Operating in a new stratosphere

Narrator: Hey podcast, thanks for joining us this morning. Listen in as Chris and I talk with special guest Joe Paulsen, a farmer in north central Illinois. Joe talks about crop conditions, why he has the highest cost of production of everyone he's ever talked to, and the dynamics of operating in a father-son business. Enjoy.

Chris

Barron: Hey everybody, uh, welcome to the Ag View Pitch. This is Chris Barron and, uh, here with Shea today. And, um, we're at a farm in Illinois and we're here with Joe Paulsen who farms with his dad, Mike Paulsen. So Joe, how's it going today? And we're here kind of working through some stuff with you. Worked with you guys for what, about 4 years now, or going into year 4 now?

Joe

Paulson: I think it is year 4.

Shay

Foulk: Yeah.

Chris

Barron: Yeah. So tell us a little bit about the operation here and all the fun you've been having this spring trying to get some stuff in the ground.

Joe

Paulson: Well, farm here with my dad and farm corn, soybeans, and We had definitely an interesting spring. I, you know, we, you know, right from right starting last fall, you know, we had trouble getting our fall tillage done. We actually chisel plowed on my birthday, which I thought would never happen. That's the 26th of December and did that in the mud. So, you know, this whole thing has kind of started for us And I think a lot of people back in, back last fall, and it continued into the spring. And it was, it was, it was interesting trying to get the work done. That's, that's for damn sure.

Chris

Barron: Yeah. So how's things looking around here? What do you, how would you describe stuff? Obviously, when I drove in today, there's a, there's about 3 different major planting windows, it looks like you guys had. Tell us a little bit about that.

Joe

Paulson: So we had a little window around the 22nd, 23rd, 24th of April that we were able to get 2 hard days of running and conditions were, they were damp, but the stuff was working up nice. It worked up beautiful. So, so we, we went like crazy and then You know, that was like a Wednesday and a Thursday. And then they were forecasting snow on Saturday. And so we didn't do any planting on Friday. And we ended up getting 6, 8 inches of snow on it that Saturday. And that planting looks good. It had a little bit of moisture stress from going in the ground, you know, just some saturated spots. But for the most part, that planting looks really good. Now the, you know, I think it was around the 20th of May, somewhere around in there. We got another window and we, it was damp, it was wet, it wasn't quite right. We hemmed and hawed. We had some neighbors that started kind of going.

I had a lot of pre-emerge to put on. So I was just kind of staying busy doing that. And then kind of at the 11th hour, we decided we're going to try and get my dad's home farm in. And that should have taken me about 5 hours to plant it. And it has 3 different planting dates on it. So, and that actually looks pretty good. And then we got in again in, you know, the first week in June, like the June 2nd, 3rd, 4th. And we planted one day there and got rained out. And then hung it up and ended up leaving about 650 acres of prevent plant corn and thought, you know what, we're gonna focus on getting the beans in. And then it was about the 10th of June, we got our next little window and, you know, and then we went hard on beans and we were able to get all the beans in.

Shay

Foulk: So it seems like throughout different regions that you go to, Everybody has their own concerns with your planting dates and your windows. What do you think your biggest concern is moving through the summer and then into fall here?

Joe

Paulson: So my biggest concern is, is in this neighborhood in 2009, we— a lot of the older generation said it was real similar to 1974. And we had a later crop, we had a cool summer, and we had a semi-early frost. I think it was around the 1st of October that year. And nothing was done yet. Everything— corn wasn't black layered, beans weren't done. And it, it, it frosted it all off. And the first time we got in the field that year was the 27th of October. Those beans were 19%. I was drying them. Corn was in the 30s. And it stayed in the 30s all the way in through December. And, you know, 46, 48-pound test weight, you know, massive drying bills. It was just absolutely awful. So as we were coming into this year, the way that it was, you know, it was cool. We had no cloud, you know, it was cloud cover every day. It just, it just did not feel good. And '09 was kind of fresh in my mind.

So when we got that last little bit of corn in, it just seemed like I just didn't want to have the risk. And so I hung the corn up, had a lot of neighbors that kept going, and that stuff looks beautiful. A lot of it does. You know, if we keep getting some heat, you know, and the frost stays away.

Chris

Barron: What happens if we have an October 1st freeze?

Joe

Paulson: I feel really bad for the elevators because they're gonna be a lot of wet corn, they're gonna be a lot of wet corn, a lot of bad quality. It's, it's, it will not be good around here. October 1st.

Chris

Barron: Your exact location for the listeners again is, you know, you talked about the lake, talk about the exact location and some of the effects in this area, as you know, because you farm some ground to the west. Yeah, explain that.

Joe

Paulson: Part? So we, we're, we're about probably 70 miles straight west downtown Chicago, and we can be a little bit cooler here because of the lake. You go west, it gets a little bit warmer. You know, that kind of plays into it a little bit. Definitely as far as GDUs, the further east you go, a little bit less. And anybody that farms kind of from the east to the west in this area, you know, can kind of attest to that, you know, you can get longer season hybrids when you get 30 miles further west, that stuff seems to finish faster.

Shay

Foulk: With the emergence and how things have gone with the later spring, the one thing I did notice while I was driving here is the fields look pretty clean. And obviously that's dependent on operations, but have you seen anything major as far as weed pressure or insect pressure up to this point?

Joe

Paulson: You know, I saw in a no-till field that I custom spray, this guy went in there and no-tilled corn into corn stalks. And he had quite a bit of caterpillar feeding that I'd never seen that before. From an insect. And then I had a neighbor here to the east of us that put in a lot of beans really early. And he had, he had some bean leaf beetle. Looks like we had a little power surge. But, but for the most part, from a weed standpoint, everything is fairly well in, in pretty, pretty clean because preemergents got put on a little bit later. Especially in our corn, you know, all my pre-emerge was put on in a later fashion and all that's still around. Stuff is relatively clean except for prevent plant fields and everybody's starting to kind of start to knock those down and spray.

Chris

Barron: We were talking about corn quite a bit there. The thing I noticed driving here was how small the beans were or just emerged. Oh yeah. You know, and so I got a little bet going on with your dad here on what these things are going to yield for a steak dinner, I guess. And so, you know, and I'm thinking, you know, under 40, and, you know, your dad and I are thinking the under, the over 40, but, you know, what's your thought? I mean, it's amazing to me. I mean, that's the majority of the fields around here. It doesn't look like there's very many fields that got planted when in any of those corn windows. It looked like the beans all got planted here just not too long ago.

Joe

Paulson: Oh, 2 weeks ago. I would say probably 90.

Chris

Barron: So what were the planting dates then?

Joe

Paulson: That would have been all probably the 10th through the 15th. I would say would catch probably 85% of the beans around here. All the beans are in pretty much the same boat and they are tiny. I mean, we're just, you know, a lot, most of the fields probably are only on their first trifoliate. Just starting to shoot.

Chris

Barron: And I'd say I saw that all the way from, say, Galena, or, you know, as soon as I got into Illinois. Yeah, whole drive across northern Illinois. Looked like there isn't any beans that have any size to them at all. No, no, no. Day length is going down already.

Joe

Paulson: That's the—

Chris

Barron: I can already taste that steak that your dad's gonna fry.

Joe

Paulson: Yeah, a lot of these beans never even saw longer day length. They, by the time they came out, you know, we were at the solstice down here. So it'll be interesting to see how that impacts them. I don't have a tremendous amount of experience with late planted beans. The only thing I can kind of equate that to is, you know, there's some wheat grown in the countryside here and You know, there's some guys that try and put cheater beans on and those can be planted anywhere from like the 5th, 6th, 7th of July till I've seen them in as late as like the 12th or the 13th. And I've seen those beans make 40 and I've seen those beans make 6. And so I don't, it just totally depends on Mother Nature. Frost date.

Shay

Foulk: And are they putting in fuller season hybrids when they go with the double there?

Joe

Paulson: Yeah, I'm not sure exactly what the day length is. I mean, I know that, you know, all of our beans were treated, of course. So we, we were kind of locked into what we're going to have to plant. And, you know, I was planting 2 nines on the, you know, 13th, 14th of July or June, I mean. So I don't know. I don't— we're in uncharted territory. So it'll be interesting to see how some of these beans, you know, what they make. They're definitely gonna be shorter. I mean, that's a given.

Shay

Foulk: And I apologize, I said hybrid there. I meant variety. I do know what I'm talking about sometimes. But you mentioned 2009 pulling from that. How long have you been farming here in this location?

Joe

Paulson: I came back to the farm in 2001. You know, started financially farming in '07. You know, Dad, of course, has been here, you know, his entire life as well. I have seen with him in 1993, I forget the exact date, but I think he finished planting beans and it was like July 19th, 20th, something like that. And those beans were not good. But I think some of his earlier planted June ones, you know, he was— those were in the 30s. But, you know, that's been a long time ago.

Chris

Barron: On the— shift gears a little bit here on the marketing side of things.

Joe

Paulson: Oh, God.

Chris

Barron: Yeah. I'm not going to ask you any, like, Dwayne questions or anything, but what I am curious on, though, is basis in the area because You know, we've been talking on these other podcasts with Duane and different stuff about how, you know, the processors are recognizing that, you know, corn is something that they might need to get a hold of from a physical perspective. What's basis in your area doing or what do you think?

Joe

Paulson: Basis has definitely come up. I have heard some interesting things flying around. I have a neighbor had some unsold corn and he was able to get he was able to get into the local ethanol plants some, well, higher than I've ever heard that ethanol plant ever bidding by quite a bit. So, you know, some creative things, you know, hey, we're going to give you option or 10 over to based off the September delivered in July. I've heard, you know, things as crazy as we'll give you option December delivered in July. You know, there's some interesting things kind of floating around. Just looking at our bid sheets out that far into December for new crop, I would say we're probably at least 15, 20 cents over maybe where we would historically be at this time of the year. Bid that far out.

Narrator: Gotcha.

Shay

Foulk: Now, did you take some prevent plant this year?

Narrator: Oh, yeah.

Shay

Foulk: This spring. Okay. And with that, what are you doing with those acres right now? Is there any plan that you put in place for the summer and how does that carry over into next year for you?

Joe

Paulson: So kind of the thought process is, is, you know, after listening to Zane's podcast with, with, with you guys, sounds like, you know, they have some experience with that and talking about, you know, keeping the soil alive and it's better if you can get something growing on it. So we're gonna do oats is what we're gonna put on. You know, basically that's kind of the plan is maybe get some oats on there and then hit them with 2,4-D once or twice to kind of manage weed control. I don't know exactly, I'm assuming that I'm gonna chisel plow them in the fall. Uh, and then I think I'll probably stick corn back into that is kind of the plan.

Narrator: Okay. Yeah.

Joe

Paulson: Yeah.

Chris

Barron: That's about— I don't know if you got anything else you want to talk about or anything.

Joe

Paulson: Well, going back to the prevent plant, and I don't know, I don't, I don't know if it's, uh, such a thing, but we got, you know, some of my acres already had nitrogen on them. And, uh, so, you know, and fertilizer. So I think it's a good idea to kind of catch some of that. Fertility maybe with, I don't know how much nitrogen it's going to catch, but you know, it'll catch some of the nutrients and hold on to those and try to lock in and salvage some of that that you can. Yeah.

Shay

Foulk: One other thing I kind of wanted to bring up while we're talking here, and we can kind of wrap it up, but you do farm in a father-son operation. And we've had some discussion about that today. I was wondering if you can maybe speak to that and you know, why you've enjoyed that over the years, because a lot of people don't always have that opportunity. So what's been some of the biggest benefit for you to do that?

Joe

Paulson: Well, the biggest benefit, and like I, you know, we had talked earlier today, is I don't think we even really knew what we were doing. But when I came back to the operation, it was a It was a total business decision on my dad's standpoint that he needed the labor. And, you know, I could fill that void. So I think that kind of set the tone a little bit. And one thing that he did that, again, I don't even know if he really even realized what he was doing. But I mean, right from the very first year I came back, even though I was essentially hired man, I mean, the man took me to everything, you know, whether it was a meeting with a seed dealer, whether it was, you know, he even took me to his tax accountant a couple of times. You know, he took me to bank meetings. He took me to, you know, for marketing stuff. He took me to seminars. I mean, he just, it was an apprenticeship.

I had a 6, 7-year apprenticeship with him. And so, by the time I rented my own ground and it was time to conduct business, I had a really, really good idea of what all that looked like. And I just think that, you know, to all the father and sons out there or daughters or whatever the situation is, that was really helpful. And the sooner that they can see the financials and what is at stake, I think that really helps, you know?

Shay

Foulk: Having that operating knowledge passed along.

Narrator: Yes.

Joe

Paulson: And perspective.

Shay

Foulk: And it's a family affair. And that's what is the cool part about that is you're able to work together and learn from each other.

Joe

Paulson: Yeah.

Shay

Foulk: See that you're supporting him and he's supporting you. And I'm going to read back to you here. You mentioned some of it, but I wrote it down. You were talking to your dad earlier. You said, "You did everything I've ever heard of in a legacy workshop without knowing it before that was even on anyone's radar." And for you to have had that opportunity and to share that with us today, it's eye-opening for us. And we appreciate your openness and honesty with that. Now, right now too, you're working through planning for the future and what does your 10, 15, 25-year target look like, taking some next steps for mapping that out. And I think you're doing a lot of the right things there. Talk to us real quick about why that's important to you and how that's helping with some of the transition things going on right now.

Joe

Paulson: So, I think that and keep me on track here. I got a lot of things to say, I guess. But as far as like the 15, 20, 25-year plan is that I've started to realize that, you know, like, like none of this just is going to happen by accident and that I need kind of a clear picture of where I want to be when I'm 65 years old and what that looks like and what the advantages are of having that picture ahead of time. And I think that, you know, having— I'm a huge believer in collaboration. And I think that if I can position myself where I am collaborating with a group of farms and people and generations. I have been blessed with two daughters that are gonna be 5 and 7. And, you know, if they have interest in agriculture, I'll be absolutely thrilled. But if they're not, it would be great to have a larger pool to, pick from as far as to have somebody buy me out over time.

I see huge advantage in that. It allows you to back away a little bit at a time. You can still kind of, you know, it doesn't have to just be over or done with on one specific day. So, I think positioning myself so that I, you know, I'm part of something that I can sell on to someone else is going to be good. Key for good later, later years.

Narrator: Right.

Shay

Foulk: And taking the vision that's currently in place in the farm from your father's generation, moving it to the vision that you see, and then on to the vision of those who are later involved. I think that's what we call legacy. And building the right foundation and legacy, putting in that work and that time that you were talking about to do it right.. It's a pretty incredible thing.

Chris

Barron: One thing I want to throw in there too, Joe, that you do really well and have you just touch on it for a second. But, you know, like I said, we've been working together for going on into our fourth year now. You're one of my poster children of Profit Manager, tracking the numbers and stuff. But the other thing that you've done that we haven't gotten a lot of traction on is we developed a tool for tracking your budget. And I've been told by a few people, you know, that's a recipe for divorce if I got to sit here and have a conversation about having a budget, you know, but, you know, and we talked about that earlier today when we, when we got together on the cost of production side of things, because a lot of people say, I know my cost of production. Well, do you truly know your cost of production?

Because there's all of these overhead expenses, you know, and so you do a great job of of pulling out those production costs in, you know, in that budget and identifying those. Can you just talk for a second on, or a minute on how that's helped? Has that changed your behavior? Has it opened your eyes on anything as far as, you know, understanding that a segment of your, a part of your cost of production is overhead cost? It's paying yourself, it's buying, putting food on the table, it's electric bill, it's healthcare. —some of these other items, it's part of the cost of production that a lot of people tend to overlook. So give me a little feedback on that, kind of what you're finding from doing a good job of tracking that.

Joe

Paulson: I find that, you know, especially over the last— because of Dad's retiring and stuff over the past probably 6 or 7 years, I am operating in a new stratosphere because I'm increasing in acres. So, every year, I feel like I'm outside my comfort zone. It just feels that way because you're just managing more dollars and there's just a lot more there. You're not used to having maybe as much debt as you did. And what I've found is that there's comfort in the numbers. Even if they're bad numbers, there's comfort in the numbers. And like that budget report of the overhead, I've also realized there are no good or bad numbers. They are just numbers. And just knowing the numbers gives you the power to do something about it. Right.

And so, you know, all that is just all part of just keeping my sanity is, you know, even if, even if the— yeah, because when I do some of those budgets and I look at some of the stuff that You know, we spent, I'm like, wow, that's a lot more than what I really would have thought that would have been. But it's good to have, you got to know that stuff. You know, it gives you something to shoot for.

Chris

Barron: Well, it gives you a target. I mean, we were talking about that earlier. You know, a lot of times we think we want to accomplish a certain thing. If we don't set a goal and a target, you're never going to get there if you don't know where there is. Right. You know, I mean, that's— really key.

Shay

Foulk: And Joe, you said that you have the highest cost of production of anybody you know. Why is that?

Joe

Paulson: I don't know. I mean, all I can say is I've got everything in there. I've got everything in there to the white— the gas in the wife's car to, you know, the grocery bill. You know, I figured it all in. And when I, when somebody asked me what my cost of production is, you know, when I'm, when I'm rattling that number off, it includes all of that, you know, and—

Chris

Barron: Well, and that's a key. I mean, that's, I think, a testament to, you know, you've done a great job of marketing, you know, since we've worked with you, too. And I think that has a lot to do with it, too, because if, if you're confident in where your cost of production is at, and an opportunity presents itself to make sales above that cost of production, and you know that cost of production includes everything, including paying yourself, makes it a lot easier to pull the trigger.

Joe

Paulson: A lot easier. Yeah. And then they changed the game on me with all this prevent plant stuff. I kind of thought I'd figured it out a little bit, you know, get $4 December corn on and then sell the carry and, uh, You know, it, and then this happened. So it kind of took my marketing plan and flipped it on its end. But even that's turned out. And it continues to make the cost of production a moving target as well. Oh, totally.

Chris

Barron: And so when you have all that stuff in front of you and all you got to do is tweak a few numbers and instantly you know where you're at again. That's the key. Yes.

Shay

Foulk: Any last notes or comments to the listeners out there as we wrap things up here, Joe, moving forward through the summer or?

Joe

Paulson: Not really, I guess. I mean, pray for heat. Pray for heat. Pray for heat.

Shay

Foulk: No, that's some good advice there. So, hey, thanks for having us here, you know, sharing your time, the experience, and inviting us into our family. It's been a great experience for us. We really enjoy working with you and really wish you the best here. Through the rest of this year. So thank you. Thanks everyone for listening, and we'll catch you next time on the Ag View Pitch.

Narrator: As always, thanks for listening. We hope you enjoy the perspective we're trying to share with our community. No producer operates exactly the same as any other, and that's exciting for us. If you've been enjoying the podcast or would like to hear something specific from us, please email us at cbarron@agviewsolutions.com. We're always here for you. Stay safe, and we'll catch you next time on the Ag View Pitch.