Proactive farm planning for future success

Shay

Foulk: Welcome back, everyone, to another episode of the Ag View Pitch. Today, Shay Foulk and Ben Gordon. Ben, we've been running into each other over the last few months. You had a series of workshops that you put on for Fractal. We are sitting here at Top Producer and lots of communications back and forth. There's a lot of exciting stuff that's been going on here the last couple of months. How, uh, how are you sitting with kind of where we're at as we leave 2025 and head into 2026? Where's your head at?

Ben

Gordon: Yeah, I mean, I think exciting is definitely a word, maybe not the first one that comes to mind, you know, especially being at your guys' conference and seeing the profitability numbers that Chris had out there. But in some ways it is because I think, you know, downturns have a way of bringing a lot of opportunity to the forefront. And that's not just, you know, opportunity for anyone anywhere. Who's sitting there. Um, but it's, it's when, you know, this time in the cycle when people are having to sharpen their pencils and where there's a real time for those that have the ambition, the management, and the preparation to go see whether it's rented acre opportunities, just improving their own business, talent that's coming on the market. It just seems like there's a subset of folks that we work with who are just seeing more than they ever have today.

And I don't want to discount the, the toughness of this time, But it is an important dichotomy, I think, for a lot of the folks that are listening that they need to think about.

Shay

Foulk: And the opportunity that you mentioned, Chris always says, you know, luck is when preparation meets opportunity. And I think the, the clients that we're working with and, you know, the groups that were here at Top Producer today that are looking at these types of opportunities, they're the ones that are making decisions on what happens if, um, you know, we're going to get to it here in a little bit, but you said beforehand, don't let a good crisis go to waste. And I think, I think the people that are looking at this economic situation, uh, as a crisis are not the ones that are going to be taking advantage of the opportunity. They're the ones that are going to get left behind.

Ben

Gordon: Yeah, I think you're, you're spot on. I mean, I think it's, um, you know, it's that growth mindset. And I think the, the people who find themselves able to pull that trigger a little bit faster are the ones that, you know, use the playbook of controlling the controllables. On there. But they're also the ones who, they're willing to do things that work across those scenarios. So whether that's, you know, picking up acres with existing labor and equipment, because it actually reduces your cost, like they're actually playing defense, even though they're expanding, whether that's owned or rented. That's the way of thinking. That's the growth mindset that I think the best folks are moving on.

Shay

Foulk: So I want to get into the land purchasing that you're talking about. From a defensive standpoint, which ends up being offense long term. We'll talk, you know, near term, short term. Let's go back to those November-December workshops. You did 4 or 5 of them? Yeah, 4 of them. And really insightful, really good group of operations that were there asking the right questions, not just around the fractal model, but more so where are we at? What does this look like? What are the opportunities? Talk to me a little bit about what some of your key takeaways were from those workshops.

Ben

Gordon: Yeah, and I'm definitely curious to hear yours. And Jeremy's as well. I mean, I think for me, you know, we wanted to align on some of the core assumptions that we had and then people, how they responded. And I think, you know, one of the biggest ones is just we are seeing an increase in competition out there, especially you look at, you know, some of the Illinois and Iowa markets that we were in, man, the margins of competition, whether it's marginal rent or the ability to pick up those acres, they seemed really, really fine. And so positioning your business to be able to compete over time. And, you know, I think as a reminder, we're working with operations that want to be around in 5, 15, 50 years. And I think that's just a slightly different mindset.

And so they're building those long-term capabilities, they're building that long-term asset base, and they're looking and they're actually planning across the scenarios. And I think it comes back to some of our shared experience in the military. You know, no plan survives first contact with the enemy. But yet we had how many plans for every mission and it was so that we could adjust off of them.

Shay

Foulk: So that increase in competition, people hear that and they're like, I'm already paying as much cash rent as I'm gonna pay. Is it competition from some operations regardless of scale getting better in decision-making? Is it competition as operations move outside of their operating radius? Is it competition just as farms get bigger? I tend to believe it's some variation of all of those, but what's kind of top of mind?

Ben

Gordon: Yeah, I mean, I think agronomy has become table stakes, and there's still room for agronomic differentiation. It's just harder and more management intensive. I think the next one is, you know, mixed cost optimization is really, really important. And, you know, that's why it was number 2 on the list that Chris had for costs, you know, after land, you know, equipment. And so being able to spread those equipment costs over as many acres as possible. And I know that, like, that's not an infinite amount, because equipment has its limitations. But if you're not optimizing that, like, that is— even if you're a scaled farm or you're a subscale farm, like, that is going to just kill your margin.

And then, you know, I think we've each done some interesting analysis and some of the stuff we've done together that we, you know, would love your take on is just, you know, we're seeing scale become a bigger factor because of that procurement and that selling side. I'd be curious what you see from kind of your operations, especially the data that you guys have, um, coming out of Profit Manager.

Shay

Foulk: Yeah, and, you know, people that attended the workshop would have heard that information For the audience that's listening here, though, we see variations from a scale, whether that's procurement or on the back end sales side, of $200 to $300 an acre difference from operations that are maximizing scale and efficiency and purchasing power and selling power versus those who are not. And when we're in an environment where you're losing $50 an acre, the differences between losing $50 an acre or being profitable after paying for all fixed, mixed, variable costs that are associated there. So it is pretty massive. You hit on agronomic differentiation. I want to, I want to pick on you a little bit about that.

Because a lot of operations that are not farming at scale say, well, the big guy isn't doing it as well as I can, or they can't, you know, they can't get across the acres, maybe side dressing everything with liquid. And there are limitations to that, certainly. But What do you mean about that from an agronomic differentiation standpoint?

Ben

Gordon: I think a lot of those assumptions were certainly true 5, 10, 15 years ago. But I think the quality of the larger operations that are still around and the systems they have in place, the team they're developing, a lot of stuff that you guys talk at, you know, talk about, um, you know, you develop a good team, it's no different. Again, some of that shared experience, they can go operate at that high level even though it's not you. And, you know, whether it's that strategic hire SOPs, all of that. I think that has eliminated a lot of the downside to scale that exists. Now, there is still uniqueness, there's still localization, there are limits, like you said. So I still think there are opportunities, you know, to go out there and do things that are unique, hard, your secret sauce, and like really, really leaning into that.

I just don't think you can rest on those laurels of, you know, really nailing just the basics of seeding rate, getting in the field at the right time, for, you know, just those things. And I say they're basics, I know they're hard, right? But I just, I think the spread between the 25th and that 75th percentile has really compressed.

Shay

Foulk: Yeah, that's a good observation. I gotta give Ben a hard time here. What's the optimal planting date in San Francisco, California for corn?

Ben

Gordon: Well, I guess I think we have 4 growing areas that come to the farmer's market I go to. So it's actually a pretty wide area. And my wife will say, "Don't give me any of this West Coast corn." Okay. You know, whenever we're there.

Shay

Foulk: So it's not Yellow Dent Number 2 that's showing up at the farmer's market.

Ben

Gordon: I don't know if— I think you could probably sell that at the farmer's market and people would buy it.

Shay

Foulk: Tell you what, I got some oceanfront property in Arizona. I'll sell you too.

Ben

Gordon: Thanks, George.

Shay

Foulk: Yeah, you know, it's kind of interesting though. I think that was definitely one of the key takeaways. When you followed up conversations for those that attended the workshops, what did they have that reframed some of their perceptions? Did it inspire action for them to go out and, you know, look at buying more land or at least doing what I consider to be one of my key takeaways? You know, we'll talk about what can you— controlling the controllables, as you said earlier, what can you do today short term to impact long term? I think the biggest thing that I saw out of that is people just having no idea what they can actually go out and buy today. Whether that's from lending, with cash that they have on hand, investor friends, uh, Fractal, you know, whoever it may be. That was, that was one of my biggest takeaways.

But I'm curious what else kind of your audience took away from those workshops.

Ben

Gordon: Yeah, I think that was the biggest one. The amount of, you know, these were, you know, a ton of TPAP grads. These are folks that, um, that think about their business. And the amount of them that hadn't done a 3-year capital plan kind of blew my mind where they realized how many rented acres they had that were at risk, how, you know, to you, to your point, what opportunities could they bite off on infrastructure, land, the operating line that they would have to expand to? Just— and if there's one thing I would say to folks is like, just put that on paper. You don't have to build the perfect version. Heck, send me an email and I will send you a template out there of how to go do it. But it'll help ground you in reality. And I think the action that it spurred was twofold.

I think some folks just turtled up because they realized, you know, crap, this is a big deal and I'm not ready for it. And they're used to being the smartest person on the block, and I think that was intimidating to a few of them. Um, and there were some other folks who grabbed it by the horns and said, okay, this is what I need to do, and I do need to get more creative, and I need to be more proactive, and I need to have some hard conversations with neighbors, potential investors. I need to put myself out there because if I do that, then this will get easier. It'll compound over time.

Shay

Foulk: And that particular exercise that you alluded to was just saying, of my rented acres, how many of those are at risk? And whether that's a senior landowner passing away, you know, children looking to retire that were inheritance of that land and property. Pressure from rural development or renewable projects. There's a significant amount out there. And, you know, you could see in people's eyes kind of that oh crap moment of maybe we do need to think about this a little bit more. And this ties in well to a survey that I did for Joe Vaclovic's Premium Crowd here. You know, I'm not sure when this will come out, but sometime in early February, I did that survey and we had about 500 farm operations. That hopped on and a question that I asked them was, of your land that you farm, how much do you rent? And the average came in about 62-65%.

The follow-up question that I said is, of that 62%, what percentage of those rentable acres could you purchase if they all came up for sale in the next 10 years? And for those of you listening to this, I want you to think about it because I know there's a lot of operations that listen that are renting 4,000, 5,000, 7,000 acres and have very, very little owned land. One, what percentage could you buy? And two, what does that do to your margin contribution from your fixed asset standpoint, whether it's labor or infrastructure or any existing, you know, payments that you have that are out there? That should give you pause. To think about what does this look like? And how rapidly is this going to change? Because it's, it's maybe like a freight train right now. It's taken off, you know that the train's there, you know, it's coming.

But by the time you take action in 5 or 10 years from now, there, I don't think there's going to be any stopping that train. So, you know, what are your comments on that around the rented land and the ability to purchase it? It just, it seems insurmountable for a lot of people.

Ben

Gordon: Yeah, I mean, I think the first piece is, I think you wouldn't, you wouldn't market your grain like you manage your rented acres. Like, you have naked risk that's out there, and you need to start managing it actively. And that's where those active conversations with those landlords, often their next generation, are really, really important. So that's the first piece. The second one is, you know, this is where your reputation and your standing in the community can be a huge asset. And what we're talking about as a liability can often be an opportunity for you to ensure security of those acres long term, and sometimes even pick up some acres as other, you know, as folks retire or whatnot. And we've seen folks go from, oh crap, to, wow, this was, this was great type moments as well. But they had to put themselves out there to go do that.

The third and kind of biggest piece that I have is just, you know, it's a, it's a very simple statement with pretty significant consequences. What made us successful over the last 15 years is not necessarily going to be the same playbook for the next 15 years. The massive land transfer that is happening right now is not just leading to a changing of hands. It means that there's more professional management of land. More professional management of land typically means higher rents and more competitive rents, which means the margins we're going to get on rented ground over these next 15 years are probably going to be lower. Than they were over the last 15.

Shay

Foulk: So let's talk about professionally managed land. Is that from an investment farmland manager outlook, or is that Shay Foulk is professionally managing his farmland that he owns?

Ben

Gordon: When I say professional management, I'm talking a farm manager who's managing on behalf of somebody else out there and has sometimes a fiduciary, a legal responsibility to get the highest rent possible on that, where like their incentives, their job is to extract more value.

Shay

Foulk: So I would love to insert in this conversation right now, because I don't know if we'll get the opportunity later. The importance of separating your land real estate division from your operating is huge. And, and I think most people understand that. They understand that division. But if you haven't looked at that seriously of why is it all just one big ball of wax, to put it nicely, why is it just one big ball of wax and should it be that way moving forward? That's the first thing that I would say. The second thing that I would say is you talk a lot about people farming their equity away. Can you, can you explain that and maybe talk through this? Something that I've heard you say a bunch of times, but I want you to explain it because I think you do a good job.

Ben

Gordon: There is a set of farmers who are making less money per acre, all said and done, than they could if they just rented that land at a fair market rent.

Shay

Foulk: Isn't that most farmers?

Ben

Gordon: Um, no, I don't think so. Not, not, not the good ones. Not the ones that I've seen us work with.

Shay

Foulk: So explain that to me though, because if I'm paying $300 an acre cash rent as an example, and I'm not making $300— well, it really needs to be closer to $400 by the time you figure in property taxes and land management fees and things like that. So you're telling me that if I'm not making $400 an acre profitability on own land, that I'm just farming my equity away?

Ben

Gordon: Before land, before your interest payments, yeah. Then yes, you would be.

Shay

Foulk: That's gonna, that's gonna sit, sit a little rough with some people. How do you manage around that?

Ben

Gordon: I mean, I think it's, it's, it's not a values judgment that I'm making. It's just a reality. And so it's like, if your cost structure doesn't allow you to farm above that marginal rent, that means the market is telling you that you're not quite at that level of competition. And I'm not saying stop farming. I'm saying, what are the things that you can go do to put yourself in a better cost structure? To, you know, not just— you don't have to scale. Maybe you need to specialize. You need to do something that has that unique management, a side business that helps to bring down those costs, not just side business for side business sake. Or it is scale, or it's collaboration. And I think that is one of the biggest force multipliers that people don't talk about. And I think Chris just did a series on that. I know you guys talk about— you, you know way better than I do.

But I guess my push, even from an investor side, is when I see somebody who's willing to look at a different model like collaboration because they know that that's what it takes to be competitive, I, I look at that and I say, hell yeah, that's an operator that I want to work with. But I mean, you, you paint out that picture way better than I can.

Shay

Foulk: Yeah, I'll come back to collaboration. I want to I want to emphasize this because I really think it's important for people to understand the idea of you're farming your equity away. So to reiterate simply, if you are not making profits beyond what you could rent that ground out for, as we heard in the panel today, Emily Oberbroeckling said multiple times, what's the highest investment use case for that property? You just need to look at it as a serious consideration and say, am I better off renting this at $350 an acre versus the $250 an acre that I'm making from a profitability standpoint. And yeah, you're not throwing shade, you're not trying to be disrespectful to anybody. But as you think of it as a business manager, or as these investors, or as the professional land manager that you referred to, that's the reality. That's the truth.

And there's probably billions of dollars of farm equity that are being farmed away every single year.

Ben

Gordon: Yep. And like this, let's put it into context. Like, it's multi-year profitability. Like, there's all sorts of things. Now, we're not trying to be alarmist here on it, but it is a— it is not just a today problem. It is like, what is your competitiveness going forward? And if, you know, we, we talk often about, you know, commodity competition is a treadmill. So if you're standing still, you're actually going backwards. And this is where that really comes into play. And, you know, you have a lot of folks that, you know, might— I mean, I have family members who They have own ground, they're farming old equipment, their cost structure is really, really low. But the reality is, is like they could probably get pretty— it's probably getting close to that point right now. And that's a worthy decision that they have earned the right to make.

But what that typically means is that that operation is not going to have a chance to go to the next generation, even if that is in the cards.

Shay

Foulk: And some of you listening to this lost $100 an acre this year. So not only, you know, maybe, maybe not from the owned land standpoint, but when you think about it from an overall like margin contribution outlook on all land costs over all acres, and as a farm operating entity, if you're losing $100 an acre and you're not separating those divisions, you're talking $300, $400 an acre of equity being farmed away on an annual basis, you can't turn away from that. I think it's just important to kind of internalize that. So we, we hit on, you know, some of the key takeaways— people looking at the opportunities that exist, the threats that they have that are out there maybe, uh, and then you hit a little bit on maybe some of the weaknesses.

So the weaknesses of having higher mixed costs, particularly from an equipment standpoint, that's where what we've been doing on the collaboration side for many, many years now kind of comes into the picture of how do we maximize the efficiency on these machines? Because you're right, it doesn't scale perfectly. You know, if a combine could go over 10,000 acres, that would be cool. But realistically, you're probably looking at, you know, 5,500 to 6,000 acres even on these Class 10 and 11 machines. So you have a scale of operation that a lot of, a lot of entities are not even getting close to., you know, maybe a third. And I've said this example several times here over the last few weeks. There was a gentleman that came up and talked to me a few months ago, said he ran 1.6 million bushels through an S680.

Most of you listening to this that are farming with a 680 are, you know, maybe doing 350,000, 400,000 bushels. That's just— it's such an outsized efficiency that it's hard to kind of comprehend. And he might be pushing that to the limits, you know.. But even if it's, even if it's half that, you know, if your equipment is half as efficient as it could be, there's tremendous cost being left on the table. And that comes into, in addition to the operations that are doing a good job on acquisition, purchasing, and then marketing on the back end there. So any, I guess, any additional thoughts on that?

Ben

Gordon: Well, I think you've, you've brought up, and this is a bit of a different can of worms, but I think it becomes related, just like bigger and bigger opportunities on both rented and opportunities to buy that have been popping up in the last, you know, 3, 4 months with a lot of your clients. And we're seeing the same thing with folks that we work with. Um, I think, you know, having, having started some of those, you know, those even like soft collaborative conversations and just frankly just being a good neighbor, and that is what often opens up those opportunities and might actually give you an opportunity to execute on them. Because you can't bite off a whole nother combine for, you know, that 1,000 acres that comes up for renting. And I know that sounds like a big number to a lot of folks, like those are numbers we are seeing, like fairly consistent for sure at this point.

And so, you know, being willing to have those conversations, especially with those retiring farmers, or just the folks that you've always got along with, you respect how they operate, and just seeing like, is there something there? We're just seeing, we're just seeing the people who are willing to go out and put themselves out there a little bit more. They are the ones that are able to seize more of these opportunities regardless of where they're starting from.

Shay

Foulk: And the reason for these large opportunities, unfortunately, in a lot of cases is transition planning or that lack thereof. So it's whole operations, you know, roughly 25% of farms do not have a clear transition plan in place, or, you know, a clear beneficiary of anybody to take over the farm. So that's where these 1,000 to 2,000-acre opportunities are coming in, is they just decide they're ready to be done. They don't want to deal with the tough economic outlook. They want to deal with one renter. You know, Ben does a good job. He manages things, he instills conservation practices, you know, does all the things that we want to see as a landowner. We want one tenant, and they're giving those people the opportunities. And that's the phone calls that we're getting. And you're going to see more of that.

$1.5 trillion assets transitioning over the next 25 years because over 50% of the arable land in the United States is owned by people that are older than 65. So your demographic statistics, uh, tell us that most of those people will have passed in the next 25 years. This is one of the largest transfers of wealth from a land real estate side for sure since the 1980s, uh, but like you said, I mean, even further back.

Ben

Gordon: Yeah, I mean, from a wealth transfer standpoint, it could be as big as you know, kind of homesteading or the, or the Depression, if you like. Just do the numbers. Now, again, like, we don't want to be— we're not trying to be alarmist on here. Like, that's actually— that actually means there's going to be a lot of opportunity too, because, you know, if you're a great manager and you're creative and you're willing to, to get after it, um, there's going to be more surface area for you to play with than there probably was in this last 10 to 15 years. And so that, that's the point that I think sometimes gets lost in the, you know, we're all trying to hammer on like the discipline to survive today But there's that optimism going forward because U.S. farmland is really well positioned versus Brazil in the long term. We're going to get our butts kicked in the short run.

But if you look at their markets and what their cost of production is, given fertility costs in the long run, you look at their weather patterns and their susceptibility to climate change and deforestation and deforestation. The reinsurers who are about as apolitical as possible— these guys are saying it's a San Franciscan talking about climate change like he's smoking something like this. I'm talking about Swiss reinsurance and like the studies that they use and how they price. Like I tend to find them to be pretty darn apolitical and rational about it. I like that for Midwestern U.S. row crop producers.

And if I combine that with the fact that I do think those rented acres are going to be more and more competitive, if you're able to seize both rented opportunities from trusted local folks, your retiring farmers, those relationships, using your position in the community to just earn that long-term nature of your— of that relationship, and you're able to go secure more assets through ownership models like ours, you know, co-investors, but keeping yourself in control. Now, as you innovate in your operation, you get to capture more of that value. You're not just, you know, that's not just moving into marginal rent. That gets me pretty darn excited about that future farm CEO. And, um, I haven't been in this industry that long, but I will say, like, I am— I continue to be impressed by the quality of farm leader, and the pace of change and development.

Like, there's a lot to be excited about amidst all of the negativity that is often out there, especially on your favorite place, Twitter.

Shay

Foulk: Yeah, and the negativity is going to go away as soon as we get $7 corn again. You know, people are going to be back on riding the lightning, riding the high.

Ben

Gordon: I still think the Twitter will happen.

Shay

Foulk: You're on the wrong side of X. But when we— I like where you went with that, looking at the long term. And I think there's a lot of really interesting things to consider there. So let me pick your brain on this. When you think about— and I'll do it for the Ag View side too— but when you think about your average client, or kind of who your target audience is for Fractal Equity Capital, like the ability to go in and buy land, paint me a picture of what that operation looks like in terms of— like, be specific in terms of acres, dollars, revenue, and kind of what their long-term goals are?

Ben

Gordon: Yep. Uh, first and most important thing is they want to build an operation that at least has the opportunity to be around in 15, 50+ years, because that time horizon just changes the way you look at everything. Um, second, they need to be a good fundamental agronomic operator with a growth mindset. They need to be open to new things because this is a new form of capital that exists. There needs to be a level of self-belief in, like, what you are doing and how you farm, and a desire to improve. That is the really important but soft stuff for us. Typically it is a farm that is, you know, owns, you know, 250 to 1,000 acres minimum. We work with folks who own a lot more, folks on the lower end there, and they are looking to grow their operation.

Often that means acres, sometimes it can mean other elements of their business that exist, and they have that growth mindset and what they, they are constrained and they feel that constraint and they have that self-belief. It is typically somebody who uses a little bit more technology. They typically use an advisor on, you know, either the consulting side and/or the grain marketing side because they know that, you know, farming is hard and you need to farm with a team and you're constantly improving. So really, I guess we are— we look more mindset than anything else. You need to have some equity for us to invest in and you need to, you need to have some deals to go get. And I think if you're not able to find deals right now, probably not a Fractal Farmer.

I mean, we're not a fit for everyone, we're not a silver bullet, but if you want to control more of your own destiny, like we are somebody that you should at least probably have a conversation with to see if we're a fit. You're not going to get a hard sell because what you're really, what we're really looking forward to is to see, you know, are you a good fit for us? Are we a good fit for you? Are we aligned in our worldview? And then we're going to hand you the keys to, or actually we'll give you a little bit more gasoline for your car to be able to go a hell of a lot further. Um, because today debt, especially with the cash flow burden that bring— it brings on, doesn't get you far enough. And like, we love, we love a lot of lenders, not all of them, but we love, we love a lot of them, um, that are out there.

And it's an important tool, and we just think that it's really important that you add another tool in the tool belt.

Shay

Foulk: So let's talk about that, uh, additional, uh, maybe fully leaded gasoline that you're referring to there. Take your prime operator outlook today, and fast forward 25 years. So in this time, they've taken advantage of this massive transition of wealth, they've taken advantage of rental acre opportunities, they've maximized efficiency in their operation. You look at a farm that was farming 4,000 acres in 2025, and owned 1,000 of those What do you think that farm operation could look like in, uh, 20— 2050, let's say?

Ben

Gordon: Um, I'm no Damien Mason, so I'm not going to prognosticate on everything. I think what I will— what I will say, uh, what I will say about that operation is that they, they have a team and they farm with a team and they're developing people because they are either scaled and they are like winning that scaled commodity game that just exists everywhere else. So they might be a or a 30,000-acre operation, or they have specialized. But whatever they are, they are very darn good at it. And they have developed those capabilities. But I think the thing about that operation is like, that's just— that's not just a one-time, like, growth that they're going to go through, they're going to take advantage of downturns, and the actions that they're taking right now on the next one, and just continually compounding both their own development as well as their asset base.

And, and their capabilities, like what they're doing now is going to position them for that success. And so they will look a lot, a lot like a middle market manufacturing company. They'll have an HR team, they'll have advanced systems, they're going to have a hell of a lot of AI given the stuff that, you know, we both work on a lot. And I think that they're going to be sitting on an exceptional asset base if they went in that, that approach, or they will be in just a competitive hellhole.

Shay

Foulk: Um, because I think, uh, automation at that point will be so aggressive that it'll be really hard to capture value if you don't own your So I, you know, I could see from a tangible aspect that operation going from owning 1,000 acres to 2,500 or 3,000 when you look at the growth that's occurring on the back end. So they're purchasing the asset that in theory is appreciating. And I think, I think this is what I want people to really understand out of this conversation. And you're experiencing it right now as we sit here and record at the beginning of 2026, the massive amount of inflation that has occurred over the last 5 years and even over the last 9 months. Look at what gold has done. Look at what silver has done. We are in right now a K-shaped economy. Those with assets are running the show and those without assets are getting marginalized and getting squeezed.

And I think there's at least some variation of that moving forward. That, again, it's not a fearmongering thing.

Ben

Gordon: It's—

Shay

Foulk: we're not trying to sensationalize. But it is important to realize what's occurring and take a serious introspective outlook at your farm and say, do we need to own more land? Or do we need to make diversified investments? Or do we need to differentiate ourselves in such a way that we don't fall behind because, you know, you and Damian and myself were on a podcast on Damian's Business of Agriculture and you had made the comment, we are still highly fractionalized compared to Brazil, South America production, Russian production. Australia. Yeah. I mean, yeah, the new 61-foot Draper heads, 90% of them are going to Australia because of the size of farm operations and the size of fields out there. So from a, just purely from an outlook standpoint, am I off base by kind of making some of those presumptions, or do you, do you think that's aligned with the truth?

Ben

Gordon: I mean, I think it's aligned with the truth. I also think that there is, you know, there's a, there's a ton of different scenarios that go out there. And so I just kind of focus in on like, what, what can we do today that prepares us both for that like massive scaled commodity world or unique opportunities to fill a niche that might fit a more localized view of like what you want to run. Just be honest about where that's at and be open and be hungry for it. And I think in either of those scenarios, being able to have the discipline to find the extra cash in the operation, invest it smartly, find different partners that are out there more than just like what we're doing at Fractal, like find those— find as many of those chess pieces for you to move around. And just be really realistic on where they're at.

And if you're not out there like trying to pound the pavement to go find that, there are people that, that are out there doing it and there's just a lot of opportunity for them. And, you know, I just think it's— I think it should be really exciting that there is going to be that opportunity for this next generation of farms to go get out, go get after it.

Shay

Foulk: Okay. So a little bit more prognosticating or pontificating here. I got to— I got a question for you. The fractionalization that we're talking about, you look at the American producer today, you know, average farm, 700 to 1,200 acres, whatever it is. What do you think realistically from a commodity production standpoint in the US that could or should look like in 25 years? I have my opinions that I'll share.

Ben

Gordon: I think you need to essentially be at a spot where most of your procure, like fertilizer, your bulk goods, you can directly procure. So depending on where you're at, that's somewhere between 4,000 and 8,000 acres. So that'll depend a little bit on your productivity. Where I'm from in the Dakotas— well, if I'm— if I go beyond the Red River Valley where I grew up, it's going to be a lot more than where it is in the Red River Valley, and certainly more than UI State folks in that. But I'm— I think you're going to be in that— it's going to be in that 8,000 to 20,000 range is going to be kind of that minimum competitive scale to win on procurement and selling power.

Shay

Foulk: So you said minimum competitive scale. I think there's also a term minimum viable scale that we've referenced. And it doesn't mean that you're burning the world down from a profitability, but you're making your payments, you're paying for your cost of living, you're reinvesting back into the future. I think that minimum viable scale, for sure, by 2050 is probably 2,500 acres with a realistic base of probably needing a lot of operations to be at that 4,000 to 8,000. And I don't say that just from an outlook of the clients that we work with. I say that from an outlook of compare it to— everybody says, oh, well, you hear about these 30,000-acre or 100,000-acre farm operations in Brazil. And it's like, yeah, those are also the same operations that are making 30% profit margin. I mean, they are dominating the landscape because of the profit margin that's built into that.

And it doesn't matter when you like it or not. It's just the reality of it is what it is. You are in a commodity business, and commodity businesses are going to do what commodity businesses do. They're going to force out the inefficiencies. They're going to force out those who can't stomach the outlook for it. And you can, you can kind of gripe and moan about that as much as you want, or you can, you know, hop on the bull and go for the ride. So Hopefully, hopefully I'm not looking at that from too much of a negative outlook, but I do think it's a reality.

Ben

Gordon: Yeah, I mean, I think, you know, dealing with those, you know, the highest form of optimism is realism and then action therein. So, I mean, I think the good news is, is that a lot of folks are making those steps, and it starts with, you know, what we started out with, the brilliant at the basics. Know the numbers that you have, know what your profit margins are at, what you can do, market really, really well, and then get prepared for those opportunities. Have that with your banker, find those other partners. And if you need an extra voice, like, go get that extra help. I mean, you guys obviously do that, but like, go ask for help on some of these big decisions. Because, you know, as a venture-backed CEO, I have way more support for a farmer, and their job is way harder than mine. And that kind of blows my mind.

Like, I get advisors, a board of directors, I can ask all sorts of people and they'll pick up the phone for 60 minutes, and that's expected. And I kind of wish our farming community would ask ask a little bit more from others. So, uh, all— not that I know a lot of answers, um, throw my email in the, in the show notes. It's ben@fractal.ag, uh, out there, um, because, you know, I think it just— it's helpful to run these things by somebody else often.

Shay

Foulk: Yeah. And, you know, look at— to scale back from the long-term outlook, you mentioned some really good short-term actionable items. And, you know, one of them is knowing what your cost of production is. It seems like we harp that, that That's the basic outlook. But if you don't have a pulse on this, none of the other stuff really matters. Because you don't— you can't set margin targets, you can't reinvest cash that you don't know whether you're going to have or not. And you can't do any sort of strategic planning. I think another one is your 3-year outlook on not only capital expenditures for equipment and things like that, but what are the other things, the land purchases, the infrastructure upgrades, the, the shops the capital that you're going to need to spend in order to add more employees, because you're going to be able to pick up another 2,000 acres or whatever it is.

Yeah, and I would recommend people reach out to you, Ben, because I think the tool that you guys put together on that did a good job.

Ben

Gordon: Yeah. And like, we're always happy to have a conversation. It just comes down to like, is this a fit? And where does it go? Maybe the last like little plug, I'd say for folks on the proactivity, don't shy away from those landlord conversations, make sure the other land management folks— these are my competitors, still go talk to them. Uh, make— let them know that you're in the market either on renting or buying. Um, oftentimes just following up after an auction and saying, hey, I would, I would pay this for it if it falls through. We know a lot of folks that have picked up some attractive ground that way. Um, and then, uh, I just harp back at that collaboration piece to a point where, you know, if you're not, um, if you're on— I think it was— was it— did Chris do it on 19 Minutes?

Shay

Foulk: Or did you— 19 Minutes podcast?

Ben

Gordon: Yeah. So if, if you are not subscribed to 19 Minutes, the first 5 folks that email me or DM me on Twitter, like, I am happy to send you an Amazon gift card or a Venmo for whatever the first month, or no, first month is free.

Shay

Foulk: Yeah, the first month's free. So Ben is very nicely offering to give you a free month.

Ben

Gordon: I will pay for the next month after that. It's just to shut Shea up on where it goes. It is so worthwhile. And I've seen some really, really cool situations where a farmer was essentially farming away their equity to going and being competitive. Through a collaboration. And like, that is just a really darn cool thing to see because you see like high-quality managers get to exercise, you know, kind of their potential, um, which you can't hate that.

Shay

Foulk: Well, and this is, this is back to the comment of don't let a good crisis go to waste. So two, two examples that I want to point out on that. First of all, if you can't collaborate, you're probably going to have a hard time figuring out transition planning, even if it's someone within your farm operation, you know, a son or daughter or, or nephew or someone that you respect, uh, that has the ability to take over. Because the fundamentals and the structure are the same. It's building out professionalism, it's building out processes, it's analyzing things from how you should be analyzing it as a business owner and outlook. So it kind of struck me here as we were recording that if you can't collaborate, you're probably going to struggle with transition planning a little bit.

And, and that leads into the transition planning piece of you might be listening to this as the senior operator that doesn't have an interest in farming 8,000 acres. And doesn't have an interest in what a potential reality of the future can look like, whether you're optimistic about it or not. But there might be someone in your team that's highly capable of doing that. Don't delay transition because of the uncertainty of the future. Lean into the transition with the idea that you can see the next generation succeed and watch that during your lifetime instead of delaying it another 10 years. And now the person that was 32 or 35 and your operation is now 42 and they got kids and they're not as aggressive and they don't have the optimism.

I mean, there's, there's a lot of family and operational dynamics that are involved in that, uh, but don't, don't let that good crisis go to waste to where we sit here in 2026 with this optimistic outlook of the future. So, uh, I think this has been a really good recap of the workshops, um, the survey that I had done on Joe, some of the conversations we had here at Top Producer. What are your parting thoughts, Ben, for the audience to think about as we move forward?

Ben

Gordon: Yep, I would just say, you know, obviously planting's right on the horizon. It is going to be a long and late land buying season. There's still going to be a lot that's going to shake out. So I would get moving now on that kind of proactive approach where you see opportunity. If you can pick up those acres with the existing, you know, labor and equipment, they are the most profitable acres you can add. Play that offense and defense. You don't have to believe all the prognostications that especially Shea likes now. She's been spending too much time with Damien. But But being able to, regardless of scenario, improve your operation today, build the opportunity for the future, like that gets me really excited. Give us a shout at Fractal.

It's just www.fractal.ag on that, just to see if we're a fit or at least start the conversation because we like to get to know people before we just go do something that's not transactional. And just good luck to a lot of folks because I don't think we're going to— it's luck and opportunity is really like that preparation piece. And I am optimistic that that a lot of great operators— like, this is going to be a positive inflection point for them.

Shay

Foulk: Absolutely. My takeaway is if you guys have not sat down— and I know most of you that are listening to this were not at the Fractal Workshops— if you have not sat down and looked at the risk that you have on rented land, and/or the question that I posed in the survey of how many acres could you buy if all of your rented ground came up for rent in the next 10— or came up for purchase in the next 10 years, you need to go through both of those exercises. You need to do a risk assessment for your business and probably get smacked in the face a little bit and just address it. You know, the, the best part about this from an optimistic standpoint is you can control the controllables, and there are things that you can do in the meantime to drive your success. By the way, I know all of this sucks while you're looking at low profitability or no returns, there's no better time to do it.

Truly, there's no better time to do it. Because what's going to happen as soon as we get an increase in profitability, land rents are going to go up, inputs are going to go up, land prices are going to go up, you're going to have more supply on the market from a land standpoint. Get ahead of this now and take advantage of it. I think it'll pay dividends long term. So Ben, thank you so much for the conversation.

Ben

Gordon: No, thanks, Shane.

Shay

Foulk: All right. And we will catch you next time on the Ag View Pitch.