About This Episode
Recorded at the Ag View Solutions Executive Business Conference in Phoenix, Sam talks with Steve Hess, who farms at Bushnell in west central Illinois with his son Marcus. Hess took his first crop off in 1974 and lives on a farm his wife's family homesteaded in 1869; he is the fifth generation, Marcus the sixth, and the grandchildren the seventh. They were dairy farmers until 2012. Asked what he would tell his younger self, he says listen more, talk less.
Hess farmed with a brother for 20 years in a family with no governance and poor communication, and he and his wife Phyllis set out not to repeat it. They attended seminars on communication, governance and standard operating procedures, never hid farm finances from their children, and brought them along to conferences and into the decision to expand the dairy. Their rule was that any child could come home to farm, but only after five years away.
Marcus spent ten years trading in the soybean options pit at the Board of Trade after an ag econ degree from Illinois. When the farm outgrew what Hess and Phyllis could manage, they advertised and interviewed for a manager, Marcus and his wife decided Chicago was not their future, and the family worked with transition advisers on a plan. He came home as an employee first, then completed a five year transition a couple of years ago.
“We learn a lot more when times are tough than we do when times are good.”
— Steve Hess
Key Takeaways
The five year rule: a child could come home to farm only after five years working or studying elsewhere, which Hess credits for the experience Marcus brought back.
Hess and Phyllis deliberately built the governance and communication their own family lacked during the 20 years he farmed with a brother.
The children sat in on money conversations and expansion decisions, including the new dairy parlor and barns, so they learned how decisions get made.
Marcus worked as an employee for several years before a five year written transition plan was put in place; it finished a couple of years ago.
The discipline Hess carries from the 1980s is cash flows, budgets, negotiating input purchases, and knowing his historical numbers.
The habit he wishes he had started earlier is making time for his wife and children instead of taking on so many board seats.
Full Transcript
Sam: Hello and welcome back to the Ag View Pitch. Here we are recording from the Ag View Executive Business Conference in Phoenix, Arizona. And today we've got an edition of Dad's Wisdom here with Steve Hess. Steve, why don't you go ahead and introduce yourself? Tell us a little about yourself and your family.
Steve
Hess: Okay, Steve Hess, live in West Central Illinois. Bushnell is our hometown. Farm with our son Marcus. I've been farming myself since 1974 was the first year I graduated from college. I farmed my first year and this, we live on a farm, we live on a farm that my wife's family homesteaded in 1869. So there's a lot of history there. We are G5, our son Marcus is G6 and we're raising G7 right now. So, History goes, goes deep on Hess Family Farm.
Sam: Well, that's great. Sounds like you've created a really nice family for yourself. You have, you have 3 other kids other than, other than Marcus, right?
Steve
Hess: Right. Marcus is our oldest. He's our son. We have 3 daughters in who are all younger than Marcus. One is in St. Louis with 5 grandchildren. One is in Milwaukee with 5 grandchildren. And our youngest is in Asheville, North Carolina. She's only 25 and starting her career out there.
Sam: Wow, so you've got a whole posse of Generation Seven, don't you?
Steve
Hess: We do, we do. Good.
Sam: Well, I guess I'll just hit you with a good question to start us out. If you could go back and tell your 22, 23-year-old self, or whenever it was that you graduated college, if you could tell yourself one thing to help you, A, on your farm and in your business, and B, just in life with your family.
Steve
Hess: That's a really good question. Yeah, listen more, talk less. Kind of like the Hamilton theme. Pay more attention to wisdom from my elders. A lot of things I had to learn the hard way. I can remember, you know, we're going through this economic downturn right now. I can remember living and farming through the '80s, all the lessons we had to learn there. And it was, It was nothing different than what my father and my grandfather went through when they were farming.
Sam: Along those lines, you know, what specifically did you learn from that? Or how, how in those early years of your farming, trying to get through that with you and your family, what things did you guys do to get through that?
Steve
Hess: Well, you know, we learn a lot more when times are tough than we do when times are good. So I think we, we pay a lot more attention to our business when times are tough and margins are slim. And I think that was one of the big things we learned is how to do cash flows, do budgets, pay attention to all the supply decisions we had to make, learn how to negotiate. But keeping everything in perspective that to live and to work and raise a family on a farm is what the real priority was. And we wanted to keep the business going because we do really enjoy what we're doing and make it available to pass on to the next generation.
Sam: Was that one of your biggest priorities going through your business farming? Was, were you always thinking about passing that on to your next generation? Was that your goal the whole time?
Steve
Hess: Well, I'm sure it was something in the back of my mind. You know, I was a— we were, we are former dairy farmers, recovering dairy farmers. We quit milking cows in 2012. And I was the fourth generation with the dairy here in this country. We had, my family came from Germany and milked cows over there before. But it was something, yeah, it was just passed down from generation to generation. It was just something in our blood. And something that we just kind of naturally thought we'd— it would be a part of us and something we would do for our life.
Sam: Through all your years, like, from a financial perspective, what is one of your secrets or one of the things that you did really well to make things work going from year to year?
Steve
Hess: Well, like I mentioned before, we've— I have been blessed with a wife with an accounting degree. And she is very thorough about paying attention to numbers. And I learned way early on that you need to know what your numbers are. And it's even more true today. But you need to know where you're at, where you've come from, look at historical data, and then try and do your best you can to plan for the future and try to keep things profitable.
Sam: So along the lines of the next generation, A little bit about me, I'm an Iowa State student in ag business. And earlier this fall, there was a survey in one of my classes and it asked us how many of us came from a farm and how many of us were planning on returning. 25% of my class came from a farm. So 25 out of 100 of my class came from a farm. Only 7 of them are planning to go back. And when I talk to those kids that aren't gonna go back, their reasons, they don't know why they're not gonna go back. They may like it, but they don't know if there's a place for them, or maybe their dad or grandpa turned them away. So how did you instill interest in the farm in your son Marcus without forcing him to be a part of it?
Steve
Hess: Well, we just, we raised all of our children. I mean, Marcus had an extreme interest in the farm and so did all of my daughters. They all knew how to feed calves. They all knew how to feed cows. Do chores or drive a tractor. I mean, we just took him along and made him a part of it and let him know that we enjoyed it. It was— and made it fun. Try to make it enjoyable. Working together with family is just something I really, really cherish. We have lots of— and lots of— there's a lot of victories on a farm every day. And celebrate those victories with others is kind of a fun thing to do. And just encourage. I mean, we can see when we had the dairy, we could see some of the employees we had were livestock animal people and some of them were mechanical people. And we had, the Lord really blessed us, all three of our daughters were animal people.
And they really loved when we were milking cows, pulling calves, feeding calves. Taking care of the cows, and just encourage that, the things they're good at. Try to figure out what their gifts were, what their talents were, and then encourage that and give them a chance to use those.
Sam: So I talked to your, I talked to your son Marcus earlier, just asked him a little bit about you, and he told me, well, one, he had a lot of praise for you. He said that you were a great father and a really I guess you could say inspirational person. Uh, he wanted to follow in your footsteps. Um, he also told me about a 5-year rule that you have for coming back to the farm. So what was, uh, the thought process behind that, and how has it worked out for you?
Steve
Hess: Well, so Marcus, um, was always interested in coming back to the farm. I mean, and we had some tough discussions when he was in high school He would have preferred not to go to college at all. He would have preferred just to come home and start farming right away. And our oldest daughter, Stephanie, has an ANSIA degree at the U of I. She was always going to be a dairy farmer. And we kept the door open for any of our children that wanted to come back to the farm. We tried to make— let them know that if they were interested in farming and had a true love for it, that we'd provide a place for them. But we'd also seen enough We'd also seen enough family struggles in other families, and including mine. I came, my college experience was 2 years at a junior college.
I lived at home and farmed while I was there, and I don't regret any of that, but there were a lot of things I was never able to experience. To get out into the world and learn how to have to work with other people who weren't related, I think is a huge thing. And so anyhow, Phyllis and I implemented a rule with our kids that if, yeah, you can come home and farm, but you had to be gone for 5 years before you could come home. Once you're out of high school, go do something else, work somewhere else, go to college and work somewhere else. And for Marcus, and I appreciate the praise he's given me here, but he's done quite well for himself too. And, you know, he went and worked.
He was— he worked 10 years and he graduated from the U of I with an Ag Econ degree and then worked 10 years in Chicago at the Board of Trade, which was— that was another valuable part of his experience too, was learning the grain marketing side and working in the grain business like that in the soybean options pit.
Sam: So you shed some light on a little bit of maybe some family struggles from the fourth generation to you. Can you tell us a little bit about the transition that you went through when you came outta school?
Steve
Hess: So when I came outta school, like I said, I lived at home, 2 years of junior college, got an ag management degree and went right to work. I bought my first farm in 1974. I just took my 50th crop off of that piece, off of that farm. I farmed with a brother for my first 20 years. And our family didn't really had any, we really didn't have any governance. And we were very poor at communicating. And that was one of the things Phyllis and I knew early on is that we didn't want to make that mistake with the next generation. And so we, with the struggles we had, with our family, and we went to enough, I guess I'd say seminars, just like the Ag View Executive Conference here to learn about communication and to learn about family government, governance, and SOPs and talk about how to have a healthy environment to be on the farm. We just felt like that was really important.
And we've always tried to provide that for our kids. I mean, we always included our kids when it was time to, to have discussions about money. We never hid any of our farm finances from them. They knew what— we used to joke about how they would get on the bus and talk about balance sheets with their peers in school. And we took them along to farm conferences. We included them in decisions when we decided to expand our dairy and put in a new parlor and then build build new barns and really expand the herd, we included them as part of all those decisions too, just so they would have an idea of what it's like to make decisions like that. So we've just always, we just always had in the back of our minds, we want to train our kids up better than we were trained ourselves.
Sam: Well, that's, well, that's great. I think your kids have obviously been very, very lucky to have you. And, you know, I think you were very advanced in your, in your thinking about the transition between you and your kids, you know, thinking about it and including them. So how did it go when Marcus decided to come back from working after his 10 years being away? How did that go? Did he come to you wanting to, wanting to come back, or how did that all play out?
Steve
Hess: So it was kind of an interesting conversation. Phyllis and I had gotten to the point in Must have been like around 2010, we decided, or maybe even before 2010, we could see our future was in the grain side, where we were at with all the, with the land we had to farm and the grain we were handling. We started putting up a grain center in 2008. And with the intention was if we didn't use it ourselves, we could rent it out easily to somebody else. And so we started having those discussions, we kept expanding the farm. And part of the advantage of having Marcus work in Chicago like he did, he was around people with money. At one time, we had several traders that worked with Marcus that owned farms too. And the farm was growing and expanding. And it was getting to be more than we wanted to do.
Phyllis, it was getting to be more than just Phyllis and I could handle, especially when we still were milking cows and had the dairy going on. So we actually let Marcus know that we were looking for somebody to help us manage our farm. And we actually advertised and interviewed people. And I think that's when he and Shanna had some serious discussions about what they wanted to do for their future. Shanna is a farm girl. She knew the advantages of raising a family on the farm. They had their first two kids had two children while they were in Chicago. But they knew that wasn't where they wanted their future to be. So I think they started talking about where they wanted to settle at and what they wanted to do. And it just so happened at the same time, the Board of Trade was winding down the open outcry system, which Marcus really enjoyed.
I mean, that was a great education for him being in the middle of that soybean options pit. Made a lot of great friends there, but he did not want to sit in an office in front of a computer screen and just electronically trade grain. So several factors came into play and we started having discussions. We worked with a few different transition advisors about setting up a succession plan and a lot of details involved. A lot of details involved, but came up with a plan for him to come home. And he worked as an employee for a few years. And then when we understood that things were working out and we were getting along, and he was the kind of manager we were looking for, for the farm, we put together a 5-year transition plan then, which we just completed a couple years ago.
Sam: Well, I got two more questions for you before we wrap up. My first one is, what is one habit that you wish you would have started earlier in your career?
Steve
Hess: I wish one habit I would have started earlier in my career was to take more time for my family. In the busyness, I look back and those years that we were raising children and milking cows and raising crops, And I was involved on some boards, Farm Bureau board and Prairie Farms board. And I think God gifted me with some leadership skills and I should have maybe not used them quite so extensively. But I wish I had— one habit I wish I had taken more time for would be to spend more time with my wife and my family and, and teach my children better about balance in life.
Sam: That's great. Well, I think this question is going to kind of lead into your answer that you just gave, but what is one piece of advice you have for producers who are struggling right now in the, in these, uh, current times? Maybe they're struggling with their family, or maybe they're struggling with their business. Just one piece of advice for them.
Steve
Hess: Well, we're going to get through this. Marcus and I have had some really interesting discussions these last, these last several weeks. I mean, it's been year-end, we've been wrapping up financials for last year, helping put budgets together for this next year, looking at the financial situation of the farm. I can remember feeling some of the same stress he's feeling right now back in the '80s. Times were tough, interest rates were high. We weren't making any progress financially year to year, but we always took a business look at things, made some tough decisions. Like I say, the tough times are when you really learn how to manage a business well. But we're gonna get through this. There'll be some pain involved, and we'll have to make some tough decisions. Going forward about things that we can afford to do and things we can't afford to do.
But in the end, we need to keep our priorities straight and remember why we're here and why we're doing this. And if we really do enjoy it, we should let it show and not let some of this financial strain that we're going through right now, not let it overtake us.
Sam: Well, that's great. So just a little summary from what I've heard is just be a family man, make time for your family, teach your kids the ropes, and allow them the opportunity to learn as much as they can with the farm, and things will fall into place from there.
Steve
Hess: Well, and let them know, I mean, I really do, Philos keeps telling me my vocation is my avocation, or maybe it's backwards, but anyhow, It really is fun. I mean, to be able to have your own business, to be able to manage your own farm, to be able to raise your children and work with them daily. We have a goat enterprise on our farm right now where I see Marcus and his oldest daughter spending so much time together breeding and raising and showing goats. It's, that's really fulfilling. And another girl has a love for horses and they provided a opportunity for her for that. We just need to remember that it really is, there's a reason God put us here and we should enjoy it and not be overtaken by some of the stress and strain that we see every day.
Sam: Well, I think that's great. Well, thank you very much for joining me for a Dad's Wisdom here, Steve. I think a lot of people are gonna get a lot out of this, but I think we're gonna go back and get back to the conference, but we'll catch you next time on the Ag View Pitch.