Learning Curve
October 3, 2011 By Henry Gantz
hgantz@meistermedia.com
Kyle Aymond graduated from Northeast Louisiana University (now Louisiana-Monroe) with a degree in accounting. His Wisner, LA, childhood friend Thad Herron followed a year later with a degree in biochemistry.
“We had been friends since we were four or five years old,” Aymond says. “We went to high school together, we went to college together, then we sort of went our separate ways for 10 or 12 years.”
After passing his CPA exam in 1992, Aymond joined an accounting firm owned by Larry Pickett in Delhi, LA. In ’92, Aymond bought a half interest in the firm and it was renamed Pickett and Aymond. In 1993, he bought the other half, but Pickett stayed on to help. Then in February of 1999, a tragic car accident claimed the life of Pickett’s wife, and left Pickett incapacitated for awhile.
“That happened during tax season, so I had to do all of the tax returns,” says Aymond. “Sometimes Larry could come in and help and we did 900 to 1,100 tax returns a year in two months. That’s a lot. I did all of the accounting at night and I’d wind up sleeping two hours a night at the firm on the couch.
“A lot of our clients were farmers – I’d say 300 or 400. So in ’98 and ’99, I did most of the work myself. Larry was able to come back in 2001, and I sold the firm back to him in 2003. I was burned out.”
About that time, he and Herron decided that they wanted to do something together again, so they went looking for 100 acres of land to farm.
“We didn’t grow up in farming at all, but we had been around it,” says Aymond. “My daddy owned an auto parts store and garage, and Thad’s daddy owned a convenience store.
“I had a client who was managing 20,000 acres. When he came in to do his taxes in March of 2001, I asked him if he had 100 acres we could farm,” he continues. “But he said he’d let us have 350. The land was in bad shape – it was under water and had ruts all over it. Thad bought an old tractor at a sale before we got the land. We borrowed a disk and tore it up in all the mud and water. We tried to pull it out with a chain and busted the windows out of the tractor. We finally got the land in shape enough so that we could come back and really do it right. We hipped it up and were going to plant corn, but we wound up planting cotton.”
Aymond says they kept the old tractor as a reminder of how they started.
That was the beginning of what was to become a massive row-crop farming operation near St. Joseph, LA.
“As we were learning about what we were doing, I heard about a guy who was retiring. He had 1,200 acres that bordered us, so we picked that up in 2003,” Aymond says. “That pushed us up to over 1,500 acres and I started farming full time. Thad didn’t come in full time until ’05. He was here every day, but it was after he got off work.”
Through some additional land dealing over the years – losing 1,000 acres of rental land after it was sold here, then picking up 2,000 or 3,000 acres there – Aymond and Herron now farm 13,500 acres.
“Sometimes I wake up in the morning and ask myself how we got this big,” says Aymond. “We had said that our goal from the start was to just have something to do on 100 acres.”
Would they look to expand further?
“No! Mentally we’re maxed out,” Aymond says. “As far as the equipment goes, we could do it, but Thad and I aren’t 30 anymore,” – Kyle is 44; Thad is 45 – “and we’ve got 7,000 acres of irrigated ground and 6,250 acres of non-irrigated ground. We’re going to take the 6,250 and put it in wheat. So really, next year we’re going to farm 7,000 acres instead of 11,000 in row-crop like we have this year. When we harvest the wheat, that land will just sit there. We’re leveling 500 or 600 acres a year. So of that 6,250, we’ll level 500 or 600 acres and the rest will just sit there.”
This year, they have 7,300 acres of cotton, 1,800 acres of soybeans and 1,500 acres of corn.
Cotton varieties include Deltapine’s DP 1133 B2RF, and DP 0912 B2RF, and Stoneville’s ST 5288B2RF.
“We came from a small public school, so when we got to college, we basically had to learn on our own – how to study, things like that,” Aymond says. “We’ve talked about this before: We think our biggest asset is realizing that we didn’t know everything. We really didn’t know anything when we started, but the college training taught us to think in methods and methodology – how you put things together. And we hire people who do know, and we listen to our entomologists and weed scientists. We don’t argue with them.
“So if (Deltapine rep) Davy (Mize) tell us to plant DP 1133, that’s what we do.”
Their weed consultant is Steve Crawford, and Richard Griffin is their entomologist.
Formula for Success
One of the basics of accounting is calculating breakeven points, and Aymond has put his experience as a CPA to good use in marketing their crops.
“I’ve developed a formula for triggering booking points according to profits. First and foremost, you’ve got to know your breakeven point,” Aymond explains. “Some of it’s going to be hypothetical because you can’t know exactly what all of the costs will be, but you can figure fertilizer and diesel are going to be your biggest variable costs. I would use what it is this year and ask retailers what they think it’s going to be next year. After that, I would probably add 10% to what they think. But if it’s going down, I don’t go down – I leave it where it is.”
Once a breakeven point has been calculated, he then takes into consideration commodity prices.
“If beans are at $8 a bushel and that’s where your breakeven point is, basically it becomes deciding where you start making a profit. Maybe it’ll tell me that $8.50 should be where I start booking. Then we start figuring what would happen at $8.50 or $9 or $9.25. We’ll book at those increments. If it never gets to $8 by January, we won’t book and we won’t plant it. If it never gets to the point where you can’t make a profit, then I’m out. After that I don’t care what it does, because by January I’ve decided what we’re going to plant in acres. It’s just something I’ve learned over 10 years and we’ve applied it. That way I don’t have to ask where to book. That was a big problem – where do you book? So if you’ve got a formula that tells you where to book, then you don’t have to worry about it, and that’s what we do.”
The same applies to cotton.
“A lot of times we’ll try to hedge the top side, but we won’t now because it’s so high,” Aymond says. “But if cotton was 52 cents and we booked, then I’d sell it to the merchant and he’ll buy the calls. If it doesn’t make anything, he just deducts what it cost from what he pays us. We’re not using our own money.
“We don’t play with the futures at all. We hedge through options. So we never have to worry about a margin call. We use Jeff Johnson at Allenberg and he’s good about telling us to book it and buy calls.”
The Whims of Mother Nature
Mother Nature has not been kind to south Louisiana, particularly at harvest time, over the past three years, and yields have declined as a result.
“Until three years ago, our yields were good – probably around 1,200 pounds,” Aymond says. “In 2008 Hurricane Gustav got us, and in 2009 we got 50 inches of rain that started on October 1, and we didn’t finish picking cotton until December 23.”
And it was in ‘09 that they tried something unique to pick the flooded fields – they installed tracks on a John Deere 7760 on-board module-building picker.
“We had John Deere executives – some of the people who designed the picker – down here,” says Aymond. “We were going to have a school here on September 15. It was going to be for dealers all over the world.”
But they had picked only 400 or 500 hundred acres when the heavy rain began.
“We had to do something. We knew people put tracks on combines and we knew the pickers were real heavy. So I was on the phone with Thad one night and I said we should put tracks on the pickers,” Aymond says. “I looked at some rubber tracks – that’s what we initially wanted to use.”
But clearance between the picker and the tracks made rubber tracks unworkable. So they took their track idea to Sharpco, Inc., in Monroe, LA.
“We found out about Sharpco through a guy who had them make some tracks for a combine. We called them and asked them to look at the pickers,” says Aymond.
Two Sharpco engineers thought tracks on the pickers were it feasible, but wanted to contact Deere first.
“The John Deere engineers – most of them, anyway – were already here. They didn’t want to do it, but we decided to put them on anyway,” Aymond explains. “The Deere engineers helped set the timing. Timing was the biggest issue because everything works off of hydraulics. Everything works on ground speed. So if you take the tires off and put the tracks on, everything changes. We had to take the tracks off twice and redo them, but we finally got it right.
“We thought we needed some cross bracing because you had heavy heads on the front and all that weight on the back,” including the built modules, Aymond says. “There was about a two-foot space where there was nothing.”
The result was that both pickers broke in half. “They didn’t break at the same time, but both broke after we had run about 30 hours straight. They got so hot that the metal just collapsed,” Aymond says. “Sharpco fixed them in the field, in the mud. They took trackhoes and hauled their equipment to the pickers. They used two trackhoes – one on the front, and one on the back – to pick them up. Then they welded it, put everything back in line and temporally put in some crossbars. When we got through, we fixed them right. That was January or February.”
Aymond used the pickers again in 2010 and, “they were fine,” he says. “We traded them for two new pickers and the track pickers were shipped over to Georgia.”
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