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Farmers for the Future: Opportunity in adversity

Agriculture.com Staff 01/10/2008 @ 9:58am

The tabletop flat James River Valley in northeastern South Dakota features many sights that are easy on the eyes.

Blazing scarlet sunsets. Nighttime skies illuminated by an immense sea of stars. Rainbow-color ring-necked pheasants skimming the tops of cattail-lined sloughs.

On the downside, its volatile climate makes it a tough place to farm. Some 2007 weather lowlights:

  • A raging late-February blizzard.
  • A 10-inch overnight May rainfall.
  • Extreme late-July heat that killed over 1,000 head of cattle in the region.

This is the whipsaw weather Fred Kalt faced when he began farming near Mansfield in the mid-1930s. Fred's son, Marvin, farmed full-time until the mid-1980s. Marvin's son David farmed with Marvin after graduating from college in 1978. David continued to split farming with off-farm finance jobs in nearby Aberdeen, South Dakota.

In the meantime, David formed a machinery-sharing arrangement with a Northville, South Dakota, resident, Barry Smith, who also works in Aberdeen.

David's son, Bradley, 19, is the fourth generation of Kalts to farm. Like previous generations, Bradley is making opportunities out of adversity. That played a part in how he built the farm's cow herd. "There are always lots of opportunities," says Bradley.

David knew his son would farm when Bradley was a young boy.

"We had a cow in a box stall that was just about ready to calve," recalls David. "Bradley was in there with me. It was about 2:00 or 2:30 in the morning when the calf came. Bradley was with me all night and helped to pull the calf."

Bradley continued to show interest in cattle while growing up. When he was in eighth grade, a pasture-scorching drought prompted many cattle producers to sell calves off the cow early. Bradley and a farm employee bought 100 calves in June and July and fed them out to fall.

Young Bradley continued to eye opportunities as he rebuilt the farm's herd with 12 Angus cows in 2001. The most recent move occurred in January 2006, when he doubled the herd from 75 to 150 cows.

"The two things I've learned in the cow business are timing and patience," he says. "Last year, I wanted to buy some cows, but I thought they were priced too high. Then, I bought them in January, after the price dropped $80 to $100 (per cow)."

No-till is another technique the Kalts have used to trump adversity. The area contains high-clay gumbo soils. They're a conventional tiller's nightmare, since they are sticky when wet and hard as concrete once they’ve dried.

However, no-till has worked well on these soils. "Once they dry out on top, they're fine," says Bradley. "Even with the 10 inches of rain we had in early May, we were planting eight to nine days afterward."

David Kalt keeps his share of the machinery and other farm assets in a C corporation (C corp) business structure. Like other corporate structures, C corps have limited liability protection and tax advantages. Any profits made are taxed at the corporate rate, which is lower than those paid on an individual rate.

David elected to keep land out of the C corp. "It lets you know if the farm is making money without any increases in land values," he says.

Currently, David is selling or gifting C corp shares to Bradley as part of a succession plan. These shares include assets like machinery and cattle. Bradley plans to use these assets as a means to boost the farm's beef herd to between 180 to 200 cows. This increase also would boost efficiency by spreading nearly equivalent input costs over more cows.

Bradley also plans to use assets contained in the C corp as a means to garner more land. He'd like to increase their mix of 2,000 crop acres and 1,000 pasture acres that's 60% rented and 40% owned to 4,000 total acres. "Having more land lowers the cost of equipment," he says.

Meanwhile, Bradley continues to love farming. "I could never see myself working in an office job or working for someone else," he says. "I like being my own boss. There's a lot of excitement going on, and I like excitement."

The tabletop flat James River Valley in northeastern South Dakota features many sights that are easy on the eyes.

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