Speaker 1: 0:02
I’m Colter DeVries, owner of Ranch Investor Advisory and Brokerage Services. I’m an accredited land consultant with the Realtor Land Institute and proud member of ASFMRA.
Speaker 2: 0:13
The Ranch Investor Podcast is the most downloaded and informative industry-specific content that intrigues while entertained.
Speaker 1: 0:22
I’m very excited with your career. I mean, how did you end up as a consultant? Who is Fred Hepler? Where are you from? What’s your background? What’s your story?
Speaker 3: 0:35
Well, did you say you needed me to talk for the entire hour? I mean, I could probably, if I really wanted to take the hour for that. That’s probably not what you’d like to have me do, I would actually, let’s hear it.
Speaker 1: 0:47
Let’s hear it all. I mean, I’ve looked at tractor being an old frugal Dutch farmer, so I know how some of the things you grew up with. Being a frugal German, you might have used what you could and made ends meet where you could and maybe hammered some nails in the wintertime straight nails in the shop. So tell me that story. Let’s hear your background.
Speaker 3: 1:14
Well, the story of my background and thank you for inviting me on this podcast. Hopefully that it’s of interest to all. I am a true agriculturalist, born raised, and did take a little step back away, which we’ll get to here in another brief minute. But in the kind of early in my life I kind of went off and did a few other things, but agriculture came back to weigh out much heavier than what I was doing at that time. I was born and raised on a farm, as you referred to my father and mother, both were German heritage, as were my grandparents, and my one grandparent did come across the water and I had the luxury, true luxury, of knowing all four of my grandparents and they all were, yes, they were up in years and I always thought at that point as a young boy they were really old, but I’m older, way over than they are when I thought that they were old. So you know, when it comes around goes around. But the interesting part of that I found in my life and reflected back on, and it brought to a note to me when one of my grandsons here recently on Veterans Day I was attending a veterans memorial at his school. I have two grandsons that my wife and I are quite involved with 1719 years old, and I went to school their elementary school with them because they had a special event for all veterans. Anyway, sitting at the table, my grandson oldest one he’s nine and I was conversing with the guy across the table who was had been in the army in Vietnam War. I’d been in the military a little ahead of him, but I was still in at the end of my career during the Vietnam War and we get to talk them back and forth about going to school and going to college and things like that. Fast forwarding my oldest grandson who’s? I’m blessed that he’s quite intelligent, sometimes a little too intelligent, but we all understand that with children that’s a good thing to have. Well, with all those degrees of I think you said computer science and finance and all the rest of stuff, how did you learn to fix everything around the house that Grammy wants fixed? Because you can fix the drainage outside, you fix electrical things in the house and you can build things that she wants to. Where’d you learn that? I sent from my father and my grandfather on the farm, and that’s a very true story. When asked during interviews and speaking engagements, give us the background on your education. I always kind of like to leave with a little bit of a joke. Truly, it’s not to me personally. The toughest degree that I worked on, never, ever graduated and never ever received a certificate from, was my grand, my dad’s farming background of the 17 years that I lived at home before leaving for college. He never did, ever let me graduate and have the world without signing that certificate. You know, darn it, but anyway, moving on.
Speaker 1: 4:26
He wouldn’t even give you a passing grade of a C, Fred Well you wouldn’t know if I talking to him for sure.
Speaker 3: 4:34
You know he was a little short on giving accommodations for job well done, but he was not short on it. I think slightly wrong really. Let you know it very directly and sometimes a bit more directly than you’d like to have done, but it more aware of the where I guess I turned out. Okay, I’m still healthy and didn’t hurt me, but at the time it certainly diminished my attitude about wanting to farm at 17 years old. I graduated from high school when I was 17. The only thing I wanted to do at that time was get away from the farm and from my dad.
Speaker 1: 5:19
You, you have. You have a lot of listeners right now who can empathize and relate to that and and I can as well, when it comes to the old grandpa and dad, the farmers, ranchers, you put it very mildly when, when you said that they were short on positive affirmations and but very, we can all relate that they had. They had very specific details when you did something wrong.
Speaker 3: 5:48
Yeah, I yes, my dad had, and he was. I learned driving equipment, running all the equipment on the farm from my father, but there was only one way. It was the right way and it was a safe way. My dad was very, very adamant about making sure that I was always on the tractor seat. I was never hanging off the side doing anything stupid, like a lot of farmers would have their young kids standing on the side axle of an open, no fender tractor and they might even have a rotary hoe. One of our neighbors, one of his kids, fell off when under rotary help Simply not smart. My dad was not that way. He, if I did something not safe, he let me know what real hard, because he wanted to always make sure I never got injured and, worst of all, never you know, never got killed. Because that’s what happened to a lot of young people that didn’t do things around in early days of the older equipment when there was no fenders, no guards on PTOs and various things like that. And I give that credit to my dad because he was very, very adamant and, as a result, luckily, my dad was never, ever seriously injured on the farm. Yeah, all the scrapes and cuts on your fingers and you know various injuries you have, but they’re all minor. Just put a bandaid on it and suck it up and move on. You know was always the comment, but my father was a livestock farmer by heart. He loved livestock. He was very successful at it. My father, by the way, only had the seventh grade education. He had four sisters. He had one older brother and in those days the boys stayed home, worked on the farm. So the girls could graduate from high school, which is what my dad had to do. He just never went back to school. But in his own right, extremely smart math, he could outthink algebra problem that I had when I was in high school. I could read it to him. He could figure it out in his head. He couldn’t give you the algorithm that you needed, that we all had to prove the theorems, but he could give you the answer and it would normally be the correct one, and he was quite successful raising my mom, my sister and myself. 160 acres, and that’s something today would be almost unheard of. Is that a homestead? It was a homestead. We no longer own the farm. My sister and I of course inherited it and mom passed after dad, but we have since sold the home farm by my sister’s request. She had some needs and so that’s what we did with it. Was that in Iowa, fred, southwest Iowa. Southwest Iowa. About halfway between Des Moines and Omaha Koker, in what my dad used to call the hill country, not a flat black, you know high quality soil farm. My dad earned a number of drainage awards from the local conservation district from terracing he was a tile drainage and he was all about improving the soils to make sure that the nutrients were balanced. He was just ahead of his time in proper application and timing of application of the nutrients so that he wouldn’t waste any. And there was farms that you know. I lifted the tile the clay tile, not the plastic ones that you’re probably familiar with Back before the ADS came out with the black tile black two, you know what as with a slot in it there was clay tile that you laid and I’ve lifted those clay tile a lot. That’s why I was pretty full. All farm boys were pretty healthy you know, pretty healthy plus having milk cows every morning. And, as I shared with you when you and I were in another meeting together, I still carry my milking equipment with me and that is my two hands Melt when I was in school. Got to high school, I was ready to play sports and farm boy, big and rugged boy out of the good and football. I went out for that, what you call the hell week two weeks of twice a day practice. I cleared it, I passed and on the last night mom brought me home. Dad said where you been? I told him football practice and he said no, I said you pass. I said yeah, said you better have. He says but you’re not going to play football. They went bought two more milk caps. That’s exactly what he did. I never got to play sports. He didn’t believe in sports. He believed if you had that much extra energy we’ll just apply it to the farm, either raising fair or finish hogs, cow, calf operation or dairy. And we had all three. So that’s how I got to spend my days and that’s something I think that in growing up I can see that was a near sector of my life. But I don’t have the greatest interest in a lot of sports. I just do all my colleagues and buddies and friends and I like them, but probably not to the same level that they do, had I grown up being able to participate in some of those.
Speaker 1: 11:21
So anyway, I don’t know if you, if you know this or not, fred, but I think there’s a lot of people who can empathize and relate to that story. My, my five aunts and my dad had a very similar upbringing, it sounds like, with the the allocation of labor and not going to proms even because the cows didn’t get milked, and definitely not doing sports because practices took away from your productive season, fall harvest in particular.
Speaker 3: 11:58
And back in the day, I don’t know about you, but I’m old enough that I could actually get out of school to work on the forest and that was allowed. It was an allowable absence that didn’t count. A get you still how to do the homework, and dad was all about making sure I got my homework done. He I mean we’d work until way after dark and come in and the first question after supper was how much homework you got and you can’t go to bed till it’s done. I mean he, he wanted me to have the education, but he also wanted to make sure he got all the labor out of me that he could and then any excess energy I have I could work on my homework. So but in my sister you know you mentioned we would go out and do. We used to pick up rocks by hand and some of our fields that had stones in them, and it was a family event. Mom would go, mom would drive a tractor part of the time in the field and Linda and my sister, linda myself, dad, all pick up rocks by hand and put them in the wagon. And and there was other events when my sister got old enough. I started driving tractor when I was four, but she was a little older than that when she started, but dad had her in the field, also on the equipment. Even after I left home. I’m older than she, and, and, and she drove tractor disc herald, you know. Whatever was needed, that’s what she had to spend her time at as well, to help out.
Speaker 1: 13:25
So yeah, that’s very relatable to a certain demographic in the US. I think there’s a lot of people, myself included, who I Mean. We have the same stories and you and I are, I don’t know, 800 miles apart. I owe it a Montana and a couple, two generations or so, but it is. It’s very relatable and I that’s what I appreciate about our network, asf, mra and and even the ALC those, those stories aren’t gonna die just yet. They’re, they’re still gonna get shared and they’re gonna be relatable for a few more decades.
Speaker 3: 14:06
And I found in the business world oh, learn, maybe you have as well there are clients who have a great amount of respect Once they find out that you’ve come from that kind of a background and you didn’t grow up with the silver spoon in your Mouth and had never been on a farm, but yet you read a few agricultural books, gone through an agricultural college, not taken away from that but there’s still no replacement for those hours, days, months and years that we spent on the farm with our parents learning how to stretch barbed wire, how to dig a pole soul with a pair of diggers in clay ground and Various things that are very minor. And I found over the years I’ve actually acquired some clients. You know, sometimes there’s a little competition going on or either a listing or possibly a management account or a consulting account and Get interviewed in the background. And I have found many times that knowing how to drive a 530 John Deere or Even larger tractors and that which I have done and heavy equipment, that got the job Because I was able to work and I knew what they felt. I knew what I was doing because I grew up with it, as opposed, maybe, to some of the competition.
Speaker 1: 15:25
And you will get into some of those accounts, and the bigger they are, the more competitive they are, and you’ve had some very big Accounts, fred, which is why I asked you on. But now we’re at the point where you’re leaving the farm and I think is this around Vietnam.
Speaker 3: 15:43
Yeah, it would have been a little bit well just at the beginning of the Vietnam War and I left the farm actually and went to a what Today would be considered a trade school type, but it was more. In those days it was called a associates degree early on in computer science and this is in the mid 60s on on. This is 80 column hollard with cards that were, you know let’s actually created it in the basement and they all I was at university back in the day called hollard with cards and that’s what I started in the data processing area on and graduated from that with a degree of writing RPG. For trend ALC, I could write all the similar languages as opposed to the new fancy high-level ones of today for trend being another one more in the mathematics. Once. I graduated with that. Then of course I was. I had the draft after me not not what you call they, like they have today with the lottery and I was. I was had no problem going to the service. I had planned to go to the service. My father served in World War two in the Navy and I, similarly, had wanted to serve my country, and so I wanted to select where I was going to go, not be told, and with that I went to the various recruiters, navy being first, of course, and then Army and and Air Force didn’t interview the Marines, but they never did. Forgive me for that, but that’s okay. Long story short, I did end up in the Navy Kind of unique aspect, if a trivia question. What is something unique about you that probably not many other individuals have ever done? And that is I’ve been in two branches of the service. I Was actually the Navy never came through with my guaranteed data processing job that they wanted me for. My number was coming up too close to get drafted, so I selected the Army and passed all the flying tests and Went into the Army and headed to learn how to fly helicopters and of course you know Kola. At that time I obviously probably would have been a Vietnam flying Huey helicopters, which is Is not a real good thing for life. Expended expectancy.
Speaker 1: 18:09
Oh, that was a very low life expectancy.
Speaker 3: 18:12
Most friends didn’t come back from doing that job anyway. Long story short, the Navy came back with a set of orders, being I was unique with a egg or a computer science degree, took me out of the Army and put me in the Navy and immediately sent me to Washington DC, which is where I spent my entire career with the Navy, was in Worcester, dc, writing various types of programs to help teach Computer science courses, because it was so new, and that is in the time frame in which the Navy actually created the data processing rate, and Long time ago as as opposed to what it is today. But that’s how I got in, spent my time in that area, plus I wasn’t busy enough as a farm boy. So then I work, went to work for the first hospital in the US that used computerized patient data records and I got a part-time job running IBM 360, 370s and RCA equipment, which I had experience doing the Navy. So I would go to work. My normal day would be I would go to work at the Navy in the morning Six to seven, get off at three, go to work at the hospital at six and work until five the next morning and then go home, clean up and go back to the Navy again and and then I worked a lot of other hours but I also got a lot of experience, additional I’ll they found out I was a systems analyst in the Navy, so then I got into that business at the hospital as well. So another attribute the Navy put me into that I didn’t know about, that I would ever be able to do or have been able to have done so well, you, just, you just don’t, you can’t quit.
Speaker 1: 20:01
You’re like an old farmer who they don’t go to a retirement home, they just kind of die out in the field. Fred, so how did, how, did you jump to Consulting and Professional farm management? I mean, take me from now the military to how do we get to today where you, again, you don’t quit because you’re teaching courses that I’m taking and I see you at, I see you at the conventions. You, you just won’t quit. But how do we get to farm consulting and farm professional management?
Speaker 3: 20:40
Well, a couple of steps in there after a few years in the Navy and I’m sitting it at three o’clock in the morning and I’m thinking about a lot of different things because there’s programs on those. Those old computers have run two or two and a half hours. A lot of times I throw a pillow up on top of the big old tape drives, crawl up there and go to sleep, as it was always cool and I had a larn that would wake me up when the when the tape drive was done or if there’s a problem. I learned how to program, so I’ve set a bell and it wake me up. You know that’s how I got some extra sleep and they didn’t care as long as I got the job done, which I always did. But I found that after a couple of three, four years in the Navy, being away from the farm, agriculture still came back. Home was what I really wanted to get back to. Yes, I enjoy computers and obviously it was a good background for me in agriculture and I’ve used it within my various jobs. But so, as a result and after A number of years in the Navy, I applied for an early out use the JIVE. I went back to Iowa State, got a degree in agricultural business, finance, voice, communications because I broadcast on radio and television while I was at Iowa State working for Dallas McGinnis Also did some background work for Bob Wissner, gene Frutel economists that wrote you know they were cooperative extension Did a lot of groundwork research work for them, got my bachelor’s degree in agricultural business, did a little master’s work in ag econ and then I got an offer from Monsanto and Monsanto wanted someone with all my agricultural background, my experience and computers in their product development division. And so I went to work for Monsanto in the product development division and helped write the computerized data record program with Earl Spurrier that we use to take to Washington and convince DPA to accept efficacy data on field trials for herbicide, pesticides and other chemicals In computerized form rather than having to hand type them. They used to have to hand type five copies of field research for every label and label petition. That was right. I was hired 30 days after Monsanto received tentative approval on the label for Roundup and that was in late 70s. I was there a couple of years just having a great time and then I got the call from A fellow Iowa state person. He was a number of years older than I was. He was one of my main mentors in his business colder. He got me into agricultural management and it’s one of those things, if you make an impression, you never want to look back, but you never want to burn any bridges. He was a graduate from Iowa State University as well from Washington, iowa and Phd program there. He went back to Iowa State and said I need someone that has an agricultural background, knows how to farm, has got some life experience in what he’s doing and and Can think on his feet and in the agricultural school. The only name they came up to give him was me, and so he shows up at my house in st Louis. Interestingly enough, he had also worked for Monsanto in his career and so he had some insight. Track as to what I was doing convinced me, and so then I began my agricultural management consulting work, working with him for a German based investment firm, and it was based in out of Germany originally, but formally based in Canada and this um. It was interesting that we had land in Wisconsin and we had land in Arkansas, we had land in Mississippi, we had land in Texas that’s where I first became exposed to your manager and we had a live cow-calf operation in Lake Geneva, wisconsin, which is where I lived. Plus, we grew seed corn, we grew a number of other specialty crops, and Larry was a specialist in how to develop and drain land. We developed a lot of land in the Pin Hook Ridge of Missouri, which is down south of Charleston. What years that would have been 78, 79.
Speaker 1: 25:27
I’m going to take a quick tangent here, because you just brought up a hot button topic foreign investment in US farmland. When do you think that started? Because this was a German who I don’t know if it was family wealth or sovereign wealth or just managed pension funds, diversified investments. But when can you recall or when do you think foreign investment in US farmland really started getting going?
Speaker 3: 26:05
I don’t remember the exact date, coler. I believe it was early 70s. It was a 960-acre farm purchased by a German family in northeastern Iowa. That’s where the anti-corporate foreign land laws started. I’m not exactly sure on that date, but I do believe it was in Iowa that 960-acre farm was grandfathered in and continued. It was one of the most well-managed drained farms in the area. The company that I work for was more private capital was not public capital private investments from Germany. I don’t know the sources of all of that, but I can tell you that they were very interested in farmland. They were very interested in building sites and they were very interested in when they bought a piece of land. Once we did the financial analyses that it would work, we always had to build in to maximize the productivity of every acre that we could, because the reason was they came from parts of the country that they were afraid that they would lose their food supply and have to leave the country and come back and live in the US. They wanted a farm to go to live on. Therefore, we always made sure we had the best farming practices. If a piece of land needed to drain, we drained it. If we could gain additional land culture from developing timberland to farmland. The Lendorf group was also one that developed a very large called the Sweden Plantation, down by Old Heimer, arkansas that we developed over 4,500 acres. In those days you could push in the bayous. You can’t do that today. We did a lot of that. We did it in Missouri as well. That was the forte behind the foreign land ownership. There’s others that don’t meet those requirements, that wouldn’t follow that farming practice. There are those that do. The company that I worked at, lendorf Management USA, was the name of it at the time. They were all about making sure if we had a building site, if it was worthy of repair, we repaired it. Even sometimes the land resident would come and look at it. He was German. We’d say really, robert Hans, we really need to burn and bury this? It’s really not going to be worthy. I liked the way. And then his wife would write along and she says we need to redo that building. We would redo the building. They painted it, everything that we had, every operation we owned, whatever state we were in. Kolder was always well-managed roads, mowed, everything, just like you’d want to class A farm.
Speaker 1: 29:32
I’m glad to hear it was a guy named Hans and not Klaus Schwab. Do you mind? Can we go? I want to hear more about your experience in this because this is kind of a. I wasn’t expecting our discussion to go down this route today, but the anti-corporate farming laws that are so restrictive for today’s farm investment industry, which is much larger than it was in 1979. In some ways it’s growing, but in some ways it seems like it can be being curtailed. We know that there’s a big push to eliminate China as a farmland investor owner. We’ve seen the Saudis down in Phoenix and Arizona Wilcox. The Saudis are no longer allowed to pump water. What I’ve seen, what I know of the anti-corporate farming states, it’s what we’d call the Bible Belt. It’s the states where the populist Granger movement had really took off during the Grange and William Jennings Bryan he won a lot of those states when he ran for president twice. It’s kind of the belt of North Dakota, south Dakota, nebraska, iowa, oklahoma, kansas. Why is it that those states are still restrictive in your opinion, your experience? And yet Montana, wyoming, colorado we’re really not. We don’t have anti-corporate farming laws.
Speaker 3: 31:33
Good question. I’ve thought about that a number of times over the years because you’ve got Iowa, who does have an anti-corporate law, and then you’ve got right next door Illinois, that does not have. You’ve got Wisconsin in the North Door that does have. But when you look into the anti-corporate laws, some of them are really restrictive and can get pretty mean if you get caught. There’s others, like the state that I live in now, oklahoma. It does have an anti-corporate law and they’ll find you $500. Then let’s talk about maybe how we can work this out. I’m over-emphasizing, over-simplifying it, my point being, as opposed to the state of Kansas, our neighbor to the north, I believe it’s a $50,000 fine pretty much immediately and then we’re going to proceed to probably sell or fortune, to sell your land. There’s saying there’s an anti-corporate law and I was involved in Nebraska. I was involved in Nebraska building the large feedlot that you know about. You’ve heard me talk about at the time that an issue 300 was put in place in Nebraska which is their anti-corporate law. That somewhat has been taken up by their Supreme Court and kind of lightened up a bit. It’s still there. There’s still restrictions, it’s not open gate, but there’s a lot more manageable ways. I believe that companies are finding to own land around it. The question I would pose to everyone and the listeners are let’s see, if you knew it was an anti-corporate and if it was a former corporation coming to buy your land, you didn’t have to take the money and the C? Now why would you take the money? Oh, it was a good price, or maybe it was a little higher price than normal, and so you know, you’ve kind of got two sides to this story when you look at and I’m not taking one side of the other here, because there’s good points and bad points and I think we need to manage the ownership. I’m not saying not to manage it Particularly. You know, when we were talking about our country, china, that is purchasing strategically, we can, we concern ourselves strategically located parcels in and around airports, military bases, et cetera. To me, coulter, I’m about military defense and the defense of our country. I served in our country and I’m all about it. I supported as best I can. Every day, those purchases do concern me. I don’t know what we can do about it probably nothing. But I go back to my question is if we all supported the anti-corporate law, if the states that have anti-corporate law and everyone there is supporting it, then they probably wouldn’t have sold that parcel of land to a foreign owner Because that had to be disclosed. There’s all kinds of paperwork that has to be disclosed. You’re probably familiar with them. Being as much real estate as you’ve done in your career, you familiar how that 14 works, and so I don’t know how you regulated any better. I know that I believe that the total ownership of anti-corporate is less than 1% of the total US farmland.
Speaker 1: 35:15
Speaker 3: 35:17
Might be between one and two, if you add in timberland, because they are involved. There are some anti-foreign ownership in timberland. Pretty good size of ownership.
Speaker 1: 35:26
Correct and timberland is going much faster just because it’s a longer hold period with cash flows are much different. But timberland is an asset class that went institution first, probably first, probably quicker than farmland, and we bring it up on the podcast. Here is when does pasture and ranch become institutionalized? And that I’m not saying 99% institutionalized. There just isn’t even a product out there for pasture and ranch, aside from the Mormon church, is an investor and conservation groups and your wealthy billionaires. They incorporate it into their portfolio for many other reasons other than investment attributes, fred. But yes, I’m glad you brought that up because the ranch investor podcast I also say if you want to restrict the market and control who the buyer is tomorrow when I go to retire, you just eliminated some of my retirement options, you just devalued my 401K. If you’re gonna tell me I can’t sell to the Canadian teachers pension fund.
Speaker 3: 36:45
Correct, yep, exactly right. And that’s where we come to a catch 22. And it’s been there for a number of years, I would tell you. I would back up to tell you that Missouri is a tough state and when I was with Lendorf the state came after us and forced us to sell the property. I mean it was. We didn’t think it was that major of a deal. We knew we were willing to take the risk. We made some mitigation, things that we had did during the ownership. We always took care of the land, made a great large farm out of the areas that we developed and purchased, and it’s still operational today. But that wasn’t what the state thought. So we had to take our medicine and take our money and move on. We had to sell.
Speaker 1: 37:41
So, and one of the arguments is, a lot of people would say well, north Dakota would have more feed lots, they would have more hog facilities, they would have more hog processors, they would have more chicken facilities, they would have more chicken feed mills. North Dakota would have far more markets, value added markets in business and industry today If they were not so restrictive when it comes to corporate investment in agriculture. But then you hear North Dakotans also say that’s okay, we don’t want them. The Scandinavian Lutherans up there in North Dakota, they just say, well, that’s fine, we don’t want your chicken mills in your hog facility. So be it.
Speaker 3: 38:29
Yeah, and you know, if you think back a little bit, those voices are coming from well-established, probably sizable, farmers, and that’s good, that aren’t planning on the next dollar and they’re planning on the expansion of industry in the state, as opposed to compared to maybe a younger farmer who would like to get started and could take advantage of some of those services as a younger farmer in their early stages that they need all the help they can keep and keep it rolling. Oh yeah, those comments come in regularly.
Speaker 1: 39:05
Well, now that we jumped over to that, let’s jump back to Fred. What do consultants do, land consultants in particular? You twisted my arm into joining the education committee for the ALC accredited land consultant. You’ve been teaching my courses for the AAC accredited agricultural consultant, and that’s through ASFMRA, the American Society of Farm Managers and Rural Appraisers, while ALC is through RLI Acronym Soup, today Realtorland Institute. But tell me, what do consultants do, and land consultants in particular?
Speaker 3: 39:56
Well, consulting is an area you asked me way early on in the podcast. I wanna talk about your how’d you got into that. You got all away from it. But as I went through my career, I’m gonna pass forward you through several steps here real quickly. But as I went through my career with various large corporations, I was always being asked and got hired from one to the next to the next, all dealing with agricultural land investments and management throughout the US and a few countries outside the US. Strong background in management First of all. I saw the real value early on in the 80s, early 80s, of the value of the AFM. I’m gonna sidetrack just a minute here Koltler, and that was accredited farm manager and that’s a predecessor to the AAC which you have. That designation and the accredited farm manager, of course, is my best description I had a short order, is a very similar to a CPA in accounting, only it has to do with management and operating farming operations. Very similar duties relating to background of experience, education and a multitude of disciplines of knowledge that you need to have to be an accredited farm manager and I am one of those. I got mine in the early 80s and as I became very active in American Society of Farm Managers and Rella Frazier’s been a member for I don’t know, 45, mid 40 years, somewhere in the lost track of time. I became very active in that and in my along with my working life I could see that there were some things that needed that. There were opportunities that I could see out there with potential clients and I had to experience a few of them in my businesses of consulting with families didn’t need management but needed help with just advice and maybe some help with a certain particular crop, maybe whether to make a land investment decision just kind of one offs. It wasn’t a full management service corner, didn’t need to hire me under a yearly contract for those kind of things, but there were certain areas of their ownership of assets farmland and other businesses, usually agricultural that they needed some expertise in. And I could see that, as several of my colleagues in the American Society were generating revenue from those kinds of services, they were doing it under the AFM hat but they were really consulting services. So there was a group of us back in the early 90s that put our heads together I being one of them, along with several others, and went to the board of ASFMRA. I was actually on council a couple of times and convinced them we needed another designation. And the reason we needed another designation and I think there’s going to be more opportunities in the future for both ALCs and AACs is that the transition of land ownership is moving from my age bracket of the older membership of the baby boomers on into the exigeners and the millennials and cetera. But when you go into the millennials and you take a cross section of their background, along with the exgen and the ygen take a cross section of their background. They’ve inherited the farm. Step one step, two. Generally, you’re going to find that there’s going to be over 70% of the couples both have college degrees. There’s going to be at least one of them is going to have an advanced education degree of at least a masters and some PhDs. So they’re well educated. And so what do you do when you’re well educated and you’re wanting to run an asset? How do you manage an asset that you know nothing about? You hire a consultant and that’s what they are starting to do and what precipitated us at the American Society to create the AAC designation. It’s a slight takeoff of the AFM. In fact, the core coursework at the beginning is very similar. But the end of the side track of that is you’re learning more how to deal with a client with various aspects of business, and you don’t go in and take over the farm, analyze with the nut they’ve been putting on the right amount of fertilizer, selecting the right hybrid of crop for their particular field, location and so on type. You’re more about looking at their business what can you help them with to make better profits and how do you respond to that? And, as you found from going through the AAC, it’s kind of a broad brush of yeah, you had to learn how to run an IRR pretty well. You already knew that you need pretty strong accounting and finance backgrounds, but you also need to have some background in agronomy, because every once in a while you’re gonna get a question that comes along as to you know really what’s the best alternative that I can do to apply fertilizer from once a year to twice a year, or what’s the best way. Drone technology comes in. Water scheduling comes in as a real one that we get a lot of requests on. These days there’s just a number of consulting opportunities out there to create, if you will, revenue for me running a consulting company, my own consulting company. It’s a fee generator for me and the thing that you will find that’s a bit different than a manager is. Manager really focuses and if you get a good manager, he is focused on the fact that he knows how to grow his crops, usually in one region of the US, and with that, that’s what he knows. Now, if you have a question about that, he can consult in that area. But as you found, I believe or hopefully it did go through that we spread you out a little bit more than that. We diversify your background and that’s one of the things I shared with some of you. You know I’m a farm boy from Iowa. Found Iowa farming, in Illinois farming, to be pretty boring, which is why I have farmed from coast to coast in my career and even in Australia and had some opportunities in Brazil as well. How do you make those areas work? And when you get outside your comfort zone at consulting when I would go outside, when I went to California the first time, I found the best water consultant I could find. I found the best crop consultant for almonds. I could find the areas of expertise that I needed wells, soils. I went and looked for the best consultants in those areas and we hired them. That’s what we did and that’s why I see there’s tremendous opportunity for that in the future and that’s going to be. I think I’m not in the majority but in ASFMRA I think that’s gonna be a bigger growth path, quite frankly, than undercredited farm managers. Now we need both and I’m not taken away from the guy that wants to be. You know a lot of my buddies my age. They’ve been, they’ve managed Iowa farms forever the Hertz boys, and there isn’t anybody better at it than them. But if I take them to California, what are they gonna do? Randy picks up the phone and say hey, fred, what are we gonna do about this in California? And that has happened from. We exchange back and forth and that is one of the benefits of the American society. I think you’re finding culture that if you have a problem have you have a project, if you have an opportunity that’s outside your norm, you will find somebody in the society that can help you with it and all you gotta do is pick up the phone and call them and they’ll give you some help. But that’s why I see that the AAC now let’s. I’ve got kept on the AAC, let’s jump over to the ALC, which I’m also an ALC. Joke about the ALC I plan Ray Brownfield fast president of both organizations, good personal friend of mine from Illinois, after I got done with a certain stint in my life, having been through all the chairs and ASFMRA president all the way up and on and on, he says, okay, now I have to get your ALC and let’s get you involved in re-elector land institutes. And he’s proceeded to do that. And on the ALC application, you recall, kolda, that you had to submit transactions totaling 25 million 30, I thought yeah, and so I put down. One of my transactions was 85 million and I submitted five more besides that and all I heard was grief from the graders why I was trying to blow their doors off. You know, but anyway. Alc what’s important about an ALC? The difference between ALC and an AAC is that the ALC will be more to the land transaction side. It’s focused more on helping sellers and buyers find the property or sell the property that they either own or want to buy and want part of the country and advising them with all the years of experience of how to do that, make the best purchase and in some cases, most of we all have background and operations as well. But if we don’t, there are many ALCs who would struggle doing farm management work because they haven’t done that work. And what they do, they’ll pick up their local friendly fire manager, pick up the phone and call he or she to help them out on a consulting basis. Back to consulting again. So if I had to delineate between the two, both great degrees to have. They have their value for the right client, one that’s looking for assistance with a land transaction by selling, searching or evaluating, as opposed to someone on the other side who maybe they may also be wanting some help with the land transaction, but more than likely maybe they need some help with transition planning, maybe they need some help with a certain phase of their business that just isn’t working out. Or how could they improve why I got? I had a project where a guy wanted to put in a larger grain storage drain system than what he had and he had a really good one. But he says I don’t know if I’m efficient enough and I’m not smart enough to know how to calculate that. Can you help me? I’ve also I’ve done a lot of land transitions. I’ve done a lot of land transitional work on the AAC side with families agricultural families that are in transition and are in court. not a pretty sight. I would give a little tick here. I am helping rewrite and updating the succession planning course that we are going to be offering at ASFMRA and that’s not just strictly for members either. Can be non-members attend that?
Speaker 1: 51:33
Boy, that’s a needed product.
Speaker 3: 51:37
Certainly is absolutely. Yeah, we’ve had. I helped write the course, I helped the whole team write it and I don’t think we. It was way back in 2008, 9, 10,. We offered it a few times and it’s kind of been on the shelf since about 2012, 13. And now there’s three of us an attorney and then another ALC, dick Edmonds out of New York, and myself. Some way we got our arms behind her back twisted hard enough. They decided that we decided that we would, yes, and rewrite the course. We’re just really updating it, bringing it up to current. We have a young attorney who is in the succession planning business based in Omaha, that is helping us out from the legal standpoint to make sure that we don’t misstep and not overstepping our bounds with legal information, but that we’re hopeful I’ll be offering at this summer at Education Week in Des Moines.
Speaker 1: 52:40
Well, I look forward to taking that course because that service, I mean. We all think that this gray wave and silver tsunami is coming and it sounds like you’re long in the market. You’re long position on AAC, because technology continues to add products and services to farm and ranch and we’ve got data analytics now and so we need a specialist, a consultant, for data analytics, but we also need that for managing family assets, succession planning. What are your thoughts on this silver tsunami and gray wave coming? Is it going to be radically transformative, fred?
Speaker 3: 53:30
I don’t know that it’s gonna be radically transformative, but I’m gonna quote Dr Cole from Virginia Polytech University. I was at the American Agricultural Bankers Association annual meeting here in Oklahoma City a couple of weeks ago. One of his quotes was there’s 10,000 people turning 65 every day. That’s every day. And with that there’s other organizations that we got 12% of the farmers today that produce 90% of all the commodities and farm revenue. One thing we can’t change I can’t change my birth certificate. I tried several times, had a couple of different job opportunities later on in my career, but they had some restrictions on age and I’d actually worked out one of the presidents of the group for many, many years and ran on the treadmill with him every morning and he never knew how old I was. That’s quite a lot older than he was. He says are you sure your mom filled out your birth certificate correctly? And I said best. I know she did wish I could change it, but that’s one thing we cannot change. It’s gonna come and I’m not sure I’m not sure, walter that it’s gonna be a radical change. I mean we’re gonna continue to ease into it, but I think it creates a lot of opportunity for those of us in the business. You, much longer than me you have left in the business, but being in the business, seeing those opportunities to assist families with the direction that they wanna go, and more likely than not. And one of the things we teach in this course is that my opening statement is who’s gonna get grandpa’s farm? Someone ask it. Get ready for that, because and then the next question I wanna ask you, what are you gonna do with it after you get it? And so that leads into the line of questioning that we’re going to. It’s more of a thought provoking course and really it’s something that you should ask your clients if they’re in that age category, not that you don’t wanna run them off as a client, but just if you know them personally, been a client a long time. Hey, georgia getting 70 years old these days. What are we gonna do when need to transfer? And we kind of teach soft skills, how to get into those kinds of things, et cetera, from a negotiating standpoint. But it’s gonna happen, it’s coming. I mean I can give you all kinds of quotes that over half of our agricultural land today is owned by Americans 65 and older. The National Young Farmers Coalition reports, according to an article I read that nearly 100 million of these acres are expected to change ownership in the next three to five years. It’s a lot of land and it’s gonna get worse. I mean, and I’ve heard up as high as 300 million could change hands in the next 10 years. And you look at the wealth of that, isn’t somewhere in the trillions of dollars gonna change hands and agricultural land by 2035. And it’s got to. I mean, they’re just going to have to continue to be operators. When you think about it, we’ll say no, it’s not going to happen. Well, if it doesn’t happen, then who’s going to operate the farms to feed the world?
Speaker 1: 57:11
And is it fair to validate the populist sentimentality that, well, the only buyer in the future, given today’s costs and operating margins, the only buyer is Bill Gates and the institutions and therefore the outlook is dire and the family farmer is dead, and that might be catastrophizing and it might be sensational you know, maybe playing it up more than what it actually is but is there. Can you validate those feelings?
Speaker 3: 57:49
Well, I don’t know, as I would. I don’t know, as I would agree with that, because when you look at the, at the wealth of the average farmer today and you look at his balance sheet, today debt’s at a very low level, extremely manageable. And, yes, interest rates are up. They’re going to probably go up a bit more for the operating loans etc. But we’re not going to see it. 2005, six, seven and eight I live through those times, farming ownership and in real estate. One of them was a real good time, the other one’s so much fun at that time. We are in a position financially that we’re going to see that happen again. Is Bill Gates, his type of group, other investors, large pension funds? I think that the pension funds are probably going to be a larger player coming into the future and I don’t see anything all wrong with the pension funds, having been in that business for many years on the investment side and management side, because those all go back Not all, but the majority of that type of ownership is operated by local farmers and maybe the business strategy is going to change from having to own all the land, which it is changing Used to be that you had to own all the land you farmed and maybe you rented an extra parcel or two, and that’s what my dad did. He owned the main 160 and you know, but this is very small potatoes compared to what you and I are talking about, but the concept is the same. He rented an extra 80 or two on occasion to manage, make additional income. That’s what’s happening today and there’s you probably know a lot of operations as well as I do that own a very minimal amount of land, debt free, their core operation, and then they lease the balance of their land for their size of their operation and sometimes they’d like to have a long term lease. But there are a new number of operations. That’s a trend today that you will find. But the farmer himself is not going away. If you go to the Midwest Real estate people that are selling the farms that do come available for sale Iowa, illinois, indiana, dr Ray Brownfield, randy Hurd, howard Holverman, all of those guys that across there and I was with all of them as you were in Nashville Farmers still buying the land Is he firing any money? Very few, you know. I mean lending institutions are want to know who the buyer is, because they want to lend them land. You know, lend them money. Excuse me, but that’s really not what’s happening. So, with the financial statements as strong as they are today, being quite liquid Now they’re going to have to watch their peas and queues as we go forward in this environment. Looks like our commodities are going to be challenging, but I Armed a lot of years and I’ve never known a year that commodities weren’t challenging. So you just need to learn to use all the available tools to you out there to be successful In marketing.
Speaker 1: 1:01:15
Well, I appreciate that, fred, and from a guy who’s been in it for longer than I’ve been alive, I know we have a lot of listeners who are unfamiliar with a SFM RA and if you can For the, for your outro here, if you’d please? You know, plug a SFM RA and you know, make your recommendation as to why Some other brokers should be looking into it Professional managers or managers, consultants who are not designated, why they should consider seeking accreditation, and just give give your experience with SFM RA as we take it out here on top of the hour.
Speaker 3: 1:02:04
Well, sfm RA has been a. I always use the analogy and I’ve used it a number of times in presentations that my investment in SFM RA financially and personally, of my time, which has been very extensive over there more than 40 years I’ve been a member. If I could have generated a return three quarters or even half as good as that and all the other investments that I have in my portfolio today, I would be probably on that beats. It’s in my background rather than the face is there. I might even own part of it today. Truthfully, it’s been one of the best investments I found. Why is that true? There’s over 2100 members in the society throughout the United States. I’ve used it. When I started, I was a part of the Westchester group with Murray wise, and when we started in the managing pension funds in the late 80s here’s a good example of the value of SFM RA Murray assigned me to go to the West Coast, to California and other states, to locate properties for us to look at, to purchase. I’ve not been to California before that time and it was a way for me. What am I going to do now? And I picked up the phone immediately, got my book out, my membership back in those days you had a book of membership. We still do, but you can get it online. Today Picked up and I located the broker. I located specialist in the area up and down the coast that I had met at annual meetings and two of them are have passed today since then. But picked up the phone said Jerry Fisher, I’m coming to the West Coast, I need help finding land, how much you need, where you want to go and when you’re going to arrive. Three questions, and the next one was very similar. I use that same process of ASF MRA as I moved from California to Arizona, to Colorado, to the Mississippi Delta both Arkansas and Mississippi, louisiana, that’s. Murray asked me to look after those areas, finding us land to evaluate for purchase and ended up managing it Again. It’s a resource that’s invaluable. And with that being accredited versus non accredited, yes, you can still have advantages being a member, of being an accredited member. I have found when a new client would inquire of me, they would ask for my credentials and I’ve been against other. We’re all competitive business. Hey, that’s just the way the world goes. It makes the world go around. That’s what the American dream is all about. But I’ve been in competition with others before I had my FM, but I didn’t get the business. I went back and asked the client Can you tell me why? What did I do wrong? And I was told more than once nothing but so. And so I remember the R, but I won’t talk about who that either. Good friends of mine. They both had their AFMs and they got the business because they were accredited, just like these two ladies CPAs. So I give that to everyone out there that’s listening to us, that is a member or considering membership. Go forward with your accreditation as soon as you can. It will pay you great returns. Don’t stop with just one. Make sure that you get more than one accreditation and once you get to that level, then I would expect that you need to get involved in the society, because involvement in the society, you will also become closer with a lot of colleagues, you make good friends and you will learn a tremendous amount of information about other parts of the country. There’s no other annual meeting. Well, I guess I shouldn’t say no, but there’s not many types of professional Meetings you can go to where you can meet other professionals in your discipline from around the United States, from coast to coast, including Canada, because we do have a Canadian chapter as well and you can see them all in one hotel over a four or five day period. I never missed an annual meeting, unless I missed a couple for work reasons, but other than that I never miss them because I find it again is one of the best places to find out what’s going on in the industry, who’s doing what, who’s buying what type of land, who needs to sell what type of land. You culture find the same thing. You go to the re-literate land institute meetings. You talk to other brokers and I’ve been asked by certain clients well, they’re all your competitors. They don’t tell you anything. Well, you know that’s not necessarily true. Yes we are competitors, but yes we sit at the same steak table and enjoy the same similar glass of wine. That was there is appropriate in the evenings and we all get along and good friends. But daytime business is on games on and we all get along respectfully and help each other when we can.
Speaker 1: 1:07:29
Absolutely yes. I would agree on the value. The value is far, far exceeds the price. Well, fred, thank you, and thanks for thanks for your network, for your peer support and mentorship in the society. Thanks for coming on my podcast.