The Finances of Family Farms ft. Darren Hefty

Since age 7, when he began working on the family farm for a penny a week, Darren Hefty has been ingrained in the financial side of the agriculture industry. From funny memories of growing up on the farm to the days of expanding Hefty Seed Company, Darren shares his passions and hard-learned lessons with us.

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- I think if you do talk about money early and give people a little bit of responsibility, probably before they can handle it, they'll step up to the plate so that when it's time to make those big decisions, they're able to do it.[upbeat music]- Welcome to "Common Cents on the Prairie," a podcast dedicated to helping you demystify the sometimes complex topic of money. I'm Adam Cox, head of Wealth Management for The First National Bank in Sioux Falls. We're a community bank based out of South Dakota. In this podcast, we share expert insights from around the country and stories from our local community to arm you with the tools you need to make better financial decisions, because the truth is the more we talk about this stuff, the better off we're all going to be. Today I'm thrilled to be joined by Darren Hefty. Darren is the co-owner of Hefty Seed Company headquartered in Baltic, South Dakota. Hefty Seed now operates in 50 locations across 12 states, and it is the seventh largest crop production firm and the eighth largest seed retailer in the U.S. Alongside his brother, Brian, Darren co-hosts the Ag PhD television radio programs, as well as produces content for the "Ag PhD Insider" magazine. A fourth-generation farmer, Darren now lives in Sioux Falls with his wife, Shelley, and their six children. I hope you enjoy my conversation with Darren Hefty. Darren, welcome to the show. Thanks so much for joining me.- Yeah, thanks. I'm excited about this. I've been a fan of the show for a long time, so, good to be part of it.- I'm glad I found the one.- Good.[both laughing]- All right, let's start with an icebreaker. As you picture your dream garden, how big is it and what are you growing?- Well, it's funny you'd asked that because we are actually in the process of planning the dream garden out. And so my wife is not great with dimensions, and so when there was a little bit of snow on the ground, I actually stomped out what our path is, because I've even put flags out and she's like,"Nope, too small, too small, too small." So she always wants bigger. And so the garden now is 40 by 60.- Oh my.- And I'm like,"You realize how many weeds there are going to be that come up in that and how much work it's going to be." But she's got a lot of dreams about how many different things she wants to have out there. So that's where we're at now. 40 by 60.- 40 by 60.- Man!- That's a farm, not a garden.- It's going to be a lot of work.- Good for you. Well, if you ever need help weeding, don't call. All right. So let's start at the beginning, that's where we start all these episodes. What are some of your earliest memories around money?- Oh boy. Well, money was always talked about in our house, so, I know with some of your guests it wasn't. Ours, it definitely was. So, growing up on a farm in the 1980s, money and the lack of money were talked about a lot. So every expense was scrutinized, and every opportunity to make some extra money with livestock or crops or different things we were doing was definitely important.- Yeah. Tell me about the farm and seed business when you were growing up. What did it look like at that time?- Well, my dad started our business a couple years before I was born, so it just was always part of the world I lived in.- Yep.- You know, the fun things that I remember early were, my dad talked to a lot of people and he knew a lot of people and that was interesting to me. But there definitely wasn't a lot of money, everybody was looking at cutting costs all the time. So we were pretty small, we were one store. It was basically looked out the window of our house and it was a building just right across the driveway, so.- Oh, sure.- It was right there. We were always part of it.- Yeah. I don't know that everyone knows what it's like to grow up and work on a farm. Tell me about what a typical day looked like for you as a kid.- Well, as early as was safe, and safety was a really big concern for my dad and my mom, which was great. They were both very cautious about what we were doing and putting us in the right situation. So for me, I was I think seven when I really started having responsibilities, which sounds young for a lot of my friends that grew up in town, but at seven you can really do a lot of stuff. And my job was taking care of baby pigs. So we had a farrow-to-finish hog operation. So my dad thought 10 to 20 pound animals, Darren can handle.- Fair game.- Yeah, yeah. And I've got a really soft heart for animals. And so that was a great spot for me.- Yep.- And so dad would make sure all the big mother pigs were out of the way. I mean, they were 250 pounds or bigger. And he's like, "I don't want you to mess with them at all." And so he would put all of them out, and then it was just me and the baby pigs, which was me and a pitchfork and a few bales of hay and cleaning things up. And that's where I started.- Sure.- It eventually became five in the morning until I got on the school bus. And then when I got home, maybe grab a little snack, and go out and work for a couple hours again.- Yep.- That was the beginnings of it.- Yeah, I'm sure you were paid really well.- I was paid quite well. My brother, I think, was getting a nickel a week or something, and I was getting a penny or something like that when we were starting, right.- Yes, yeah.- Brian loves that. He kind of looked at me as his hired man of, okay, now he can do those jobs and I can move up to something a little bit better, but it wasn't much.- Yep. Yeah.- But it was a little something, and our big dreams with money at that time were,"Man, I'd really like to buy a pack of baseball cards." That was kind of our thing back in the '80s.- Yep, yep. And you were really good with pigs. I remember you were telling me a story once that like, you saw an opportunity to make a bunch of money and tell your dad, tell me that story.- Well, yeah, I was pretty good with animals. I had a good eye for them. My dad had a really good eye for cattle, and he could spot good animals there. But on the pig side, he taught me well. And I had a good eye for pigs. So by the time I was probably 10, he was taking me to the auctions, I was picking out which pens of pigs we were going to buy, so he was kind of grooming me to take that over. And so yeah, for the next few years I did. So I'm watching the grain markets every day, I'm watching the livestock markets every day.- And you were how old?- 10 to 12.- Awesome.- Yeah, in that range. And I really loved it. And I love math and I love numbers. And so I'm figuring out,"Okay, here's our cost of production." I know what the feed costs, I know what our corn's worth, and I know what these animals are worth. So my goal was to try to make money on these pigs. Well, in the '80s, there wasn't a lot of money on anything, and fortunately the hogs we could make a little money on. So I had figured out this batch of pigs. We made somewhere around 40 to $45,000. And so, I was really excited when I told my dad,"Hey, I've got pigs ready to go to market. We need to get the truck ready and get them to town." And he's like, "That's great." And I said, "No." I said, "What's really great, Dad, is we just made 40 or $45,000." And he's like, "Who's we?"[both laughing] That was my first big lesson of money. I was like, "Oh, I guess they're all his, and I'm getting paid a nickel or whatever."- Yeah, right, right.- So that was interesting.- Oh, that's funny. So at some point, I think maybe it was around age 13 or so, your dad decided you need a little more help on the farm. What did that help look like?- Well, I made a big mistake. One day, so my dad was responsible for grinding feed for me. He didn't want me around the PTO. He's like, "I just want to keep you away from that for a while. I don't think it's safe yet. I don't think you're careful enough." And so that was fine. So I did everything else except for grind feed. And so dad had all these other jobs he was doing, and one day he just didn't get to it. And I got home and feeder lids are banging, the feeders are empty. And I was mad because I really cared about those pigs and they didn't eat all day, and that didn't sit well with me. And I think I got about one sentence out to my dad about how upset I was with him, and he quickly put me in my place.- Sure.- But within a few days, he said,"Hey, I got your feed problem solved. I got a hired man for you." And I said, "Wait, for me? What do you mean? No, you have a hired man." He goes, "No, you have a hired man." And I was like, "I'm 13 years old." He goes, "Yep." He goes, "But you know all the jobs. So in the morning," and this is the funny part,"before you get on the school bus," because I didn't even have a driver's license yet,"before you get on the school bus, you need to tell him what the jobs are and then at the end of the day, when you get off the school bus, you check with him and see what he got done."- Yep.- So I thought,"Wow, this is a big responsibility." And it was the 1980s. And fortunately for me, my dad had found a great, great guy and a really, really nice kind person. But it was probably an adjustment for him to try and take any kind of instruction from a 13-year-old. So yeah, that was interesting. And our first first day actually on the job, I had a few pigs that I thought were not healthy, and I asked him,"Have you done vaccinations before for pigs?" And he's like, "Oh, absolutely, I can do that."- So I marked the pigs that I wanted, like six of them. And I said, "Just put a crossmark on so I know that you got them. They're all white pigs, they're hard to tell apart. And you know, it'd be easy to think you hadn't done one and you actually had." So I get back and none of them had been vaccinated. So we had a problem.- Yep.- And I was like,"Oh man, how do I confront a 30-year-old man, grown man here, and tell him we got an issue?" But I did. And fortunately, he was very kind about it. He's like, "Well, I don't think any of them are actually sick."- Sure.- And so we decided, all right, we're going to vaccinate five of them. And he could pick whichever one he thought was healthy, and we'll just see in a few days who was right. Well, in a few days, that pig was on death's door and he was like, "How did you see that? What did you see?" And so I talked to him about some of the things my dad had had taught me about looking for sick animals, and after that, we never had a problem. If I said someone was getting sick, he's like, "Where are they at? Let's get it done." So that was good. He was a great guy. And actually, recently, he just celebrated his 40th anniversary working for us, so he's still working for us.- Wow.- So, pretty cool.- That is very cool. As a 13-year-old and kind of as you reflect back, what lessons did you pull from that experience, you know, trying to lead somebody who was significantly older than you were, and, like, what did you pull from that?- Well, that's a great question. You know, we still, obviously, if you're going to get things done yourself, that's one thing. But if you want to get more done, you've got to work with other people, and communication is just so key. And even in those tough situations, just to be open and honest and talk through things is really good. And the other thing that I would say is my dad was always really fussy about who he hired. And his thought was, "I'd rather just do it myself than have somebody that's not really good." And I would say my brother and I in our business today, we are so blessed. We've got so many really, really good people that we can just turn them loose, let them do their thing, and just keep communication open in case there's something we want to do a little different. But that's been really good. It's really helped us grow.- Yeah, that's awesome. So let's talk about your career path a little bit. You went off to college, did you always know you wanted to come back and work for the family business?- Well, I wanted to farm. That's what I wanted to do. And I thought, "Oh, I'm going to raise livestock, and I'm going to have crops, and I really like both those things. And this is great." I love that angle of what my dad's doing. And I didn't know about the business thing. I don't know, I don't really view myself as a salesman. So that didn't seem right for me. And so I went to college for agricultural business and also for animal science.- Yep.- But little did I know my dad's plan was quite different. And so my last summer at home, before I went back to college, we loaded up all the livestock, hauled them off, and that was it. We were out of the livestock business. So that kind of changed-- Plans changed.- Changed my mind too that last year of oh, I better get serious about these crops because livestock's not going to happen for me.- Yep. Oh, interesting. So your dad started farming in South Dakota, like 1969 or so? And then shortly thereafter opened his first store. How has that business, your business, how has that changed over time?- Well, he was a one-store operation until my brother and I came back from college. So that was 1993 when I got out of college. And at that point we opened store number two and my dad had some really good advisors. He had both of my grandparents and they had all made it through the '30s, and that was tough. And now we were in the '80s, and coming out of the '80s, and so he said their advice, their support is how he got through the '80s, just being very conservative. And so, he was a saver. So he had saved up and thought,"Hey, if my boys come back, we'll expand."- Yep.- So we were done. And he told us, you know, "Go off, get some other job and get some experience." Well, for me, my senior year in college, he's like, "Okay, remember when I told you go get another job? No, I actually need you, so."- I've got your other job right here.- "I've got a job for you." And so that's what I did. My first year back was opening our first expansion store. It took a few years and dad got pretty confident that my brother and I had it handled and-- Okay.- So he just started looking for additional locations for us and, hey, where could we expand to? And that became his job. And Brian and my job became running the business.- Okay. So zoom out for us a little bit. What does the family business look like today?- Well, primarily, it's crop protection and also seed.- Okay.- And both those things, we've grown quite a bit. We've got about 50 stores now across a dozen states or so. And that's been been pretty fun just getting to meet farmers all over and see how crops are raised in different parts of the country. And it's helped just to bring some expertise from different areas to folks who, "Hey, we hadn't heard about it done that way before." And the cool thing with farming is if there's 100 farmers, there's 100 different ways to do things.- Absolutely.- So there isn't just one right way, and it's kind of nice to talk to guys about,"Hey, have you ever thought about doing things just a little bit different? Here's a way that could be less work or help you make more money."- Yep. So we're on episode 60, 65, something like that. How many episodes of your television show have you done, Darren?- Well, we've done a brand new weekly show every week since April of 1998. So that means over 1,400 shows.- Unbelievable.- And yeah, I didn't think it'd be that much when we got started for sure.- Yes.- And also when we first got started, we thought,"Huh, I wonder if it's going to be a challenge coming up with new ideas all the time." And what we quickly learned is Brian and I both love farming and love agriculture, and there's always things changing. So we haven't had any problem with that. In fact, it's been about the opposite, where we've got too much we want to talk about and ooh, wow, let's prioritize here. What should we talk about this time of year? The other big thing that we've been trying to do is talk about things ahead of time. So, when we first started, when we first had the idea of the show, we spent a whole year gathering footage because we thought if we're going to talk about planting, we can't be with a camera in the field as guys are planting, we're already too late. All those decisions were made months earlier. So we filmed a whole season of farming first, then we could talk about planting two weeks to four weeks ahead, so farmers could see it and say, "Oh, okay, those are a couple good ideas I might implement this year."- Yeah. That's smart. How has content impacted your business?- Well, there's definitely no cold calls for anybody around us. People have certainly heard who we are. Whether they like it or not, or want to try something different or not. But that's been really good. And it's just opened conversations up. And what we've always seen with farming is a lot of guys try to hold back what they know. They don't want everybody else to know what they know, that's their competitive advantage they see. But we found it so much more beneficial to just talk about,"Hey, here's how we're doing things and why." And the feedback we get from farmers is,"Oh, hey, have you thought about doing it this way?""Hey, I used to do it that way, but I've tweaked it now a little bit and I found a better way to do it." And we've learned probably more than what we've put out there and that's been really rewarding.- Yeah, that's the beauty of content is you put good stuff out there in the world, there's a lot of good that comes back out.- Yeah, that's for sure.- So you talked about Brian a couple times. Brian's your brother. How did things get divvied up? So you and Brian came back roughly around the same time, and then your dad was obviously still actively working in the business. How did your dad divvy things up between the three of you?- Yeah, well, my dad tried farming with his dad and his brother. And so three Heftys all in the same spot, and all three wanted to be in charge.- Sure.- So that didn't go the best for him.- [Adam] Yep.- And he thought, "Man, long term, this isn't going to work out. I'm better off if I can get out now and still like everybody and so forth." And that was a good idea for him. And about that time, my mom, her family was getting out of farming, they were going to retire. And so they bought my mom's family farm, and that's how we ended up in South Dakota. But when we started our business, and Brian and I are both getting back in this, I shouldn't say started it, but when all three of us were going to be in it, dad had seen, "Hey, it doesn't work to have three guys in charge of everything."- Yep.- So my brother had really worked on the books with my dad and done a lot of the overall management kind of side from the time he was 14. We start early. And so he said, "Okay, you do the ag chem side, Darren's going to do the seed side. And I'm going to just kind of oversee everything." So dad was still overseeing the books. He really enjoyed doing the books and kind of overseeing the farm at that time. And then we just quickly worked him out of a job as fast as we could.[Adam laughing]- Oh, funny. So when your dad did retire, how did you handle you and Brian buying into the business? It wasn't given to you, so how did you handle that?- No, no. And that was interesting too, because dad had always talked to us about debt but we didn't have any debt personally yet.- Yep.- So it was all theoretical, and like I said before, it was his money that he made on all those hogs. Here is our chance to get in. And that was, I didn't know if it was going to happen. We really had to kind of push him a little bit,"Hey, you know, we'd like to kind of get into an ownership role here over time and probably not going to happen all at once." An so he said, "All right, well, here we go." And he gave us an opportunity to buy in a chunk.- Okay.- And that meant going into debt. And that was a little bit scary, but it was a gamble on ourselves.- Yeah.- And we knew we could do it. We knew we had been doing it, and so we were pretty excited to have a go at it.- Didn't feel like it was a big of a risk.- Yeah. Yeah. It felt like a pretty sure thing at that point. Now we were in the early 2000s, and farm economy was not the greatest, But it certainly wasn't the '80s. So we had a chance.- Yeah, so you took a risk on the business side of things. Do you take a similar risk on personal finances?- Yeah, I've never been one to spend a lot of money on myself or be in much personal debt. So, yeah, business debt doesn't scare me. Personal debt, I kind of subscribe to my grandparents' theory, if you've got the cash, great, let's go do it. And so I started off with a car loan and that was enough to educate me real quick,"Man, I don't like making these payments and maybe I should have gotten a little less expensive vehicle and paid cash and just worked my way up." So once I paid that car off, everything after there, I've paid cash, I don't trade out vehicles very often or switch big things financially, personally, but yeah, on the business side, we'll take a little risk.- Okay, so growing up in the '80s, you mentioned you just talked about the business and money all the time. And, you know, my dad, if he were still alive, he would've said the same thing with our family farm as well as this part of life. Now, as you're a husband and a father today, do you talk about the business and money as much with your kids or do you not?- You know, we've got different opportunities than we had then, but yeah, absolutely. We talk about money a lot and just eyeopening for them even to go to the grocery store and see, "Okay, well you pick stuff out, and see how much stuff costs." And that kind of changes their thinking when they see,"Oh wow, these vegetables that I really didn't want to eat on my plate, I'm not throwing them away anymore because they're expensive."- Yep. Yep. Well, until you start growing them, obviously.- We've got to get good at that. We've got to get good at that.[Adam laughing]- What are your goals for the family business as you think near term and long term?- Yeah, it's an interesting time. We've got our first of the next generation has gotten started here the last couple years. So the oldest of the next generation is in the business now, and he's working his way up just like Brian and I did, starting at the bottom and doing all the jobs, learning all those things first. So we'll see how many others want to get in. But it's one thing my brother and I both saw that we weren't handed anything. We had to be capable and show ourselves that we were good workers and could handle the roles before we were given anything. So that's been our thing from the start. If anybody else wants to get in, great, we'll give them a shot, but they got to work their way up and earn everything they get.- Yep, last question for you. What advice would you give other family business owners?- Well, I think talking about money at an early age is really good. And if you haven't, you need to start now. One thing that I saw from both my grandparents is the sooner they started having those conversations with their kids, the better things were and the better able the kids were to handle it. My dad always talked to us about, "I'm still young enough, I can step back in if you guys screw things up."- Sure.- And I don't know if he was serious about that or not, but I think in his mind he thought someday he might have to jump back in and take over some of those roles.- I still got it.[both laughing]- But I think if you do talk about money early and give people a little bit of responsibility, probably before they can handle it, they'll step up to the plate. And I see that with my kids too, that we try to let them make decisions as much as we can. And decisions that are not huge, so that when it's time to make those big decisions, they're able to do it.- Love that. My dad's not with us anymore, but he would've loved this conversation. Thank you so much for being here.- Well, thank you.[upbeat music]- I hope you found this helpful. If you did, please subscribe and share with your family or friends. If you have a topic you want us to cover in future episodes, send us a note through our website, and if you're at the point where you want an expert opinion on your finances, reach out and we'd be happy to start a conversation. And remember, any comments, insights, or strategies discussed on this podcast are intended to be general in nature and therefore may not be suitable for you and your situation, whatever that may be. Before acting on anything we discuss, please consult with your attorney, CPA, and/or your financial advisor.