The numbers were gut-wrenching, but for the Kuhns the toughest part of what Ferguson and Van Dusen had to report was how they were going to turn Kuhn Farms around. The consultants tried to be gentle. They said that although the Kuhns' success in developing their family corporation to its current size was "genuinely impressive" and that their imagination and hard work had taken them a long way, because of the operation's size, the vagaries of the weather, and the volatility of agricultural commodity prices, the Kuhns had to reduce their risk, with detailed financial planning, systematic controls, and forward marketing. That was all well and good, and for a fee Ferguson and Van Dusen were willing to teach them the techniques they would need. But the first step in the process was the worst for both Kuhns. To reduce the intolerable burden of their short-term debt, the Kuhns would have to sell land. "I cried," says Dorothy.
"I took a real dim view of it," says Keith. "We didn't purchase the land to speculate. We expected it to be in the family long after we were. It's a very bitter pill, until you realize the land is killing you."
Ferguson also recommended that they restructure their cattle-feeding program to feed cattle for investors instead of owning the beasts themselves. This, too, was not easy to accept.
"It's a little like running a full-time babysitting service," says Keith. "People thought we were too proud to do it. In the Midwest you do your own thing. You pay your own bills. You feed your own cattle. You do your own electrical work, your own plumbing. And you own the cattle you feed."
Ferguson was saying that it was time to get into the service business, and that was a long way from where the Kuhns were. But farming the way their grandfathers had farmed was no longer possible.
Still, said Ferguson and Van Dusen, if the Kuhns were willing to make those admittedly drastic changes, the consultants were "cautiously optimistic" about the future. Dorothy and Keith would have to stick to their budget with the 98% accuracy that Ferguson preached was possible, forward-contract enough of their crop and livestock sales to guarantee two-thirds of their incoming revenues, and allow outside investors to assume a significant part of their financial risk. If they did so, not only would their operation become profitable, but they would be able to forecast and control their revenues, expenses, and income to a degree that much of the agricultural world was saying was impossible.
The Kuhns didn't want to sell their land, and they were not completely convinced that they could project their income with anything approaching 98% accuracy, given the volatility of prices and the effect of the weather on crops. But nobody else was offering any better answers. They could sell the 250 acres the PCA wanted them to sell and hope that commodity prices would go up and interest rates down, and they would be able to farm themselves out of trouble. But they realized that was only a temporary solution. The Kuhns had built their house on top of a hill, they had three children to feed, clothe, and send to college, children who played with toy John Deere tractors, combines, and front-end loaders. They had tied up their lives in farming, and they wanted to make money. Following Ferguson's and Van Dusen's suggestions seemed to be their only hope of doing both.
Even when Keith and Dorothy agreed to make the changes that the consultants thought necessary, their road was neither smooth nor straight. Although expenses and income for the year had been projected in excruciating detail in the operations review, the PCA balked at lending the Kuhns the money they needed for operating expenses. There were no buyers for the land, and short-term debt didn't allow the Kuhns the luxury of waiting for one to show up. They persuaded relatives to back Keith's mother in a limited partnership that would buy the land Keith and Dorothy had acquired and then lease it back to Kuhn Farms to work. Even when they had put together a prospectus for their investor cattle-feeding venture -- including costs down to the last pint of feed corn; pictures of the family homestead; and recommendations from local veterinarians, an Iowa State University livestock specialist, and the territory manager of their feed company -- they had to make many calls and write letters to track down potential investors who would buy the 2,000 head of cattle that was the minimum Keith and Dorothy could feed profitably. They got their first 600 cattle from a neighbor who fed 6,000 of his own but had more than he could handle. They made deals with investors in Montana and Chicago who needed tax breaks. Keith still makes the rounds of the farm every morning for strategy sessions with his men. But he has had to give up time on the traetor to spend it on the phone with investors. Dorothy has probably devoted more time to lenders in a year than Keith's mother did in a lifetime.
Farming is changing in Woodbury County, Iowa, and as usual, Keith and Dorothy Kuhn are at the leading edge of that change. "We're still not sure if it was the way to go," says Dorothy of their land sale to the family and the investor feeder cattle operation. And they won't know for a number of years. There have been times when they have wondered whether all the pain they have had to go through has been worth it. But even with no-till planting, investor cattle-feeding, and cultivation of rented land, Keith can come home for lunch, talk over the investor program with Dorothy while his youngest, Kevin Michael, climbs on his knee, and look out across fields that are still in the Kuhn family, even if he doesn't own them in the way he would like.
