By Elizabeth Williams
DTN Special Correspondent
INDIANOLA, Iowa (DTN) -- On many family farms, pioneer legends and land are intertwined. For beginning farmer Quint Pottinger of New Haven, Kentucky, the link goes back to the Revolutionary War and comes with a price tag.
Every generation of Pottingers has been required to buy or re-buy a piece of the family's land holdings from their elders. The rationale is that it gives the entering generation "skin in the game" as they gain experience to take over the family row-crop and vegetable farm.
Quint Pottinger's ancestor, Captain Samuel Pottinger, was a frontiersman who first came to Kentucky in the 1770s with a scout and then returned to Maryland to fight in the Revolutionary War. He came back in the late 1780s to build a fort in the nation's wilderness. As payment for his war effort, the captain received a land grant for 8 square miles of rolling central Kentucky ground, 50 miles south of Louisville. Much of the land was sold to settlers to start the town of New Haven. Later, Pottingers found work on the railroad, but gravitated to farming in the late 1800s. Quint's grandfather bought back the original homestead that was first established as a fort and later deeded to Samuel Pottinger.
"In fact, the meat house from that 1781 homestead is still standing," noted Quint. Even Quint's name connotes family history: He is Butler Ramey Pottinger, the fifth -- hence the nickname "Quint."
A DIFFICULT START
Buying a farm when you're just starting out in farming is not easy. "I'll be honest with you, it's tough. It's been really difficult. I knew it could not cash flow and you have to find other ways to pay for it, but I know in the long run, it will put me at a competitive advantage," said Quint.
His dad, Ramey, just shakes his head when Quint worries how tight budgets are going to be. He bought a farm in 1979 and in 1982-1983 he took a trucking job to pay for his farm. "He says, 'Don't talk to me about tough times,'" Quint said.
Many family business advisers caution not to overload youngsters with too much debt. Johnne Syverson with Transition Point Business Advisors in West Des Moines, Iowa, warned, "If you are buying land from relatives who want to keep the family legacy going, it's best to try to negotiate purchasing terms down to near rental rates, especially in this low-profit environment." Some families offer the lowest fixed-interest rates IRS allows, stretch out terms over 30 years and offer "repayment holidays" -- say, two or three years when you can skip annual payments if hard times warrant.
Today's tight margins do not stop the Pottingers from finding a way to keep farming. Quint is determined to find solutions to obstacles. In college, Quint juggled four jobs, including working for a neighboring farmer while attending classes three days a week as a full-time student. He earned an Ag Economics degree from the University of Kentucky in 2011.
"When I was close to graduating, my grandma said, 'Quint, you're the last Pottinger still around. I'm ready to move off the farm. Here's what my farm has been appraised at, do you want to buy it?'
"I didn't have enough money for the down payment. No lender would finance me," Quint added. "We did a contract for deed from my grandma's trust which held the 80-acre farm, of which 23 acres were tillable. I also rented 50 acres from my aunt. My first year out of college in 2012, my corn yielded only 8 bushels per acre due to drought. I had crop insurance, but the indemnity payment was only $13,000, which barely paid my college loan."
Fortunately, his soybeans did well and a neighbor with cattle rented his pasture ground. Since then, yields have rebounded. Quint's soybeans make 58-62 bpa. Corn yields average 155-162 bpa.
Another bonus is the region's distilleries offer premium markets for those who can meet the industry's high standards.
"The key is you have to figure a creative way to make the farm business work," Pottinger said. It's innovation and attention to all the details that add up. No-till was one solution to being a low-cost producer. The Pottingers are 100% no-till (except for the cover crop they had to disc in last spring). They're experimenting with cover crops, planting them on 275 acres of their 1,500 total acres. "The microbes are responding well to the cover. We're still working on the best way to plant through the thick rye [grass]."
Another solution is cutting fertilizer costs with split applications at variable rates. Quint is a Precision Planting dealer and has been able to slash his fertilizer bill.
"My dad is 68 years old, but he adopts technology like he's 21. We are constantly looking at ways to improve, but it has to be cost effective. I wanted to move from 30-inch rows to 20-inch or 15-inch rows, but it would cost too much to convert our harvest equipment. It's too risky in this economic environment to make the big move," said Quint. "If I had the farm paid off and more acres and better crop prices, I could do it. But not now."
The Pottingers have invested in grain storage to increase their marketing options. "We built a new wet holding bin, a new dryer and two big bins. Now we can harvest our corn at 25% moisture and dry 500 bushels per hour to get it down to the 14%-14.5% moisture level required by area distillers." But even then, the Pottingers were able to save money.
"My dad is a master fabricator," said Quint. "I had priced a granary at $120,000. I also found one for $5,000 that needed a lot of work and my dad said he could build what we needed from that, which he did."
One of the biggest adjustments the Kentucky farmers made was reducing their equipment cost. The Pottingers were able to chop their equipment cost by $100 per acre. Pottinger and his dad were doing a lot of custom work and noticed as grain prices dropped, more area farmers were doing more of their own work.
"We could see our custom business was not going to grow. And we got really lucky. Before the machinery market collapsed, Dad was able to roll his new equipment out for older equipment that was a lot cheaper. For example, we switched from a 2013 combine to a 2011 combine that had about the same amount of working hours. We still had about the same line of equipment, just older," Quint explained.
Marketing is another area Pottinger works to gain a competitive advantage. "My dad always told me, you can't go broke making a profit." Quint sets his price points based on cost of production and tries to remove emotion from his marketing. He likes to sell ahead in the fall when he prices his inputs.
"We've priced 2016 and 2017 grain. But we had such a decent crop this year, I've got more 2016 crop to sell." He is now starting to formulate his 2018 marketing plan.
WORKING TOGETHER
"It's not always easy to bring in the next generation," said Quint's dad, Ramey. "I've handed a lot of decisions over to him. Some decisions have been good and some not so good. But that's all part of the learning curve. For a person to learn, they have to feel they are contributing."
Quint noted, "We have our own tasks, although we didn't start out that way. Now, Dad does all the harvesting. I run the grain cart and do the marketing." Quint also figures out what seed varieties to plant and decides the fertilizer program.
Quint is gradually building up his equity, as he works to find solutions to get all the bills paid. He and his off-farm brother bought another farm to add to the operation.
As the Pottinger family has learned, buying that first farm can be tough. The timing may not be right, but finding smart, creative solutions to pay for it can keep the family farm operating for generations. Their farm family tree stands at seven generations and counting.
(MZT/ES/AG)
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