:12):
And it was just, it wasjust not a good time.
But we started growing it againwhen the prices went way up.
Three years ago.
Yeah.
Three years ago.
We grew it two years, and then lastyear we were going through some of the
budgeting stuff and the best budgetthat any of us, me or my dad and some
of the local input provider people, thebest budget we could come up with was
(02:34):
like losing 250 bucks an acre on it.
So we're just like, we just
Whoa
said, Hey, you know, we're good.
We don't need to grow cotton.
Is it ever coming back?
Are people only buying polyester t-shirts?
Like what is, what do youthink is the outlook there?
Yeah, so I should preface my answerhere with, I'm a Midwest wheat guy, so I
grew up in the western part of Missouriwhere we have corn, soybeans, and wheat.
(02:55):
Used to have grain sorghum.
So I would actually associate tothe conversation about loading pigs.
Cotton kind of reminds you alittle bit of grain sorghum.
So the question around cotton is,is a very interesting one because
the demand for cotton, is both theconversation around oil, if oil prices
get real cheap, polyester becomes cheap.
And that that competes against,you know, natural fibers, wool,
(03:16):
cotton, what have you, right?
So there's this conversationaround cheap oil prices, which
is what we've got, right?
Relatively cheap oil prices right now,both in the US and the global market.
That increases thecompetition for polyester.
The second part here is global economicactivity, and we've seen global
economic activity really slow down.
Here in the United States hasbeen a little bit more stable.
But the global GDP has really slowed.
(03:37):
Both of those factors, high competitionfrom synthetic products and less buying
power by international buyers has reallykind of been a dog for, for, for cotton.
So that's what's caused this.
Now the question becomes, youknow, where do we go from here?
Right?
Yeah.
And, and I think in the short run, the waywe get out of this is acreage abandonment.
(03:58):
You know, right now, the mostprofitable outcome for a lot of cotton
producers is not to harvest cotton.
Yeah.
Is, is to plant it to, to let it growand then just not harvest it, right.
And this is a little differentfrom us in the Midwest where we
have corn and soybean production.
Our harvest costs are relativelysmall compared to cotton.
Yeah.
And so the price really has to drop, oryou have to have a really, really low
(04:21):
yield not to harvest corn and soybeans.
Like very low yield.
That's not necessarily truein cotton where you have
relatively large harvest costs.
And so if you're getting to theend of the season and you've got
a decent crop, you're kind ofhoping for a hailstorm, right?
You're hoping that a hailstormcomes and wipes out that cotton crop
because of the large harvest cost.
And so I think our acreage abandonments,what gets us out of this in the short run.
(04:45):
We reduced acreage this lastyear for cotton substantially.
I think we need to keep it therefor a short run period of time.
In the long run aspect when it comesto cotton, we're gonna have to see
some consumer dynamic changes aroundnatural fibers and an attitude
shift away from synthetics, workoutclothes to more natural fibers.
And I think there is a consumerargument to be made there.
(05:06):
The cotton and the naturalfiber industries are trying
very hard to make that argument.
And I think they're making someheadways, but we have more work to go.
What I heard is that Lululemonis killing the cotton farmers.
There's, I, I'm not gonna signalout Lululemon 'cause who knows,
maybe they have my home address.
I don't know.
But I would just simply say that yes,that representative brand, right?
(05:27):
Yeah.
Like people have, have just gotten towhere they like workout clothes, that
are made from synthetic fibers becausethey're, you know, easier to breathe
and we see more blends to your commentthan what we've historically seen.
And, you know, not to signal outany celebrities, but, sometimes the
cotton industry hires celebritiesto promote their product and
they do for the photo shoot.
(05:48):
Right.
And then the very next week yousee them out in public wearing
synthetic products, right?
Yeah.
And so that's, that's,that's been a challenge.
I did not know the degree to which harvestcosts were so much higher for cotton.
They are.
That's fascinating.
What would you thinkan acre, what is your,
I'd have to go back and look, but Ithink a realistic estimate is probably
three times more than corn and soybeans.
(06:10):
Wow.
We're probably 200, 220, something likethat for some of your basic harvest costs.
Then you potential have a pricethat would be low enough, you
wouldn't recoup your harvest costs.
Correct.
Yeah.
That's fascinating.
Yeah.
I mean it, the harvest costs are justso much larger relative to corn and
soybeans, and so that's why we seequite a bit of acreage abandonment.
Even in potentially years wherethe yield's not bad, it's just the
(06:32):
price has gotten low, maybe enoughto where it becomes part of this
decision around variable cost.
And just the marginal costof harvesting that product.
That's like undergraduateentry level microeconomics.
We should be using that as an example.
Yeah.
Cotton's really fascinating.
I'm a Midwest guy.
And so I've learned a lot about cottonand rice and peanuts, now canola,
'cause those are very southern crops.
And I've learned quite a bit about 'em.
(06:53):
Still learning.
Always learning.
I did know about the spraying.
Yeah.
So, thrips is the bug.
Right?
And there's no control for that.
No.
And so you, you spray all my, allmy friends that have cotton, you
know, all summer, all I get isSnapchat of them on a sprayer.
So yeah.
But then the growth regulators as growth.
Growth regulators.
Regulators as well.
And since it's a crop that never stopsgrowing, you gotta spray it and kill
(07:15):
it at the end of the season as well.
Right.
That's something interesting Ilearned that I didn't know until
maybe last year, is that cotton'stechnically a perennial crop.
And that's why they shred it at the endof every year after they harvest it.
Yeah.
It's basically a tree.
I mean, it is a tree.
When I was in undergrad, I mentionedI had a plant science double major.
And one of the courses we did hadcotton seeds that we planted and grew.
(07:37):
And so I actually grewmy own cotton plant.
And I was convinced I was gonna tryto get it to grow for the next year.
Of course, you can do that withone and hand pick it, right?
But the way we harvest cotton,it becomes an annual crop.
But yeah, it is aperennial, perennial cotton.
Right?
'cause you go and then you've got a,you have to defoliate it at the end
of the season so it doesn't stain theleaves, don't stain the cotton green.
And then, but if you go out anddefoliate it and then you get a rain
(08:00):
on it, then it just comes back andyou have to go defoliate it again.
So it's really a headache to deal with.
So it's, it's a headache andyou're losing a ton of money on it.
Yeah.
Not only that.
How many times, how many trips acrossthe field to till before you plant it?
Yeah.
You have at three, at least threesometimes passes with the tillage
system before you plant it.
Because you want it reallylevel or what, what's
We, we do, I don't know whatit is in Missouri, but we do a
(08:21):
ton of, all of ours is bedded.
You come in and you, you discit and loosen up all the dirt.
And then you come back with abedder and form everything into
the piles, basically your beds.
And then you have to come backseparately and knock the top off the
bed to create a flat planting surface.
So it's three passes.
The other thing after tillage, I,I did some time down in West Texas.
(08:45):
I, I, I'd say it like I was in prison.
I actually love my time down there.
I interned for a dairy, but theywere in cotton country and I learned
from some of the agronomists thatcotton, it just wants to die.
Yeah.
Up until it's been out ofthe ground for a week or two.
Then after that, it doesn't wanna diewhatsoever and it's wind storms and,
and that sort of thing can kill it.
(09:06):
Cold weather.
And it, it'll be done in earlystages of growth, but then after
that it, it just takes off.
Fascinating crop to me.
Yeah, it is.
Who would've guessed I would've cameto Indiana, we'd spend this much time
talking about cotton, but here we are.
I love cotton.
I think there is, I mean, we, wealways joke that if you put enough
people who are interested in farms in aroom, like you get strange diversions.
(09:27):
Sure.
You know what I mean?
Like, because, because wejust talked about furrows.
And topping furrows.
I don't, I, that's a prettyniche audience that, that wants
to like, have that conversation.
You know?
If you wanna runequipment, get into cotton.
Right.
So, Avery, what do youwanna talk to Ben about?
Well, Ben, thanks for coming tospeak at the conference and thanks
for being on the podcast today.
Something that struck me from your talkearlier is the correlation between energy
(09:51):
prices and agricultural commodity prices.
And I thought that was super interestingand something I've been thinking a
lot of lately, reading the Wall StreetJournal, I've been reading a lot about
Venezuela and what's to come withthe oil market there and how the US.
could interact.
How do you see, the changes to,this Venezuelan government and
potentially global oil markets,in relation to the US' ag economy?
(10:17):
Sure.
And we could spend a lotof time talking about this.
The initial impression was that thiswould be bearish to the oil market.
Venezuela has a lot of oilreserves that they're sitting on.
And there was maybe this thought thatwe'd see rapid growth in oil production.
The US is talking about, alot of investment in Venezuela
from, oil and energy companies.
(10:38):
Their oil system that they havein Venezuela is similar to some of
what we would see in Canada, youknow, the very heavy, dark, crude.
And so, you look at the economics betweenthe two and you ask the question, well,
if I had the choice between Canada orVenezuela, why would I leave Canada?
And so I, I think when the market didopen on that Sunday night and even the
following days afterwards, and we sawjust a little bit higher oil prices,
(11:00):
but pretty flat in the grand scheme ofthings, I think now you're starting to
see people say, well, maybe we don'tsee as big of oil supplies to the
global market as maybe what we initiallythought in the hours leading up to it.
And again, you know, Venezuela is acountry I don't normally think about
a whole lot, but here we are, youknow, in 2026 talking about Venezuela.
So that would be whatI'd say about Venezuela.
(11:21):
I, I'd say the thing you mentionedabout the connection between energy and
agriculture, you know, there's always beenkind of this connection between the two.
Both of 'em are commodities.
Oil, corn, soybeans, commodities,you know, we see 'em in a lot of
portfolios as a hedge against inflation.
So from an investmentstandpoint, we've got that.
But just with the growth that we'veseen in the biofuel space over
the last 15 years, 15 to 20 years,just continues to increase that
(11:44):
connection between, energy and thenalso, row crop commodity economics.
Yeah.
We've talked about cotton here and howacreage is going down, and in your talk
you said a lot of that's going into corn.
Becoming corn acres, it seems likethe solution to everybody's low profit
Returns.
Yeah.
Low return.
Low profit problem is plant more corn.
(12:07):
Is, is aviation fuel?
Is the bio, is the, you know, ethanol,aviation fuel, is that the silver bullet?
Is that gonna save everybody?
The corn's gotta go somewhere.
Right?
Like that's what I keep coming back toin my mind when I hear those numbers.
Sure.
Yeah.
So you are correct onthe first part of that.
Everything's going to corn.
Right.
And that was the case in '25.
Like every crop gave up acreage to corn.
(12:30):
Yeah.
And I think we maybe see asimilar standing in 2026.
It, we might not lose acres and all thosecrops to corn, but corn's just gonna
maintain what they took this last year.
Right.
It is kind of what I think we'regonna see in the year ahead.
So from that standpoint, now yourquestion about sustainable aviation fuel.
Or synthetic aviation field, whateveryou wanna call it these days.
But, we would consider thata rather aspirational goal.
(12:52):
Okay.
It's out there.
But the economics don't, don't reallysupport the growth in that sector.
You know, for a period of time we hada lot of airline companies that were
voluntarily starting to talk aboutusing sustainable aviation fuel.
Some of them have now announcedthat they're not going to do that.
Some countries are askingfor mandates, to do that.
(13:13):
So you might see specificcountries that do that.
But here in the United States, I'd sayit's a pretty aspirational goal yet and
would require policy intervention orpolicy changes to really get to take off.
If I can use that pun, but yeah.
Yeah.
Nice.
That's a good one.
Okay, so, farmers seem to be long-termdecision makers, at least the people
(13:33):
who are kind of left, doing this.
'Cause we know that things change, right?
And so that can be great.
Because you don't sort of makethese quick and pivoting moves.
We know this is an uncertain game and ifyou play the same strategy over and over
again, that's probably a decent play.
But it also makes us fairly susceptibleto just kind of keep doing what
we've always done as opposed to bethoughtful about our long-term strategy.
(13:57):
When I think about the families that Iknow who are farming, their long-term
mentality has been really successful.
Is that still a good decision in thisenvironment or should there be more
thought around strategy for the future?
Based, based upon everybody's gonnaplant corn, everybody's, you know, like
we, we have these big conversations.
Yeah.
So I think, this is a greatconversation and great question.
(14:21):
My answer to the questionspecifically is yes, I think you
still have to think long term.
I think that has to be partof farmer decision making.
And so I don't want to discourageanybody from thinking long-term,
even with all these challenges.
Here's how I think that's changingin terms of how we think about
long-term decision making.
Asset specificity, I can't say thatword, but basically if you have an
(14:42):
asset and you can only do one thingwith it, that has worked in the past.
But I don't think that's our future.
Okay.
So relationships still matter.
Strategic partnerships and intentionalrelationships still matter within
this business, and I think thoseare the long-term decisions.
And long-term planning farmers should,and that's a value judgment, but in my
(15:02):
opinion, should be thinking about buildingrelationships, strategic partnerships,
is a long-term decision making.
Let me use poultry as an example, right?
Modern poultry barns are a big investment.
You know, you're talking about millionplus investment in, in a poultry
barn, that may take a little bit ofan on ramp period to get it built.
Right now we're seeing a littlebit of delay in terms of when
you can build a poultry barn.
(15:24):
But let's just say the poultry sector, youknow, really struggles and goes through
a prolonged period of, of transitionor some type of recession, depression
type thing in that specific sector.
Currently and where I see the longterm going, that leads me to be kind
of concerned about making some typeof investment to where maybe I need
seven years, six to seven years torecoup my, my investment in that asset.
(15:48):
But if in year two or three ifsomething goes awry, is there an
alternative to use that asset?
As I look ahead, I'm gonna say I don'tthink that's where we need to be focusing.
I think we need to be focusingas production agriculture and
looking at assets that can beused in multiple different ways.
Land continues, row crops continueto be something like that, right?
(16:09):
So here in the Midwest, primarilycorn and soybeans, but there's other
crops we can grow on that same land.
Canola is an example of that.
I talked about canola today during thetalk about how we're seeing an increase,
well that's, that's been a productthat coming into some of that land.
We can run cattle on that land, right?
You know, we could dosolar, things like that.
It provides us options,multiple different options.
To answer the question about long term,I think we have to be focused on it.
(16:32):
I think it has to be relationshipbuilding, but I would be very, very
cautious about investing in assetsthat can only be used in one or
two very niche and special ways.
I didn't know I was gonna be thecotton guy, but that comes back to
like, I mean, a cotton harvester.
And what do you do with itafter, if you don't grow cotton.
Your only option is to sell itto your neighbor who hopefully
needs one and grows cotton.
Those are your only options.
(16:52):
You can't.
Just change to corn or soybeanslike you can with your, your
conventional harvesters.
The flexibility becomes the name of thegame, I think in the long run, right?
Yeah.
We've seen this in, in, inseveral different commodities.
Dairy comes to mind.
And we're seeing it in someother types of livestock.
If you build a relationship, and thatrelationship is good, that's fine, but
(17:12):
you also expose yourself to third partyrisk to where if that buyer exits and
there's no one else to buy your asset,but you're still sitting there with an
$800,000 ownership note on that barn andyou gotta figure out what to do with it.
That's where we're seeing someof the challenges in this space.
Same thing with the cotton harvester.
Okay, so another thought that I haveis that, you know, I'm a, I'm nearly
40 and so I did not experience thefarm financial crisis, but I think
(17:35):
my birth signaled the end of it.
So I'm the same way.
And I always say I didn't growup in the 1980s, but I grew up
in the long shadow of the 1980s.
Yeah.
Oh man, that's
I can point to specific things in my life.
Yeah.
That now after I've learned, and beena student of this industry, I can point
to specific things that my family didthat I'm like, okay that was a direct
result of them living through the 1980s.
Right.
No, yeah, that's dinnerconversations still, right?
(17:57):
We're still hashing the 1980s.
So the thing that is interestingis we had a pretty significant
solvency problem in the eighties,and we don't have that today.
It doesn't seem to be at least yet.
I would agree.
But we definitely have a cash flow,a significant cash flow problem.
To the point where even people withreally, really, strong asset base
(18:18):
are probably asking, their banks areasking them different questions maybe
than they were asked previously.
And maybe they didn'tget a, an operating loan.
What do you think about the financialsector health and how people are
gonna manage low cash returns andcrop production, if we go into yet
another year of low cash returns?
Sure.
Yeah.
So I, I would agree withyou on the financing space.
(18:39):
We are not seeing thedeterioration, in solvency ratios.
Broadly.
There's, there's pockets, you know, Ithink of, of prime cotton and rice country
where that's, that's a dominant market.
And not a lot of livestock.
You know, we are seeing some land salesthat are starting to cause a little
bit of deterioration in land value.
So, you know, that's starting to see someof these solvency issues start to pop up.
(18:59):
But broadly speaking, I don't thinkwe're seeing the solvency issues.
Nor do I think we'll see the deteriorationof land, like what we saw in the 1980s.
And, and people listening areprobably like, well, that's
what somebody said 1979.
And, you know, that's true, right?
Yeah, yeah right.
You never think it, it's gonna happen.
But we have quite a few changes in termsof safety nets, that exist out there.
(19:20):
And the other thing that I would sayis the amount of ownership of land that
is well positioned and either ownedby somebody outside of agriculture or
a very established, balanced farmer.
I think we'd have to see this shortageof cash flow exist many more years before
we really started to see some of thesolvency issues that we saw in the 1980s.
(19:41):
And so I don't know if thatprovides any security for
anybody or any hope or whatever.
I'm just saying I just don't thinkwe'll see the solvency challenges.
So from that standpoint.
Now to the lender conversations, interms of accessing financing, right.
You know, a lot of people usetheir asset base to get financing.
And I think we've seen that reallytighten up, because it's now
(20:02):
becoming very much a cash flow game.
Yes, you have the asset, but the assetdoes not necessarily justify cash,
or, the ability for debt repayment.
And so you're seeing a lot oflenders really focus on that
debt repayment capacity, evenoutside of selling an asset.
Does that start toencourage more asset sales?
As farms struggle to get, youknow, traditional financing.
(20:23):
From either a bank or even third partyfinancing through a input supplier.
If that becomes a little bit harderto get because of this debt repayment
capacity issue, and we start to seesome land sales and some transactions,
that could then cause a littlebit of softness in the market.
But as of right now, we're not,I'm not seeing a whole lot.
And I think that's where it comesdown to is like we are seeing
banks pull back on, on lending.
(20:45):
I had a farmer call just the otherday, and of course, you know,
I talked with a lot of farmers.
He called me at 8:02 on a Monday morning.
And I talked to a lotof farmers all the time.
And most of the time I believethem to always tell me the truth.
Sometimes I wonder if theytell me all the truth, but this
particular farmer had $5 millionin assets with 75% paid off equity.
And his loan officer declinetheir operating this year.
(21:06):
And they had to go find a differentbank and different provider to
provide that operating loan.
So I do think we're seeing some tightness.
Wow.
Do you think for land in particular,this provides opportunities to build
some of those strategic relationshipswith more institutional capital in
exchange for taking on debt to buy landnow because of the cashflow challenges.
Do you think this is providing agreat opportunity for institutional
(21:28):
capital and big time investorsto come in and help farmers, with
that access to capital they need?
So I'd say we've seen a slow down inthe big institutional investors because
the returns in the stock market relativeto the returns in land have favored
alternative investments other than land.
Now I always say that they'resmart and they jump into the land
(21:48):
market when there's a good buy.
So if land values started to looklike they, they were undervalued
relative to where they could be.
You would start to seealternative investors, outside of
agriculture, come into the space.
That's one of the reasons why I think wehave somewhat of a floor in land markets.
They recognize that an asset can getout, undervalued and buy into it.
And so to some extent, farmersdon't like to hear this, but to some
(22:09):
extent we need outside investorsbecause that's what keeps our
land market from, from collapsing.
They come in when theyfeel like it's undervalued.
To your point about relationships,yes, I'll hit on that again.
I do think that we're in an era towhere building those relationships
and being good stewards of landfor a asset owner just continue to
grow in importance and relevance.
(22:29):
And I think we'll continue aswe move through the future.
Okay.
One of the things like, as I, as Ihear you say, the relationship piece
and thinking back to 25-year-old Chadand in thinking about how I would take
in that podcast, where would you, thethree of you are really smart, where
would the three of you start on tryingto build strategic relationships
if you are a row crop farmer?
How would you go about that process?
(22:49):
I think that there was alwaysthis idea that we should find some
partner, who has, ultimately it wasusually the doctor or the dentist
or somebody who you can convince tocome by 140 acres when you can't.
When I think about, the idea makes tons ofsense, the tasks that I would go through
to accomplish that idea seem difficult.
I would start with like personalnetwork, like just people you
(23:12):
know, who are smart people.
I'll use an example of, ofsome people I know at home.
A guy and one of his buddies, they I thinkwent to college together and then just
kind of went their separate ways and hewent into the vegetable buying industry.
He was a representative of grocerystores going to farmers buying vegetables
for some different grocery stores.
(23:33):
I think that had kind of run hiscourse and he didn't really feel like
he wanted to do that as much anymore.
And he moved back home and his friendwas looking to diversify and they
went into together and bought avegetable packer that had been run
down and put a lot of money into it.
The farmer was excellent and he couldgrow the vegetables, and his buddy was
(23:54):
excellent and had lots of connectionsin the grocery store industry.
He could get them sold.
And that's been a fantastic deal for them.
That has really, helped them a lot in someof these less than ideal market times.
Yeah, I would agree.
That's an excellent, excellent story.
I, I would agree with that fully.
You know, and I think there'sopportunities to grow niche products and
look outside what we traditionally think.
(24:15):
I get the opportunity to teach ourupper level farm risk management
course at the University of Missouri.
I love my students.
But the majority of them come withideas of how to work in production
agriculture that are very differentthan what we have historically thought.
Outside of just corn and soybeans, Ihad one student that was growing, grain
sorghum to produce the molasses or thesugar to be used in sorghum whiskey.
(24:37):
And he had built a strategicpartnership with a distributor
and a distiller in St. Louis.
And that market share was growingfor them and they were constantly
adding more sorghum acres andworking with producers that would
allow 'em to grow sorghum on acres.
So there, you know,there's another example.
Llamas, right, is another thing, right?
That's a livestockcategory component here.
And so, you know, there's these examplesand these strategic partnerships in
(24:57):
avenues and channels, that aren'tnecessarily just corn and soybeans.
Now, if I was somebody that was lookingto grow my strategic partnerships
in corn and soybeans, right now,the way I think I would do that is
used equipment or just equipment andwe've seen the values come down, so
it's relative cheap to where it was.
It's still not cheap.
People would argue it's not cheap at all.
But it's relative cheap to where it was.
(25:18):
You can get a pretty attractive financingnote to finance some equipment, and I
would look at getting into the customagriculture, whatever, planting, spraying
if you're cotton and, and they, yougotta get across your field 14 times in
the summer or 10 times in the summer,
Spraying.
Right?
Buy a sprayer at a relatively cheapand run as many acres through that,
that machine as I possibly could.
(25:38):
Build that network ofproducers that I'm helping.
Maybe they can't get over all their acres'cause it was really wet and they need
some additional help to spray their acres.
Well now all of a sudden I'm providingthem value and strategic partnerships
to where I am building that networkand then maybe at the end of that
producer's timeline, he's like, Hey,you've been a great partner in this
endeavor, would you be interested intaking an ownership in this operation?
(26:02):
Or buying into this operation?
My answer to this question is unique nowbecause equipment values have come down.
You can get a cheap relativeinterest note, but custom work
right now would be a way to get intoto the corn and soybean markets.
But there's avenues outsideof corn and soybeans too.
Yeah.
This is a little bit off of beinga starting farmer, but I think that
strategic partnerships with livestockproducers is really important and is
(26:24):
going to continue to be really important.
Chad, you have some experience with that.
If you're a corn and soybeanproducer, having manure on your farm
is a hedge against input prices.
Well, fertilizer, butit's a hedge on that.
And then additionally, it's a littlebit of a hedge on the commodity
prices too, because lean hogs orbeef cattle or dairy or whatever you
have on your farm is usually fairlyuncorrelated with corn and soybeans.
(26:49):
Especially if you're feedingcorn and soybeans to your cattle.
If prices are cheap, you know,that's good margins for your dairy.
If prices are high.
It's good margins for yourcorn and soybean operations.
So I think that having partnershipsand strategic relationships with
livestock producers and integrators,is really important and going to
continue to be really important.
(27:10):
Man, that's good.
So in my head, what I was thinkingis, is how do you, approach the Purdue
retirement fund and, and you know,how to convince them to buy farmland.
So you guys, all, all threeof you answered a different
perspective on that strategicpartner, which I think is awesome.
That's really, it's because I thinkthat was always the part, as a
producer, it always felt, well, like,who am I to go and, and talk to,
(27:32):
you know, this big, management fund.
And I got laughed outta roomsin, in multiple places, you know?
But you said verypractical sort of things.
Within the network, people who arein the industry and would look at
you favorably as, as opposed tobeing like, what are you doing here?
Pitching us to buy 160 acres?
So I love that.
Any other questions you guys have for Ben?
Yeah, I want to pick your brain, Ben,
(27:54):
Will that hurt?
Go ahead.
On, on, on different parts ofthe corn belt and different
parts of ag in the country.
You've done some time in Kansas and Ohioand Missouri, and here you are in Indiana.
I want to hear cultural differences,but also some economic differences
as we're, we're sitting aroundtalking about these things today.
Yeah, so I mean, you dosee these cultural pockets.
(28:16):
The Delta region, for instance,Mississippi, Arkansas, Louisiana is very
different than where we sit up here.
For a very long time Indiana hadalways had this mix of poultry and egg
production, plus row crop, and thatwas very unique kind of to this space.
Iowa also had kind of some of that,that same type of blend of mix.
Now we're seeing it in placeslike, you know, Missouri,
Oklahoma, Northwest Arkansas.
(28:37):
A lot of growth in poultryand egg production.
They had to do that.
Companies had to do that to provide asafety net or a risk management standpoint
around some of the avian flu and diseases.
They don't want their whole enterpriseto be wiped out if disease breaks out.
So a little bit of geographicaldiversity there too.
To the specific question aboutdemographics, there are some differences
(28:57):
in terms of how people think about stuff.
I would say most of it'srelated to, to rainfall.
That's where I see the biggest difference.
The folks out in Kansas that are onlygetting 12 inches of rain a year, have
a very different mindset in terms of howthey plant crops and how they invest in
the crop throughout the growing season.
Than you would here in Indiana whereI'm guessing the average rainfall
somewhere around like 36, 38 inchesa year or something like that.
(29:18):
The rainfall has a tendencyto be, a signal of culture.
Also, just like the growth that we've seenin alternative investments outside of ag.
Here in the Eastern Corn Belt, youguys have had a lot of growth in
urban sprawl and solar initially.
And now we're gettingsolar out west as well.
Some of the things are differentacross the corn belt at specific times.
(29:41):
But I think we allexperience them eventually.
You guys might be a, a precursor to us byfive to 10 years and then all of a sudden
those same types of things and mentalityand questions start to pop up in Missouri.
And then of course the rainfall andthe weather patterns that we've seen.
We used to, I always joke about thisand it's really not a joke, it's
actually very sad, but, our corncrop in Missouri is always made if
(30:02):
a hurricane hits Texas in August.
That's when we get the rainthat makes our corn crop.
So we start getting excited whenthere's activity happening in the Gulf.
Sure.
Because that means we're gonnaget rain in Missouri and it's
gonna make our August corn crop.
So, you know, weather hasa pattern in that as well.
The difference across regions is the wholereason we, at the University of Missouri,
in partnership with USDA, have startedlooking at state level farm incomes.
(30:24):
Because the national farm incomes werefine, but they hid a lot of the, the
very nuanced details at the state levels.
And so, we're now in like year threeof this and we can look at how, a
state like Nebraska that has a lot ofcattle feeding, compares to a state
like Indiana, where there's a lotmore hogs and a lot more chickens.
How does that farm incomecategories kind of shift over time?
(30:47):
And it helps us at least be alittle bit better at targeting some
assistance if, it needs to roll out.
So I don't know if I answered yourquestion about differences culturally
and geographically, other than to saythat there's probably more similarities
across the corn belt than people realize.
Mm-hmm.
It just comes sometimesat different times.
I think we should close this up.
So, thank you, Ben, Jonah, Avery.
(31:10):
Thanks guys.
This is the conversation series,and Ben Brown is here speaking
at the Top Farmer Conference.
I have invited because Todd's ona boat somewhere, Avery Pound and
Jonah Armstrong, who are master'sstudents in ag econ at Purdue, to be
a part of this conversation becausethey're really good question askers.
(00:24):
So Ben, you were just mentioning likeyour background and I think that might
be kind of a cool place to start.
So can you repeat someof what you just said?
Sure, yeah, absolutely.
So I grew up on a family farm inWest Central Missouri, about an hour
and a half south of Kansas City.
We had row crops and cattle,went through 4H and FFA.
Undergraduate education in agricultureeconomics and agronomy at K State.
Grad school at the University of Missouri.
(00:46):
Worked for a period of timeat Ohio State University.
They always said, they could tell Iwasn't from Ohio 'cause I never said
How, how long was that?
How long was the Ohio State?
Almost four years.
Four years.
Okay.
Almost four years.
Which is crazy.
But, yeah, I was there and then had theopportunity to go back to Missouri, my
home state, serve as our state extensionspecialist for row crop economics at
Missouri and work with FAPRI on row croppolicy and kind of forecasting work.
(01:08):
So you just gave a really compellingoutlook talk, related to crops.
and I think Jonah might have thefirst sort of burning question
as our resident southern member.
You gonna ask me about cotton.
My farm at home, we grewcotton in the mid nineties.
And then it was such a pain andit made everybody hate each other.
So we stopped growingit in the early 2000s.
(01:30):
Okay.
Wait a second.
For those of us who aren'tfamiliar with, growing cotton.
Yes.
Yes.
Can you tell us why?
Is this like our loading pigs?
Is this the Midwestern loading pigs?
Well, well, I, I've only, I have notloaded that many pigs, so I don't feel
Like it's basically the opportunityto hate your family members.
Pretty much.
Yeah.
Well, it's 'cause you have tospray it or you had to spray it
14 times a year.
(01:50):
14 times a year.
Like that's a, that's not an exaggeration.
No.
14.
Yeah, legitimately.
Oh, okay.
Like you had to spray it likeat least once a week, if not
twice every week over the summer.
So it was just a lot of work to get overall the acres and pe you know, people
want to go to the beach, which is whatyou do where I'm from, by the coast.
Everybody wants to go tothe beach over the summer.
(02:12):
And it was just, it wasjust not a good time.
But we started growing it againwhen the prices went way up.
Three years ago.
Yeah.
Three years ago.
We grew it two years, and then lastyear we were going through some of the
budgeting stuff and the best budgetthat any of us, me or my dad and some
of the local input provider people, thebest budget we could come up with was
(02:34):
like losing 250 bucks an acre on it.
So we're just like, we just
Whoa
said, Hey, you know, we're good.
We don't need to grow cotton.
Is it ever coming back?
Are people only buying polyester t-shirts?
Like what is, what do youthink is the outlook there?
Yeah, so I should preface my answerhere with, I'm a Midwest wheat guy, so I
grew up in the western part of Missouriwhere we have corn, soybeans, and wheat.
(02:55):
Used to have grain sorghum.
So I would actually associate tothe conversation about loading pigs.
Cotton kind of reminds you alittle bit of grain sorghum.
So the question around cotton is,is a very interesting one because
the demand for cotton, is both theconversation around oil, if oil prices
get real cheap, polyester becomes cheap.
And that that competes against,you know, natural fibers, wool,
(03:16):
cotton, what have you, right?
So there's this conversationaround cheap oil prices, which
is what we've got, right?
Relatively cheap oil prices right now,both in the US and the global market.
That increases thecompetition for polyester.
The second part here is global economicactivity, and we've seen global
economic activity really slow down.
Here in the United States hasbeen a little bit more stable.
But the global GDP has really slowed.
(03:37):
Both of those factors, high competitionfrom synthetic products and less buying
power by international buyers has reallykind of been a dog for, for, for cotton.
So that's what's caused this.
Now the question becomes, youknow, where do we go from here?
Right?
Yeah.
And, and I think in the short run, the waywe get out of this is acreage abandonment.
(03:58):
You know, right now, the mostprofitable outcome for a lot of cotton
producers is not to harvest cotton.
Yeah.
Is, is to plant it to, to let it growand then just not harvest it, right.
And this is a little differentfrom us in the Midwest where we
have corn and soybean production.
Our harvest costs are relativelysmall compared to cotton.
Yeah.
And so the price really has to drop, oryou have to have a really, really low
(04:21):
yield not to harvest corn and soybeans.
Like very low yield.
That's not necessarily truein cotton where you have
relatively large harvest costs.
And so if you're getting to theend of the season and you've got
a decent crop, you're kind ofhoping for a hailstorm, right?
You're hoping that a hailstormcomes and wipes out that cotton crop
because of the large harvest cost.
And so I think our acreage abandonments,what gets us out of this in the short run.
(04:45):
We reduced acreage this lastyear for cotton substantially.
I think we need to keep it therefor a short run period of time.
In the long run aspect when it comesto cotton, we're gonna have to see
some consumer dynamic changes aroundnatural fibers and an attitude
shift away from synthetics, workoutclothes to more natural fibers.
And I think there is a consumerargument to be made there.
(05:06):
The cotton and the naturalfiber industries are trying
very hard to make that argument.
And I think they're making someheadways, but we have more work to go.
What I heard is that Lululemonis killing the cotton farmers.
There's, I, I'm not gonna signalout Lululemon 'cause who knows,
maybe they have my home address.
I don't know.
But I would just simply say that yes,that representative brand, right?
(05:27):
Yeah.
Like people have, have just gotten towhere they like workout clothes, that
are made from synthetic fibers becausethey're, you know, easier to breathe
and we see more blends to your commentthan what we've historically seen.
And, you know, not to signal outany celebrities, but, sometimes the
cotton industry hires celebritiesto promote their product and
they do for the photo shoot.
(05:48):
Right.
And then the very next week yousee them out in public wearing
synthetic products, right?
Yeah.
And so that's, that's,that's been a challenge.
I did not know the degree to which harvestcosts were so much higher for cotton.
They are.
That's fascinating.
What would you thinkan acre, what is your,
I'd have to go back and look, but Ithink a realistic estimate is probably
three times more than corn and soybeans.
(06:10):
Wow.
We're probably 200, 220, something likethat for some of your basic harvest costs.
Then you potential have a pricethat would be low enough, you
wouldn't recoup your harvest costs.
Correct.
Yeah.
That's fascinating.
Yeah.
I mean it, the harvest costs are justso much larger relative to corn and
soybeans, and so that's why we seequite a bit of acreage abandonment.
Even in potentially years wherethe yield's not bad, it's just the
(06:32):
price has gotten low, maybe enoughto where it becomes part of this
decision around variable cost.
And just the marginal costof harvesting that product.
That's like undergraduateentry level microeconomics.
We should be using that as an example.
Yeah.
Cotton's really fascinating.
I'm a Midwest guy.
And so I've learned a lot about cottonand rice and peanuts, now canola,
'cause those are very southern crops.
And I've learned quite a bit about 'em.
(06:53):
Still learning.
Always learning.
I did know about the spraying.
Yeah.
So, thrips is the bug.
Right?
And there's no control for that.
No.
And so you, you spray all my, allmy friends that have cotton, you
know, all summer, all I get isSnapchat of them on a sprayer.
So yeah.
But then the growth regulators as growth.
Growth regulators.
Regulators as well.
And since it's a crop that never stopsgrowing, you gotta spray it and kill
(07:15):
it at the end of the season as well.
Right.
That's something interesting Ilearned that I didn't know until
maybe last year, is that cotton'stechnically a perennial crop.
And that's why they shred it at the endof every year after they harvest it.
Yeah.
It's basically a tree.
I mean, it is a tree.
When I was in undergrad, I mentionedI had a plant science double major.
And one of the courses we did hadcotton seeds that we planted and grew.
(07:37):
And so I actually grewmy own cotton plant.
And I was convinced I was gonna tryto get it to grow for the next year.
Of course, you can do that withone and hand pick it, right?
But the way we harvest cotton,it becomes an annual crop.
But yeah, it is aperennial, perennial cotton.
Right?
'cause you go and then you've got a,you have to defoliate it at the end
of the season so it doesn't stain theleaves, don't stain the cotton green.
And then, but if you go out anddefoliate it and then you get a rain
(08:00):
on it, then it just comes back andyou have to go defoliate it again.
So it's really a headache to deal with.
So it's, it's a headache andyou're losing a ton of money on it.
Yeah.
Not only that.
How many times, how many trips acrossthe field to till before you plant it?
Yeah.
You have at three, at least threesometimes passes with the tillage
system before you plant it.
Because you want it reallylevel or what, what's
We, we do, I don't know whatit is in Missouri, but we do a
(08:21):
ton of, all of ours is bedded.
You come in and you, you discit and loosen up all the dirt.
And then you come back with abedder and form everything into
the piles, basically your beds.
And then you have to come backseparately and knock the top off the
bed to create a flat planting surface.
So it's three passes.
The other thing after tillage, I,I did some time down in West Texas.
(08:45):
I, I, I'd say it like I was in prison.
I actually love my time down there.
I interned for a dairy, but theywere in cotton country and I learned
from some of the agronomists thatcotton, it just wants to die.
Yeah.
Up until it's been out ofthe ground for a week or two.
Then after that, it doesn't wanna diewhatsoever and it's wind storms and,
and that sort of thing can kill it.
(09:06):
Cold weather.
And it, it'll be done in earlystages of growth, but then after
that it, it just takes off.
Fascinating crop to me.
Yeah, it is.
Who would've guessed I would've cameto Indiana, we'd spend this much time
talking about cotton, but here we are.
I love cotton.
I think there is, I mean, we, wealways joke that if you put enough
people who are interested in farms in aroom, like you get strange diversions.
(09:27):
Sure.
You know what I mean?
Like, because, because wejust talked about furrows.
And topping furrows.
I don't, I, that's a prettyniche audience that, that wants
to like, have that conversation.
You know?
If you wanna runequipment, get into cotton.
Right.
So, Avery, what do youwanna talk to Ben about?
Well, Ben, thanks for coming tospeak at the conference and thanks
for being on the podcast today.
Something that struck me from your talkearlier is the correlation between energy
(09:51):
prices and agricultural commodity prices.
And I thought that was super interestingand something I've been thinking a
lot of lately, reading the Wall StreetJournal, I've been reading a lot about
Venezuela and what's to come withthe oil market there and how the US.
could interact.
How do you see, the changes to,this Venezuelan government and
potentially global oil markets,in relation to the US' ag economy?
(10:17):
Sure.
And we could spend a lotof time talking about this.
The initial impression was that thiswould be bearish to the oil market.
Venezuela has a lot of oilreserves that they're sitting on.
And there was maybe this thought thatwe'd see rapid growth in oil production.
The US is talking about, alot of investment in Venezuela
from, oil and energy companies.
(10:38):
Their oil system that they havein Venezuela is similar to some of
what we would see in Canada, youknow, the very heavy, dark, crude.
And so, you look at the economics betweenthe two and you ask the question, well,
if I had the choice between Canada orVenezuela, why would I leave Canada?
And so I, I think when the market didopen on that Sunday night and even the
following days afterwards, and we sawjust a little bit higher oil prices,
(11:00):
but pretty flat in the grand scheme ofthings, I think now you're starting to
see people say, well, maybe we don'tsee as big of oil supplies to the
global market as maybe what we initiallythought in the hours leading up to it.
And again, you know, Venezuela is acountry I don't normally think about
a whole lot, but here we are, youknow, in 2026 talking about Venezuela.
So that would be whatI'd say about Venezuela.
(11:21):
I, I'd say the thing you mentionedabout the connection between energy and
agriculture, you know, there's always beenkind of this connection between the two.
Both of 'em are commodities.
Oil, corn, soybeans, commodities,you know, we see 'em in a lot of
portfolios as a hedge against inflation.
So from an investmentstandpoint, we've got that.
But just with the growth that we'veseen in the biofuel space over
the last 15 years, 15 to 20 years,just continues to increase that
(11:44):
connection between, energy and thenalso, row crop commodity economics.
Yeah.
We've talked about cotton here and howacreage is going down, and in your talk
you said a lot of that's going into corn.
Becoming corn acres, it seems likethe solution to everybody's low profit
Returns.
Yeah.
Low return.
Low profit problem is plant more corn.
(12:07):
Is, is aviation fuel?
Is the bio, is the, you know, ethanol,aviation fuel, is that the silver bullet?
Is that gonna save everybody?
The corn's gotta go somewhere.
Right?
Like that's what I keep coming back toin my mind when I hear those numbers.
Sure.
Yeah.
So you are correct onthe first part of that.
Everything's going to corn.
Right.
And that was the case in '25.
Like every crop gave up acreage to corn.
(12:30):
Yeah.
And I think we maybe see asimilar standing in 2026.
It, we might not lose acres and all thosecrops to corn, but corn's just gonna
maintain what they took this last year.
Right.
It is kind of what I think we'regonna see in the year ahead.
So from that standpoint, now yourquestion about sustainable aviation fuel.
Or synthetic aviation field, whateveryou wanna call it these days.
But, we would consider thata rather aspirational goal.
(12:52):
Okay.
It's out there.
But the economics don't, don't reallysupport the growth in that sector.
You know, for a period of time we hada lot of airline companies that were
voluntarily starting to talk aboutusing sustainable aviation fuel.
Some of them have now announcedthat they're not going to do that.
Some countries are askingfor mandates, to do that.
(13:13):
So you might see specificcountries that do that.
But here in the United States, I'd sayit's a pretty aspirational goal yet and
would require policy intervention orpolicy changes to really get to take off.
If I can use that pun, but yeah.
Yeah.
Nice.
That's a good one.
Okay, so, farmers seem to be long-termdecision makers, at least the people
(13:33):
who are kind of left, doing this.
'Cause we know that things change, right?
And so that can be great.
Because you don't sort of makethese quick and pivoting moves.
We know this is an uncertain game and ifyou play the same strategy over and over
again, that's probably a decent play.
But it also makes us fairly susceptibleto just kind of keep doing what
we've always done as opposed to bethoughtful about our long-term strategy.
(13:57):
When I think about the families that Iknow who are farming, their long-term
mentality has been really successful.
Is that still a good decision in thisenvironment or should there be more
thought around strategy for the future?
Based, based upon everybody's gonnaplant corn, everybody's, you know, like
we, we have these big conversations.
Yeah.
So I think, this is a greatconversation and great question.
(14:21):
My answer to the questionspecifically is yes, I think you
still have to think long term.
I think that has to be partof farmer decision making.
And so I don't want to discourageanybody from thinking long-term,
even with all these challenges.
Here's how I think that's changingin terms of how we think about
long-term decision making.
Asset specificity, I can't say thatword, but basically if you have an
(14:42):
asset and you can only do one thingwith it, that has worked in the past.
But I don't think that's our future.
Okay.
So relationships still matter.
Strategic partnerships and intentionalrelationships still matter within
this business, and I think thoseare the long-term decisions.
And long-term planning farmers should,and that's a value judgment, but in my
(15:02):
opinion, should be thinking about buildingrelationships, strategic partnerships,
is a long-term decision making.
Let me use poultry as an example, right?
Modern poultry barns are a big investment.
You know, you're talking about millionplus investment in, in a poultry
barn, that may take a little bit ofan on ramp period to get it built.
Right now we're seeing a littlebit of delay in terms of when
you can build a poultry barn.
(15:24):
But let's just say the poultry sector, youknow, really struggles and goes through
a prolonged period of, of transitionor some type of recession, depression
type thing in that specific sector.
Currently and where I see the longterm going, that leads me to be kind
of concerned about making some typeof investment to where maybe I need
seven years, six to seven years torecoup my, my investment in that asset.
(15:48):
But if in year two or three ifsomething goes awry, is there an
alternative to use that asset?
As I look ahead, I'm gonna say I don'tthink that's where we need to be focusing.
I think we need to be focusingas production agriculture and
looking at assets that can beused in multiple different ways.
Land continues, row crops continueto be something like that, right?
(16:09):
So here in the Midwest, primarilycorn and soybeans, but there's other
crops we can grow on that same land.
Canola is an example of that.
I talked about canola today during thetalk about how we're seeing an increase,
well that's, that's been a productthat coming into some of that land.
We can run cattle on that land, right?
You know, we could dosolar, things like that.
It provides us options,multiple different options.
To answer the question about long term,I think we have to be focused on it.
(16:32):
I think it has to be relationshipbuilding, but I would be very, very
cautious about investing in assetsthat can only be used in one or
two very niche and special ways.
I didn't know I was gonna be thecotton guy, but that comes back to
like, I mean, a cotton harvester.
And what do you do with itafter, if you don't grow cotton.
Your only option is to sell itto your neighbor who hopefully
needs one and grows cotton.
Those are your only options.
(16:52):
You can't.
Just change to corn or soybeanslike you can with your, your
conventional harvesters.
The flexibility becomes the name of thegame, I think in the long run, right?
Yeah.
We've seen this in, in, inseveral different commodities.
Dairy comes to mind.
And we're seeing it in someother types of livestock.
If you build a relationship, and thatrelationship is good, that's fine, but
(17:12):
you also expose yourself to third partyrisk to where if that buyer exits and
there's no one else to buy your asset,but you're still sitting there with an
$800,000 ownership note on that barn andyou gotta figure out what to do with it.
That's where we're seeing someof the challenges in this space.
Same thing with the cotton harvester.
Okay, so another thought that I haveis that, you know, I'm a, I'm nearly
40 and so I did not experience thefarm financial crisis, but I think
(17:35):
my birth signaled the end of it.
So I'm the same way.
And I always say I didn't growup in the 1980s, but I grew up
in the long shadow of the 1980s.
Yeah.
Oh man, that's
I can point to specific things in my life.
Yeah.
That now after I've learned, and beena student of this industry, I can point
to specific things that my family didthat I'm like, okay that was a direct
result of them living through the 1980s.
Right.
No, yeah, that's dinnerconversations still, right?
(17:57):
We're still hashing the 1980s.
So the thing that is interestingis we had a pretty significant
solvency problem in the eighties,and we don't have that today.
It doesn't seem to be at least yet.
I would agree.
But we definitely have a cash flow,a significant cash flow problem.
To the point where even people withreally, really, strong asset base
(18:18):
are probably asking, their banks areasking them different questions maybe
than they were asked previously.
And maybe they didn'tget a, an operating loan.
What do you think about the financialsector health and how people are
gonna manage low cash returns andcrop production, if we go into yet
another year of low cash returns?
Sure.
Yeah.
So I, I would agree withyou on the financing space.
(18:39):
We are not seeing thedeterioration, in solvency ratios.
Broadly.
There's, there's pockets, you know, Ithink of, of prime cotton and rice country
where that's, that's a dominant market.
And not a lot of livestock.
You know, we are seeing some land salesthat are starting to cause a little
bit of deterioration in land value.
So, you know, that's starting to see someof these solvency issues start to pop up.
(18:59):
But broadly speaking, I don't thinkwe're seeing the solvency issues.
Nor do I think we'll see the deteriorationof land, like what we saw in the 1980s.
And, and people listening areprobably like, well, that's
what somebody said 1979.
And, you know, that's true, right?
Yeah, yeah right.
You never think it, it's gonna happen.
But we have quite a few changes in termsof safety nets, that exist out there.
(19:20):
And the other thing that I would sayis the amount of ownership of land that
is well positioned and either ownedby somebody outside of agriculture or
a very established, balanced farmer.
I think we'd have to see this shortageof cash flow exist many more years before
we really started to see some of thesolvency issues that we saw in the 1980s.
(19:41):
And so I don't know if thatprovides any security for
anybody or any hope or whatever.
I'm just saying I just don't thinkwe'll see the solvency challenges.
So from that standpoint.
Now to the lender conversations, interms of accessing financing, right.
You know, a lot of people usetheir asset base to get financing.
And I think we've seen that reallytighten up, because it's now
(20:02):
becoming very much a cash flow game.
Yes, you have the asset, but the assetdoes not necessarily justify cash,
or, the ability for debt repayment.
And so you're seeing a lot oflenders really focus on that
debt repayment capacity, evenoutside of selling an asset.
Does that start toencourage more asset sales?
As farms struggle to get, youknow, traditional financing.
(20:23):
From either a bank or even third partyfinancing through a input supplier.
If that becomes a little bit harderto get because of this debt repayment
capacity issue, and we start to seesome land sales and some transactions,
that could then cause a littlebit of softness in the market.
But as of right now, we're not,I'm not seeing a whole lot.
And I think that's where it comesdown to is like we are seeing
banks pull back on, on lending.
(20:45):
I had a farmer call just the otherday, and of course, you know,
I talked with a lot of farmers.
He called me at 8:02 on a Monday morning.
And I talked to a lotof farmers all the time.
And most of the time I believethem to always tell me the truth.
Sometimes I wonder if theytell me all the truth, but this
particular farmer had $5 millionin assets with 75% paid off equity.
And his loan officer declinetheir operating this year.
(21:06):
And they had to go find a differentbank and different provider to
provide that operating loan.
So I do think we're seeing some tightness.
Wow.
Do you think for land in particular,this provides opportunities to build
some of those strategic relationshipswith more institutional capital in
exchange for taking on debt to buy landnow because of the cashflow challenges.
Do you think this is providing agreat opportunity for institutional
(21:28):
capital and big time investorsto come in and help farmers, with
that access to capital they need?
So I'd say we've seen a slow down inthe big institutional investors because
the returns in the stock market relativeto the returns in land have favored
alternative investments other than land.
Now I always say that they'resmart and they jump into the land
(21:48):
market when there's a good buy.
So if land values started to looklike they, they were undervalued
relative to where they could be.
You would start to seealternative investors, outside of
agriculture, come into the space.
That's one of the reasons why I think wehave somewhat of a floor in land markets.
They recognize that an asset can getout, undervalued and buy into it.
And so to some extent, farmersdon't like to hear this, but to some
(22:09):
extent we need outside investorsbecause that's what keeps our
land market from, from collapsing.
They come in when theyfeel like it's undervalued.
To your point about relationships,yes, I'll hit on that again.
I do think that we're in an era towhere building those relationships
and being good stewards of landfor a asset owner just continue to
grow in importance and relevance.
(22:29):
And I think we'll continue aswe move through the future.
Okay.
One of the things like, as I, as Ihear you say, the relationship piece
and thinking back to 25-year-old Chadand in thinking about how I would take
in that podcast, where would you, thethree of you are really smart, where
would the three of you start on tryingto build strategic relationships
if you are a row crop farmer?
How would you go about that process?
(22:49):
I think that there was alwaysthis idea that we should find some
partner, who has, ultimately it wasusually the doctor or the dentist
or somebody who you can convince tocome by 140 acres when you can't.
When I think about, the idea makes tons ofsense, the tasks that I would go through
to accomplish that idea seem difficult.
I would start with like personalnetwork, like just people you
(23:12):
know, who are smart people.
I'll use an example of, ofsome people I know at home.
A guy and one of his buddies, they I thinkwent to college together and then just
kind of went their separate ways and hewent into the vegetable buying industry.
He was a representative of grocerystores going to farmers buying vegetables
for some different grocery stores.
(23:33):
I think that had kind of run hiscourse and he didn't really feel like
he wanted to do that as much anymore.
And he moved back home and his friendwas looking to diversify and they
went into together and bought avegetable packer that had been run
down and put a lot of money into it.
The farmer was excellent and he couldgrow the vegetables, and his buddy was
(23:54):
excellent and had lots of connectionsin the grocery store industry.
He could get them sold.
And that's been a fantastic deal for them.
That has really, helped them a lot in someof these less than ideal market times.
Yeah, I would agree.
That's an excellent, excellent story.
I, I would agree with that fully.
You know, and I think there'sopportunities to grow niche products and
look outside what we traditionally think.
(24:15):
I get the opportunity to teach ourupper level farm risk management
course at the University of Missouri.
I love my students.
But the majority of them come withideas of how to work in production
agriculture that are very differentthan what we have historically thought.
Outside of just corn and soybeans, Ihad one student that was growing, grain
sorghum to produce the molasses or thesugar to be used in sorghum whiskey.
(24:37):
And he had built a strategicpartnership with a distributor
and a distiller in St. Louis.
And that market share was growingfor them and they were constantly
adding more sorghum acres andworking with producers that would
allow 'em to grow sorghum on acres.
So there, you know,there's another example.
Llamas, right, is another thing, right?
That's a livestockcategory component here.
And so, you know, there's these examplesand these strategic partnerships in
(24:57):
avenues and channels, that aren'tnecessarily just corn and soybeans.
Now, if I was somebody that was lookingto grow my strategic partnerships
in corn and soybeans, right now,the way I think I would do that is
used equipment or just equipment andwe've seen the values come down, so
it's relative cheap to where it was.
It's still not cheap.
People would argue it's not cheap at all.
But it's relative cheap to where it was.
(25:18):
You can get a pretty attractive financingnote to finance some equipment, and I
would look at getting into the customagriculture, whatever, planting, spraying
if you're cotton and, and they, yougotta get across your field 14 times in
the summer or 10 times in the summer,
Spraying.
Right?
Buy a sprayer at a relatively cheapand run as many acres through that,
that machine as I possibly could.
(25:38):
Build that network ofproducers that I'm helping.
Maybe they can't get over all their acres'cause it was really wet and they need
some additional help to spray their acres.
Well now all of a sudden I'm providingthem value and strategic partnerships
to where I am building that networkand then maybe at the end of that
producer's timeline, he's like, Hey,you've been a great partner in this
endeavor, would you be interested intaking an ownership in this operation?
(26:02):
Or buying into this operation?
My answer to this question is unique nowbecause equipment values have come down.
You can get a cheap relativeinterest note, but custom work
right now would be a way to get intoto the corn and soybean markets.
But there's avenues outsideof corn and soybeans too.
Yeah.
This is a little bit off of beinga starting farmer, but I think that
strategic partnerships with livestockproducers is really important and is
(26:24):
going to continue to be really important.
Chad, you have some experience with that.
If you're a corn and soybeanproducer, having manure on your farm
is a hedge against input prices.
Well, fertilizer, butit's a hedge on that.
And then additionally, it's a littlebit of a hedge on the commodity
prices too, because lean hogs orbeef cattle or dairy or whatever you
have on your farm is usually fairlyuncorrelated with corn and soybeans.
(26:49):
Especially if you're feedingcorn and soybeans to your cattle.
If prices are cheap, you know,that's good margins for your dairy.
If prices are high.
It's good margins for yourcorn and soybean operations.
So I think that having partnershipsand strategic relationships with
livestock producers and integrators,is really important and going to
continue to be really important.
(27:10):
Man, that's good.
So in my head, what I was thinkingis, is how do you, approach the Purdue
retirement fund and, and you know,how to convince them to buy farmland.
So you guys, all, all threeof you answered a different
perspective on that strategicpartner, which I think is awesome.
That's really, it's because I thinkthat was always the part, as a
producer, it always felt, well, like,who am I to go and, and talk to,
(27:32):
you know, this big, management fund.
And I got laughed outta roomsin, in multiple places, you know?
But you said verypractical sort of things.
Within the network, people who arein the industry and would look at
you favorably as, as opposed tobeing like, what are you doing here?
Pitching us to buy 160 acres?
So I love that.
Any other questions you guys have for Ben?
Yeah, I want to pick your brain, Ben,
(27:54):
Will that hurt?
Go ahead.
On, on, on different parts ofthe corn belt and different
parts of ag in the country.
You've done some time in Kansas and Ohioand Missouri, and here you are in Indiana.
I want to hear cultural differences,but also some economic differences
as we're, we're sitting aroundtalking about these things today.
Yeah, so I mean, you dosee these cultural pockets.
(28:16):
The Delta region, for instance,Mississippi, Arkansas, Louisiana is very
different than where we sit up here.
For a very long time Indiana hadalways had this mix of poultry and egg
production, plus row crop, and thatwas very unique kind of to this space.
Iowa also had kind of some of that,that same type of blend of mix.
Now we're seeing it in placeslike, you know, Missouri,
Oklahoma, Northwest Arkansas.
(28:37):
A lot of growth in poultryand egg production.
They had to do that.
Companies had to do that to provide asafety net or a risk management standpoint
around some of the avian flu and diseases.
They don't want their whole enterpriseto be wiped out if disease breaks out.
So a little bit of geographicaldiversity there too.
To the specific question aboutdemographics, there are some differences
(28:57):
in terms of how people think about stuff.
I would say most of it'srelated to, to rainfall.
That's where I see the biggest difference.
The folks out in Kansas that are onlygetting 12 inches of rain a year, have
a very different mindset in terms of howthey plant crops and how they invest in
the crop throughout the growing season.
Than you would here in Indiana whereI'm guessing the average rainfall
somewhere around like 36, 38 inchesa year or something like that.
(29:18):
The rainfall has a tendencyto be, a signal of culture.
Also, just like the growth that we've seenin alternative investments outside of ag.
Here in the Eastern Corn Belt, youguys have had a lot of growth in
urban sprawl and solar initially.
And now we're gettingsolar out west as well.
Some of the things are differentacross the corn belt at specific times.
(29:41):
But I think we allexperience them eventually.
You guys might be a, a precursor to us byfive to 10 years and then all of a sudden
those same types of things and mentalityand questions start to pop up in Missouri.
And then of course the rainfall andthe weather patterns that we've seen.
We used to, I always joke about thisand it's really not a joke, it's
actually very sad, but, our corncrop in Missouri is always made if
(30:02):
a hurricane hits Texas in August.
That's when we get the rainthat makes our corn crop.
So we start getting excited whenthere's activity happening in the Gulf.
Sure.
Because that means we're gonnaget rain in Missouri and it's
gonna make our August corn crop.
So, you know, weather hasa pattern in that as well.
The difference across regions is the wholereason we, at the University of Missouri,
in partnership with USDA, have startedlooking at state level farm incomes.
(30:24):
Because the national farm incomes werefine, but they hid a lot of the, the
very nuanced details at the state levels.
And so, we're now in like year threeof this and we can look at how, a
state like Nebraska that has a lot ofcattle feeding, compares to a state
like Indiana, where there's a lotmore hogs and a lot more chickens.
How does that farm incomecategories kind of shift over time?
(30:47):
And it helps us at least be alittle bit better at targeting some
assistance if, it needs to roll out.
So I don't know if I answered yourquestion about differences culturally
and geographically, other than to saythat there's probably more similarities
across the corn belt than people realize.
Mm-hmm.
It just comes sometimesat different times.
I think we should close this up.
So, thank you, Ben, Jonah, Avery.
(31:10):
Thanks guys.
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