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Farming: “A Growing Business”

This week’s episode is another feature from the Ag Biz Cast Podcast. Launched in August, Ag Biz Cast shares inspiring stories of young, beginning, and small farmers. It is targeted at current, past, and future participants of the Ag Biz Masters educational program, but anyone is invited to listen.

Today’s episode is an interview with Dan Hartzell, who shares about his family dairy farm and how he grows his business. I invite you to look for and subscribe to Ag Biz Cast on your favorite podcast platform to hear more stories from young and beginning farmers like Dan. Find the link to the full podcast here:

 


Can you tell us about your operation? Some of the history of it, and how you got started with it?
A little history: I work on the Hartzell farm. I'm a fifth-generation dairyman in Western, Pennsylvania, just North of Pittsburgh, in Slippery Rock. The farm has been in the family since 1896. It was purchased because of the lay of the land, and the good fertility of the land here in Slippery Rock. Since then, the farm has grown. In 1922 they milked about 20 cows. That was about the time the farm got electricity in the early twenties. From there we've grown we we're about a 70 cow herd when I was a little fella. We've since added on, and we're now milking about 260 cows.

Why do you enjoy farming, and what inspires you to stay in business?
I think farming's a rewarding career. I always joke that it's a growing business, but realistically it is a business, and I think there's a lot of joy to be had farming, but it also can lead to a lot of pain, and disappointment. I think in a career as a commercial farmer, you have to expect things not to go your way, and I think for young people getting into the industry, there are a lot of challenges. Ag Biz Masters helps people know what they're up against and take a realistic view of knowing what type of business are they looking to run, and how do they achieve those goals moving forward.

You talked about challenges for yourself. What was the biggest challenge in operating your farming business?
I always joke because Penn State had a program called Dairy Challenge, and when something goes wrong on the farm I laugh, and I say, "This is a dairy challenge." The hardest days on the farm are easy to dwell on, but you have to move past them. I always joke that I've lost my best cow 10 times, and another one's always showed up. I think it comes down to how you look at what you're working for in the long run. If you focus on short run, shortcomings, et cetera, it can really start to snowball. In the long run you have to say, "Are we meeting our goals here as a business?" You're going to lose calves. Your favorite cow won’t always get milk fever.

In the long run, you have to have that longer range view to say, "Are we meeting the benchmarks for animal health? Are we meeting the benchmarks for production? Are we meeting the benchmarks for all those things DHI has records on?" Trying to take that along with data on yields, and you can say, "Some guy in Iowa hit 350 bushel on corn this year." Well, what's a realistic yield for Pennsylvania? Are you making 120 bushel, or you making 170 bushel? What's realistic for the productivity of the ground that you're running? You can't always benchmark off somebody that's six states away.

In your farm business, what has been your favorite memory over the years if you have one, or maybe a couple?
Some of my favorite memories on the farm have been the days when you beat the clock. Your day starts early, and you only have so much daylight to get done. When you get done right before a lightning storm. It was odd, there was a stretch of about four cuttings of hay last year where we covered the bunker in a rainstorm. In different cuttings of hay, you could say, "That's terrible, we're covering the bunker in the rainstorm," but the fact that the cover was on the bunker, and the hay wasn't out in the field getting lost might have indicated it was a successful day. It was not as much of a tragedy as we thought it was getting wet under the big storm clouds.

I think good memories on the farm are when you're there in the nick of time to make something happen. So many things are out of your control. Just focusing on what you can control like, "How many times a day are you checking on your fresh cows? How often are you making ration adjustments? How often are you tracking your production? How often are you tracking your expenses on different things?" Then when things get out of whack, you need to be diligent to say, "Gee whiz the price of soybeans is up 33% this month. What are we going to do about it?" Tracking your costs can lead to a lot of long-term benefit because if you recognize things early on that are starting to snowball, especially in today's markets with feed prices, you can avoid some long-term suffering in the input side of your business. At least this is true on the dairy end, which is obviously what I'm specialized in. In anything managing your input costs can really pay back in the long run.

Moving forward with your farm, and the business, what do you envision for the future of it?
Right now we’re kind of an in between cattle size with 250 cows. I think to stay competitive I'll have to focus more on having custom operators to help me get my work done. I'm not at a size where I can own all the bells and whistle toys that are available on the market today. The price of new machinery is headed north of a quarter of a million dollars. With the milk revenue where it's at, I don't think new equipment is always the answer. You have to look at your business size, and make adjustments to say, “What do I do well? What could someone else do well, or better than I can?” If your grain drill's nine foot wide, and the neighbors is 25 foot wide, you might benefit from paying him versus pulling your hair out for six days trying to plant a crop.

Time is always going to be money in the dairy business. As my herd size grows, I think I really have to be more conscious of time management. Another simple goal moving forward with my business is to put people where they thrive. You realize that you're not just out there working with cows in a 200 cow herd. There's a lot of people involved in the business, and to get them in their niche to find out what their specialty is can be important. Maybe this guy's really mechanical or the fella over here really enjoys the animals, so trying to balance that all out, and put people right where they fit best is really a good way to operate your business. I enjoy working with the people aspect a lot. I think there's a lot to be said for that, because as your business grows, you're not going to pick every ear of corn yourself; you just have to accept it. The past five years has been a testament that to allow your business to grow you have to trust other people to help you in their specialty.

Speaking of business planning, you are an Ag Biz Masters graduate. In your own words, what does Ag Biz Masters teach young, and beginning farmers like yourself?

One expression that I always caught was “What's a 30,000-foot view of your business?” I always spend time on Google maps, and you think “What's going on here?” Looking at the business from the sky, are you making money? Are you losing money? I think Ag Biz Masters definitely gave me a scope to identify the industry trends. Constantly being on Ag Web, or numerous news sources, and following markets was a big push in the program. It also gave me the ability to say, "Hey, I'm going to lock in my input prices here, and not look back,” or to say "Okay, I'm avoiding $5 corn, but I'm paying a little more than the guys around me for a month, or two, but in the long run you might make out." To have a longer-range view of your business I think was probably my best takeaway from Ag Biz Masters. It's given me a little bit more of a foothold in some of the risk management strategies that are out there for dairy businesses.

The name of the milk pricing game is volatility. For years, and years dairy farmers have golfed back and forth, "Oh, we need a guaranteed price. We need a guaranteed price." Now believe it or not, the programs are finally out there with DRP, and some other things, and they've allowed me to set some price floors, and set some caps on things that I wouldn't have had the confidence to do without the Ag Biz Master's perspective of “follow your markets, know the trends.” I think that the future of the business is in looking at where markets are heading, and allowing those decisions to dictate, scenarios like “There is a market for more milk, we should expand” versus 2020, when they were dumping milk. You have to always be aware of the trends because you're not just an island out there on your farm. You're actually part of a bigger Ag network, and the world food network out there.

No one wants pumpkins, don't grow pumpkins. It's simple, but it's very complex at the same time. Or just fake it till you make it, that works too.

Is there anything more specifically with how Ag Biz Masters helped to improve your operation, or any changes that you saw in the operation after completing the program?
I think operation efficiencies, and really driving for milk production was one thing that I realized how simple it was. What is the effect of two more pounds of milk per cow? Well, it's pretty substantial, or “What about four more pounds of milk per cow?” Being able to take a step back, and look at your business you can drown yourself in the day to day operations, but if you can take a step back and say, "Well, if I had six points better forage quality, and made another two pounds of milk we'd make another $50,000 this quarter, this year."

In farming, I always joke because tractors used to be $30,000. You could get any tractor you want for $30,000. Well now $30,000 doesn't even buy you the wheel on a new tractor. Always being updated on where prices are headed adds a healthy dose of reality for a lot of people. You can buy a lot of things on paper, but in the long term, if you're not profitable, you're probably not going to stay in the Ag business forever because you can only go so long on credit.

What piece of advice do you have for young or beginning farmers that are looking to start their own business?
I'd say to avoid people who sound like a country song. Their dog ran away, and everything's broken. Down, and outers aren't going to get you where you want to go in a business setting. I always tell people to get their priorities straight. It's good to keep positive contacts in the industry. Find someone who's successful and find out how they got there. They probably didn't get there by making the wrong choice seven days a week. Something went their way, and you need to find out how they got there. I already said follow the economic trends.

I always try to focus on the controllable things. If a hurricane comes, and knocks over your cornfield, you probably couldn't have stopped that. However, did you happen to have crop insurance on the field that got knocked over? You can control the crop insurance that you purchased, or your coverage level. Always try to know your numbers. Whether, or not it's a good year, or a bad year, there's always a lot more money to be had on a good year. When things are going good, it's the people that are saying, "Well, wait, the cows are making 80 pounds. Why aren't they making 85 pounds? Why aren't they making 90 pounds?"

They're always pushing for that next step and those are the businesses that are the most successful in the long run. When you ease off, and you say, "Oh, life is good. The grass is green. Everything's great." You might have missed a big opportunity by not looking down the road at what could have happened. A big strength in the industry is to always be questioning, “Where are we at?” and “How do we get to where we want to go?”

Do you have anything else that you want to add?
I think this has been a great interview and I just wish everyone luck that’s in Ag Biz Masters. It's a neat program. It's demanding we'll give it that. You'd rather be out there grinding feed in the rainstorm than making a business plan. I think there's a lot to be said for getting everyone on the same page who's involved in your business. The biggest thing that always came up when I was in Ag Biz Masters was transition stuff, and well, “Daddy won't sell the farm.” Everybody's heard that. Why doesn't he want to sell the farm? Those conversations are always difficult conversations to have in any family setting of, well, how do we want this to go? Which brother's going to own this? How do you want this farm to be divvied up? There's a lot to be said for farms that transition to the next generation.

That is a huge hurdle in the Ag industry. Every year you figure any farm that didn't get passed on had a failing transition plan. That's hard to say, but essentially their transition plan didn't work out. The farm was sold in an estate sale. To have those conversations earlier and preemptively is always the best approach versus after the fact. Trying to figure out what this will said, or how did they want this worded? You can't get those questions answered when it's too late.

It's definitely one of the biggest hurdles in Pennsylvania agriculture. There are all these little tracks of land and maybe there’s one right next to the town mall worth $600,000, but what’s its farming value? What can Johnny make off it growing corn versus what will the mall pay us to buy it? Those are tough conversations because money doesn't grow on trees, at least not on the trees around here.
 


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