Randall isn’t checking in with employees in cubicles; he’s walking pens on his feedlot operation at Dell Rapids, S.D. At any given time, he has 12 to 14 pens with more than 2,000 head of cattle to check on every morning.
“Not everyone likes to do this, but I do,” Randall says of his morning routine. “I’m checking the water and seeing if they’re eating. This is the best way to keep track of their health.”
His personal attention should be no surprise, since the occupants of those pens represent a significant investment on behalf of Randall Enterprises. You could draw similarities here with Warren Buffett checking the stock market each morning.
Taking a page from Silicon Valley, Randall uses technology in his pocket to check in with various members of his management team while he’s walking pens. Those individuals — charged with business planning, financing, inputs, operations and risk management — are spread across multiple offices in multiple locations, including Huron, S.D., and Luverne, Minn.
This particular morning, before many of us have had our second cup of coffee, Randall has already talked with his CFO about a potential acquisition. It sounds like he must have quite the management payroll for Randall Enterprises. Not at all. He has the cooperative system.
“Troy touches a lot of bases within the CHS enterprise,” says Matt Mostad, a CHS Capital loan officer out of CHS Eastern Farmers, Brandon, S.D., and part of Randall’s team.
“Troy takes care of his energy business — refined fuels, lubricants and propane — with CHS Eastern Farmers. His agronomy services and inputs are here with Scott Link, his agronomist, and his grain marketing is here. On the cattle side of his business, he has Dustin Peterson with Fin-Ag and his animal nutritionist Scott Connot pulling together the CHS Value-added Cattle Program on his behalf. And helping make sure Troy manages his overall risk is Tim Hofer, CHS Hedging.
“We’re like a big web for Troy, communicating with each other and all working toward the same goal: his profitability,” adds Mostad. “But we each earned his business over time. It didn’t just happen.”
Success at the Margin
“I came back from college to farm with my dad in the late ’90s,” explains Randall. “He was a mechanic with a crop operation and no interest in livestock. But I knew 800 acres wasn’t going to be enough. Cattle was the only way to make it.”
Tragically, Randall lost his father to a farm accident several years ago, but he knows his dad watched with pride as they grew the operation, which now totals 1,500 acres and some 2,000 head of fed cattle, mostly Holsteins. The corn crop is typically planned for feeding cattle, with soybeans in rotation, but some years the numbers switch up the plan in unexpected ways.
“In our planning for last year, Matt and our agronomist ran the numbers and determined that it would make more sense financially to plant all beans and buy all my corn,” says Randall. “I trust their advice, so that’s what we did.”
David Kohl, ag economist and professor emeritus of agricultural finance and small business management at Virginia Tech, often talks about “success at the margin” and cautions producers to keep a close eye on results to ensure farm operation success.
According to Kohl, many farm operations took advantage of the ag economy “boom” to expand. Now they run the risk of “swamping the margins” if they don’t drive toward efficiency, monitoring each area of their operations closely and carefully planning additional growth. Randall says he looks to his CHS team to help him keep a close eye on his margins — today and for the future.
“We are right-sized for now,” says Randall, thinking about his sons, ages 15 and 13, who may want to be part of the business one day. “But I look to my CHS guys to keep me on track for the future.”
His team of “guys” didn’t appear all at once. Like any sustaining business relationship, connections were made slowly and trust was built over time. He recalls that it felt natural for his agronomy team to bring forward the co-op’s input financing program. “They already knew what I was doing and what I had done in the past, so financing with them was a no-brainer,” he says.
Collaborating on the cattle side of the business went a bit slower at first. “I met Bob Goetz [CHS Value-added Cattle Program manager] at a meeting and we talked a bit,” says Randall. “I remember being impressed with what Bob told me about the program, but it was a few more years before we got together. I already trusted Scott as my feed advisor and he connected us. Bankers can always claim to be ‘farm loan’ types, but Fin-Ag really focuses on cattle and puts everything together for you.”
Randall’s relationship with CHS Hedging for price risk management started with some hedging on corn and soybeans to manage price swings. Today he taps Tim Hofer, a CHS Hedging market analyst, for market intelligence and recommendations around livestock as well.
Team Randall at the Ready
“I talk to Troy nearly every day, sometimes multiple times,” says Dustin Peterson, livestock account manager for CHS Fin-Ag — aka CFO for Randall Enterprises. “He’s in the business to be a cattle feeder, and it’s our job to make sure he’s profitable. Troy is constantly tracking cattle sales in the area. He’ll call me about an upcoming sale and, based on what he’s looking at, we pull together his bottom line breakeven, his total cost to grow and when to sell. Then I might reach out to Tim and see what his positions are.
“Because I have his operation’s history at my fingertips — and others involved in his business are just a phone call away — I can get back to him with a recommendation in minutes,” Peterson says.
“We always want to be talking with each other because you make money when you buy cattle, not when you sell them,” says Hofer. “That way, we’re all seeing the full picture for Troy. We’re all focused on the same goal: his profitability.
“I’ve known producers who had to give up positions because they had a good opportunity in front of them, but the line of credit wasn’t there,” adds Hofer. “Our Hedge Line program with CHS Capital helps them make sure they’ve always got margin calls covered while freeing up that line of credit. It’s seamless between us.”
Randall says, “It’s easy for me to take their advice because they’re all so knowledgeable. Even when we disagree, I listen. I have confidence in them. They understand the business.”
Peterson considers the team a “second set of eyes” on Randall’s operation — especially Connot, who also owns cattle. Hofer acknowledges that many at CHS are still actively tied to a farm, so a shared passion for agriculture is a given.
“We’ve got boots on the ground,” says Hofer. “We’re right there getting our boots dirty alongside you.”
As CHS Nutrition consultant, Scott Connot is never farther than a phone call away from Randall, his operation and others at CHS.
“Troy and I talk weekly and I’m on his farm every couple of weeks,” says Connot. “We’re doing performance tracking as well as putting together nutrition plans. We’ve been working together for seven or eight years, so when he’s looking to buy, we have the tools to show what he can do to be as predictably profitable as possible. With history across his operation, we’ve come to understand his capabilities. That’s important to our recommendations.”
Mostad agrees. “That full view of an operation is really the only way to get a solid breakeven number so smart, safe decisions are made. It’s engrained in everything we do for Troy. It’s not ‘What can we sell him?’ It’s ‘What will make him profitable?’ We all have the same goal for him.”
Check out the full C Magazine with this article and more.