This episode of Outstanding in the Field welcomes Marty Lau, Darrin Gilley, and Danyell Maloney. Marty Lau is Energy Manager at First Coop in Cherokee, Iowa. Darrin Gilley is the Manager at Friona Wheat Growers, a cooperative in the northwestern Texas panhandle. And Danyell Maloney is a Project Manager with Delmar Commodities in Winkler, Manitoba.
Listen in as host Mike Terning discusses the everchanging cycles in the ag economy from the unique perspectives of these guests.
Mike Terning: Hello, this is Mike Terning. This is another episode of Outstanding in the Field podcast. Today I’m in Cherokee, Iowa visiting with Marty Lau. Did I say your last name right Marty?
Marty Lau: Yes, you did.
Mike: Alright. Could you please introduce yourself and your roles and responsibilities here at First Cooperative?
Marty: My name is Marty Lau. I am the energy manager at first coop at Cherokee, Iowa. New to the role, just started as of April 1st. I’ve been with the company for about seven years. I was in the sales role underneath the energy manager that was here for five and a half years with him before I started in this role.
Mike: Prior to your career at First Coop, where were you at?
Marty: I farmed up until just a year ago. I also managed a company that raised replacement heifers for a bunch of dairies in northwest Iowa and was the feed department manager at two different coops in northwest Iowa all during that same timeframe in the last 15 years. I’ve been involved in the coop system for about 20 years, a little over, in virtually any capacity. I started hauling fertilizer and hauling feed mix and feed. Then I went into sales and the feed department managers and various roles at the coop.
Mike: Okay. Well obviously, as a producer yourself for a number of years and then serving growers, you’ve probably seen a few different cycles in the ag economy.
Marty: Oh yeah, very much so.
Mike: So, what are our listeners here know… Give them a sense of what you see happening with the growers with the current farm economy.
Marty: Operating lines of credit are getting tight. If you look at, compared to three or four years ago when grain markets were much better, profitability of the farmers were much better. Now we’ve turned that cycle around just to the opposite to where input costs are still rather high and especially energy costs have continued to rachet up this year. Grain prices are suppressed. Farmers have felt that pinch to where they’re looking for ways to try to be as efficient as they possibly can and not spend any more money than absolutely necessary. So, we’ve seen operating lines of credit get fuller to where, like as our energy customers are concerned, we used to see a lot of prepaid dollars come in to contract their fuel and their propane for their fall and winter needs. Now we’re seeing to where they’re wanting to book and do a firm book and just do a partial money down type contract instead of prepaying everything. So, it’s tight. The ag sector profitability has eroded quite a lot.
Mike: So what kind of strain does that put on you and your team relative to energy sales?
Marty: Well, I don’t know if it necessarily puts additional strain as much as it does the accounting departments need to make sure that we’re not getting a spread out on our accounts receivables. Then it does, to a degree, cause guys to be more hand to mouth and not fill up as early as they normally would because they’re tying cash up earlier than they would otherwise necessarily have to do. So, we’re coming into fall with farmer’s that are having empty tanks.
So we’re, on our team, we’re trying to rev these guys up to where we want to get you filled now because if everybody goes into this fall empty and we have a collapsed time period with which harvest is going to take place, we could very easily run into a supply crunch to where we can’t get product where it needs to be when it needs to be there.
So, we’re trying to do some things through our programs and procedures that we have in place to try and encourage these guys to. Even though you need it till October per se, we’re going to try to do some things monetarily price wise or contractually to get you to fill now or earlier than normal so that when we do hit the crunch period, we still have product to be able to get where it needs to go.
Mike: So, you and your team are trying to be very proactive with the growers?
Marty: Yeah, proactive. We like that much better than being reactive. You know reactive is when we get into the crunch period and we’re limited on product to get it everywhere where it needs to be when it needs to be there. So, I would rather be on the proactive side than the reactive side. Currently through the sales and delivery side and accounting side, I probably have about 20 people that work directly for me in the energy department through varying capacities of roles, sales, delivery, maintenance, service work, and then the girls that do the accounting side of things and inventory side of things.
Mike: How many trucks do you have, delivery trucks that typically on road for energy?
Marty: 10 typically. When we get into the heat of the battle—by that I mean in the middle of the winter when it’s really cold and we’re delivering a lot of LP—we could conceivably with refined fuel and propane have 13 trucks on the road on any given day.
Mike: Okay. So, a lot going on.
Marty: There’s a lot going on in a very short period of time.
Mike: Then I suppose you deliver diesel fuel out to the fields for the combines and the cart tractors and all that.
Marty: Yep, yep we do. So, there’s a lot of product that gets delivered in a very compressed period of time. So, you have to have adequate supply. You have to have the trucks in place to be able to do it so that when it’s crunch time, you can get it hauled and get it done.
Mike: During that compressed period, during harvest, some of your folks, how long do they work? What’s a typical day in their life?
Marty: That’s a good question. I mean typically somebody in some capacity in the energy department is at work by 6:30. Whether it’s on the LP service side or myself or the drivers, it’s daylight till well after dark when we’re in crunch time. It’s not uncommon at all for these guys to be actively at work for 14 or 15 hours. Having said that, we do have mandated standards that we have to abide by, but we have plenty of personnel, so we can swap out drivers if we know that we’ve got one guy that’s approaching his limitations. Then I can swap him with another guy and make sure that we get it done. It’s long days 6-7 days a week, holidays. It doesn’t matter. When it’s time to go, it’s time to go. Our team is very well suited for the task that they have in front of them. They’ve been doing it for a long time. They know what their job is, and they get it done very well.
Mike: Marty, is there anything else you’d like to inform our audience about what you’re seeing with growers and working with them?
Marty: The only thing I would say is that farmers are getting larger. They’re getting more technologically advanced. We have to be on the edge of this technology to keep up with these guys as they’re replacing the older folks so that we’re meeting their demands and expectations so that they’ll want to continue to do business with us.
Mike: Great. We spent some time together earlier today showing you what we’re doing on that side of the coin with some of our Greenstone solutions. Any feedback on that?
Marty: I think there’s some exciting things that are going to help us become more efficient, become more proactive. As I said before, proactive versus reactive with meeting these consumer’s needs of what they’re wanting to see and the speed with which we need to get it to them, and the accuracy with delivering it too. So, I think there’s some exciting things coming down the pipe.
Mike: Marty, thank you very much with spending a little time with me today.
Marty: You’re welcome.
Mike: The best to you as you continue to work with those growers through this period of lower farm income. I wish you the best.
Marty: You bet, thank you.
Mike: Today I have with me at the CINCH Customer Conference in Bloomington, Minnesota, Darrin Gilley. Darrin can you please introduce yourself to the audience?
Darrin Gilley: Yes. Thank you, Mike. I’m glad to be here. My name is Darrin Gilley. I work at a grain elevator. I manage a grain elevator in the northwestern Texas panhandle. We operate, we have about a little over 8-million-bushel capacity. We handle wheat, milo, corn, and barely. So, we do a little bit of everything. Most of our commodities go to feed lots and dairies in the area. So mostly feed production.
Mike: Okay, great. How long has your business existed?
Darrin: The actual business, Friona Wheat Growers, has been around for 60 years I want to say. 60 plus years. So, it’s established.
Mike: Is it a cooperative?
Darrin: It is a cooperative, yes. We have currently about 100 growers and we have about 400 patrons—landowners and things like that.
Mike: In terms of that number of active growers and patrons, have you seen a trend as to whether or not that’s changing?
Darrin: It is in our area. I know the average age of the farmer is kind of increasing throughout the years. What we’ve seen in the last few years is a change. We’ve seen a lot of younger kids move back in. Coming back home and farming the family farm. So, I mean we have an influx of those. Of our hundred, we probably have… I’m gonna say a good quarter of that would be 40 and younger. So, we are starting to see those kids move back. So, I mean that’s great for us.
Mike: As you see the younger generation taking over, what sort of changes do you see in dealing with the younger generation of customers or member patrons?
Darrin: That’s a good question. It’s a giant gap between those. So, our younger group is very open to using the technology that we have. So that’s why a big part of the reason why we’re with Cultura because y’all keep advancing the ball. Those younger growers are really wanting that technology and those updates. They’re mobile. They want to be on their phone. They’re kind of plugged in a little bit more than our older set of customers who like the hard copy. They want to call you and talk to you. They want to look at you in your eye. So, I think the younger generation is a little more open to technology and also kind of their marketing stuff. So more and more we can provide them. It’s a little better. It’s an interesting time that we’re in.
Mike: In terms of, you said the word marketing there Darrin. What sort of change do you see specifically relative to grain marketing plans with the younger generation?
Darrin: You know, I think the older generation was… They’re a little more hesitant to use the advantages that they may have in the market. They don’t feel comfortable with that. Whereas the younger set are. So, we’re able to at least help them manage their risk to some extent. That way they’re not completely out in the wind. So, it’s nice to see younger farmers taking that advantage of the market so they can stay in business. You know and helping them manage their risk. I think they’re more open to that. So, it’s good. It’s refreshing because then we can get more bushels. I mean at the end of the day, if we help them, it helps us.
Mike: What kind of mechanisms are you using to just try to help them have better results with their grain marketing plans?
Darrin: What we do is we look at our business kind of as a team. We have somebody that helps us manage our risk. We use advanced trading. Then of course he helps us kind of dive into what we need to be doing in a given year depending on what he sees and what we think may or may not happen. So, we allow our customers to tap in to his knowledge as well and their knowledge. So, we can either help them with us if they feel more comfortable working with us and coming up with a plan, all three of us together. Or if it’s just as simple as us making a connection with them so that they can come up with a plan. I think the steps that are moving forward, at least they feel comfortable doing that as opposed to the other generation of farmer that we have.
Mike: So probably a mix of offers—soft offers, hard offers.
Darrin: Yes. Options, spreads. Just kind of depending on what we need to do to help them capture as much as they can and set their base. That way they know they’re going to be profitable.
Mike: Are you typically doing that before the crop is in, or is it after it’s been delivered?
Darrin: You know, we do a little bit of both. Kind of just depending on the year. We’ll do a little bit before. We’ve put on some spreads or some options that way they can go ahead and contract the 100% of their crop before it comes in instead of doing the 15 or 20 because that’s always been a problem. Farmers don’t want to go all in. If you’re protected in the market and you have some sort of strategy in place, it allows them to be able to contract more with you. So, we do stuff beforehand and then also after the crop has come in. We have several customers that wait to market. That’s fine too. So, I think its kind of a mixture of both really.
Mike: It seems like there is, the older generation has a reluctance to forward contract. I’m assuming you’ve seen that?
Darrin: Yes, yes.
Mike: They want to wait until they know what they’re gonna get.
Darrin: Yes, yep.
Mike: Rather than doing it on a certain percent and trying to capture those opportunities. You came up here from Texas to Minnesota to join us at the conference. What’s been the highlight of the CINCH Customer Conference for you?
Darrin: You know, I spoke of being a team between our risk management and us, and I think it’s also a partnership. A part of that team is our software. It takes everything to make it go. So, coming up here and making the personal connections and putting names to faces is great, especially in the ag community. We’re still handshake people and we like to look people in the eye. So that’s a great part of the conference. Then a lot of times you get caught up in your daily routines and you don’t really think about some of these applications or things that the system has capability of doing, but you haven’t tapped into that yet because you get so caught up in the doing what you need to do. So, it’s nice to come here and listen and get new ideas and maybe different ways of how to make your system work better for you. So, it’s great. I thought it was a great conference.
Mike: Good, good. Is there anything that you saw that sort of excites you about what Cultura’s doing?
Darrin: That’s the nice thing, I would say, about Cultura is that you can tell that they’re constantly trying to move the ball forward and that it’s not just a stagnant software. It’s a moving and growing and almost a living thing in and of itself. So, it’s nice to see that. Whether you would ever use any of those applications or not, it’s just nice to see that it’s not just here’s the software and good luck with it. We’ll see you later. I mean it’s constantly growing and moving as is our industry that is growing and moving. It’s nice to see that our software is one step ahead of the game with that.
With that being said, the invoice application with allowing our people in the warehouses to be able to capture that information and send it directly to the farmer is a great tool. I think the CINCH website where we can come together as a community and maybe discuss problems that we may or may not have… We may be able to answer our own questions and free up your time, people that are having to run trouble tickets. We can answer our own questions maybe. So that’s interesting in and of itself too.
Mike: Is there anything else you’d like to share with the audience here before I let you go?
Darrin: Not really. I guess I appreciate you having me on here. It’s great to be here in Minnesota and see something new. If you’re ever in Texas and you need dry, hot wind, come by Friona.
Mike: Well it was a pleasure visiting with you last night. We went to the Mall of America and I got to meet your wife. It’s always fun to see when our customers bring the family along for events like this to kind of combine a little play with the work side.
Darrin: Yeah, that’s right. Exactly. All work and no play is no fun.
Mike: That’s right. That’s right, Darrin. So, thanks again for doing this for us and attending our conference. The best to you as you go back to Friona.
Darrin: You bet. You as well. Thank you so much.
Mike: Thank you, Darrin.
Today I have the privilege of chatting with Danyell Maloney from Delmar Commodities. Would you please introduce yourself to the audience Danyell?
Danyell Maloney: Sure. My name is Danyell Maloney. I’ve worked with Delmar on and off for about five years now. I started more with an accounts receivable/accounts payable position. I moved into more of a grain accounting position. Then I moved into a seed administration position. Then I took some time off actually and I came back. That is when they implemented CINCH into our company is when I was gone. Six months after implementation, I came back to Delmar. They phoned me up and asked me to come back and help them out. We struggled quite a bit in the beginning. So, my job was to find where we struggle and what we can do to improve those struggles.
Mike: Tell us a little bit about Delmar Commodities. Where is it located? What does it do?
Danyell: So, our head office is located is Winkler, Manitoba. We are a very unique business. We are very diverse. We have five grain elevators across Manitoba. We have a soybean crushing plant that we make soy oil and soy meal with. We have a special crops bird food packaging facility. So, we take bulk product, package it into bags, and ship it out as bird food. We are also the distributors for Legend Seeds in the U.S. So, we distribute Legend Seeds in Canada.
Mike: So yes, quite a diversified business.
Danyell: Yes, very diversified.
Mike: So, you’re basically, you take what the farmers grow… Do you contract with the farmers to do the growing as well?
Danyell: Yes. We do buy from producers. Contract that they bring their grain into the elevator and then we sell to our customers.
Mike: Okay, alright. So, it sounds like you do a fair amount of processing.
Mike: With the crushing and that and packaging. And cleaning, I’m sure, with the bird seed.
Danyell: Yes. Actually, we have another facility that does have cleaners at it. So just for regular grain products that they needed cleaned or whatnot, we can do that as well.
Mike: Okay. In terms of your experience going from the previous system to now CINCH, what would you say have been some of the benefits to your organization, to Delmar in that transition?
Danyell: Well, we were using a DOS based program before. So, this is a major upgrade for us. Going into Windows, everything was manual. Everything was handwritten. We have now gone to all printed documents. So, all of our scale tickets are no longer handwritten, scribbled on, signed that you can barely read. It is all printable documents. That was probably our biggest benefit from it.
Mike: Is this your first time using the Microsoft Dynamics GP platform as well?
Danyell: Yes. I believe there’s other people in the company who have used the platform in the past, but it is new to Delmar as a general rule.
Mike: So, in terms of some of the benefits that you think you’ve gleaned by printing the documents, what sort of value do you think that’s added to your business?
Danyell: Quite a bit. I mean there’s not so much confusion. Is this an A or is this a B? Is this number an eight or is it a three? There’s a lot of very messy hand writers. So, to have that clear piece of paper and know exactly what it is, it’s great. Being able to PDF things. There’s a lot of great features that we did not have in a DOS based system. So, it was definitely a major upgrade for Delmar.
Mike: Oh, good.
Danyell: A lot of value there.
Mike: How many grower customers do you have roughly? Do you happen to know?
Danyell: I wouldn’t even be able to tell you. It would definitely be up there at 2,000 to 4,000, I’m sure.
Danyell: They are not consecutive customers. I mean sometimes a farmer’s going to take their grain to Linear Grain down the road. Sometimes they’re gonna bring it straight to us. It all depends on the market, where they’re going to get the price, and who’s gonna treat them better and everything. Delmar is very much dedicated to relationships. That is kind of our slogan. That’s out motto. So, we are very much, we want to meet our producers. We want to do everything we can to make them happy. It’s the same thing with our customers as well. We are often that company that’s catering to the customers. What can we do to make your experience better with Delmar? If there is issues, we want them to be addressed to us. We want to have that conversation with people and build that relationship with them and keep those relationships.
Mike: What sort of challenges are some of your grower customers having this year? I’ve not been up to Canada recently. Any unique conditions up there?
Danyell: Well we have had a lot of hail this year. So, it will be a lot of crop insurance claims. That doesn’t really affect Delmar in the same way. We’ll get phone calls from insurance people asking them for copies of settlements and stuff, but it doesn’t really affect us a whole lot other than the market and what’s out there as well. Their biggest thing with us though, between us and the producers, is when they do settlements and they want splits. Trying to get those splits worked out, and they never tell you ahead of time, right? So, trying to get the producer happy with all of their splits is sometimes our biggest challenge because they never tell us ahead of time. So, we have everything entered and we think it’s going to be a certain way. We go to settle it and they’re like, oh no. I want this split four ways and 50% of this one split is going to go to this person. So yeah, it can get pretty messy. That’s where we have a lot of challenges.
Mike: In terms of trying to have tight relationships with your growers, do you have a team that works on marketing plans with them to try to secure some of those quantities in advance of harvest?
Danyell: Not really a marketing team I guess. It would be all of our managers. So, Dale Hyde is the president of Delmar Commodities and he is also the lead merchandiser. He guides all of the managers in the right direction when they have questions, if they need help with any of that. He’s the one that pushes them. Okay we need to buy a lot of this commodity. Go and find all of your producers that are growing this and start buying it. Same with the sales side. He’s the lead on that as well. Delmar is very diverse, but we’re also very small in a sense that we have 16 people in our head office that we all sit side by side. It’s all the departments grouped together. We can communicate if anyone has any questions. We sit in an open room and we have very good communication. So that’s where it all stems from. Then, like I said, we have seven or eight locations out there. Each location has a manager. It’s the managers that are doing that marketing.
Mike: Interesting. In your role, what sort of questions do you get from the merchandizing and origination team? What’s kind of a day in your life typically?
Danyell: They want everything simple. Sales people do not like entering things into a computer. They do not like… You have to do this except for when it’s like this, then you have to do this. You have to make these little changes. They hate that. That’s when I get the, “Can you just do it for me please?” Because they want it straightforward, they want it simple, and they want to be able to be standing there with their customer and say, “Okay the customer wants this, this, and this.” Enter it and away they go. That’s probably the biggest thing for them. It stems into other situations. Like I said, when they want splits done and things like that. Those are a lot of my questions.
Mike: Well, you flew down here to Bloomington, Minnesota for our CINCH Customer Conference.
Danyell: I drove down.
Mike: Oh, you drove?
Danyell: Yes. It’s a seven/eight-hour drive.
Mike: Oh, okay. Alright. Sort I didn’t… I thought you flew, but okay. Alright.
Danyell: No, that’s okay.
Mike: Alright. Well thanks for making the drive. You’re gonna hit the road this afternoon?
Danyell: We’re staying until Sunday.
Mike: That’s right. Enjoying what Minneapolis, Saint Paul has to offer, huh?
Danyell: Yeah, we’re gonna go check out the city.
Mike: Good, good. I was gonna ask what’s kind of been the highlight of the CINCH Customer Conference for you?
Danyell: Definitely the third-party products. Being able to search for customers by any letter in their name and that is going to be huge for us. I’ve already asked for the quote on that. So, it’s a big one for us. I have all of our merchandisers ask me for something. They’re like I can’t see the town that this person is from, and I have to enter programs for them because there’s levees in each province. So, they need to know province they’re from. But when they’re making a contract, they can’t see that. They can only see the name of the customer. So that’s going to be something that’s very big for us that they can see the province that the customer is from at the time and being able to search for them by any part of their name because we do have a lot of customers that go under a farm name, but the contact is their personal name. You go into the system and you search their personal name, oh they’re not in the system. Okay well we’ll add them. We’ll no they’re not in the system because they’re in the system under their farm name. If they had a searchable contact, then it would work for us. So that’s going to be a big one for us.
Mike: That’s the Rockton Smartfill?
Danyell: I believe that’s the smartfill piece that was demonstrated here, yes.
Mike: Great. Is there anything else that you learned or heard that kind of excites you from what happened at the conference?
Danyell: Yeah. I had a lot of good conversations with some of your customers, and even some of the CINCH pros. It was great. I got to sit at a table at lunch with Mark Hisken and some of his customers and just discuss some of the things that they were using and how we could be using things better. That was great. Great collaboration.
Mike: Okay, good. So, would you recommend attending. Some of our audience are probably CINCH customers. Would you recommend that they attend the next conference?
Danyell: Yes. I found it very valuable to us. There’s a lot of things that this system can do that we are not using that we could be using. Some of it, yes there is quotes involved and we would have to pay for it. Some of it they have said is absolutely free and we’re not using it. So definitely we’re going to start getting into some of that stuff as well.
Mike: Is there anything else you’d like to share with our listening audience as it relates to your role or technology or Delmar Commodities or anything else?
Danyell: I will say there has been some struggles with CINCH getting it up and going. We found it very, very difficult for some of our older employees to make that change. They’re not comfortable making change. So, a whole new set of Windows and everything was very overwhelming for a lot of them. There’s a few things in there that we don’t like about the system, but we have brought those concerns up to certain people with CINCH. They have made progress with them so that they are working on those fixes for us, which is very much appreciated. It’s nice to see that our concerns are going not unheard.
Mike: Okay. Well we appreciate that feedback and for your willingness to share that with us and such. Well Danyell, I really appreciate the time that you’ve given me.
Danyell: Well thank you for having me.
Mike: It’s been my pleasure and I wish you the best for a safe trip back up to Delmar in Canada.
Danyell: Thank you.
Mike: Thank you very much.