Barn Talk - How Tariffs, Land Values and High Rates Are Shaping the World of Farming w/Jake Espenmiller

Episode Date: April 20, 2025

Welcome back to another episode of Barn Talk! In today’s episode, Sawyer and Tork dive deep into the world of agricultural finance with special guest Jake Espenmiller, the new President and CEO of Conterra Ag Capital. If you’ve ever wondered how tariffs, interest rates, and the shifting economic landscape are impacting America’s farms—or you just want to know what it really takes to thrive in ag finance—this episode is for you. Jake shares his winding journey from small-town Iowa to becoming a leader in ag lending, including what it was like to step into a business during a time of growth, uncertainty, and industry change. The discussion covers everything from the current state of commodity markets and the reality behind headlines about tariffs, to how top farmers are managing costs, embracing technology, and running their operations like true businesses. Plus, the crew explores the future of rural America, with candid takes on housing, AI, the evolving job market, and lessons learned from nearly a century of farming wisdom. Whether you’re a farmer, a lender, or just ag-curious, you’ll find honest advice, some laughs, and plenty of practical takeaways in this jam-packed conversation. Let’s get into it! Use code BARNTALK for 10% OFF your next order https://farmergrade.com/  Check out Conterra Ag http://conterraag.com SUBSCRIBE TO THE PODCAST ➱ https://bit.ly/3a7r3nR   SUBSCRIBE TO THIS’LL DO FARM ➱ https://bit.ly/2X8g45c  LISTEN ON: SPOTIFY ➱ https://open.spotify.com/show/3icVr4KWq4eUDl7Oy60YMY  APPLE ➱ https://podcasts.apple.com/us/podcast/barn-talk/id1574395049 Follow Behind The Scenes👇🏻 ● This’ll Do Farm Instagram ➱ https://bit.ly/30KPBNk   ● Barn Talk TikTok ➱ https://bit.ly/3qciekS   ● Sawyer’s Instagram  ➱ https://bit.ly/3BtX0n4   ● Tork’s Instagram ➱ https://bit.ly/3LGZJxS    00:00 Ag Finance and Tariffs Discussion 05:18 Gold's Influence and Stock Trends 14:21 Long-Term Resilience in Farmland Lending 16:52 Unexpected Agriculture Journey 22:43 Career Journey in Agriculture Lending 26:59 Community Bonds and Farm Legacy 31:49 Agricultural Commodity Shipping Tax Repeal 40:10 Fed's Dual Mandate and Market Rates 44:37 Rising Costs of Agricultural Loans 48:21 Revitalizing Small Town America 54:00 "Value of Face-to-Face Interaction" 01:00:22 Winning in Agriculture: Strategy and Adaptation 01:04:46 Self-Reliance in Farm Operations 01:09:42 "Legacy Farmer Coaching Impact" 01:17:43 Streamlining Financial Data Processing 01:22:23 AI Replacing Human Jobs 01:28:08 Hiring for Cultural Fit 01:33:29 Cigarettes as Unconventional Therapy 01:37:29 Unsustainable Farming Practices ------------------------------- ⚠NO FINANCIAL ADVICE / DISCLAIMER⚠  The Information discussed and shared on Barn Talk is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or success for any particular purpose. The Information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The Information on this podcast and provided from or through our content is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional, professional broker or ... Learn more about your ad choices. Visit megaphone.fm/adchoices

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All of the food we eat and much of the clothing we wear comes from plants and animals that are raised on farms. Farms are different in type, in size, and even in name. Welcome to Barn Talk. What happens at the barn stays in the barn, but not today. We're going to let it all out for you guys. Today is going to be a great episode. Got a great guest coming on the show to talk about everything, finance, ag finance, just everything going on in that world. Because God knows we all need it. We need some advice. We need some guidance. it's good to pick somebody's brain that knows something so before we get into it though you guys know the drill share the show with the people that you know the more that you guys do that the more that this show

grows another thing you can do to support barn talk is leave a review on spotify or apple we love hearing what you guys have to say and that gives our show a lot of credibility to get more guests on the show and make more episodes so thank you to all that leave reviews last thing you can do to support barn talk and support our farm is you can support our direct-to-consumer meat business, Farmergrade, farmagrade.com. You can always use code barn talk to save 10% off your next order. We got some more pork sticks in stock, jalapeno cheddar, and honey barbecue pork sticks. They sold out last time really, really fast, and I personally think they're delicious. So go get a pack if you want them. And I'm just excited to have a great episode today.

Hey, you know what? This is along the lines of a meat business. I had lunch yesterday, and I got this pasta dish, and I had chicken in it. And I asked them if they could put bacon on it, and they did. And I said, you know, bacon makes it better. And then I got to thinking, you know what, bacon is the perfect food because it's the only food that nobody ever says. You know what would make this bacon better? Nothing. True. There's nothing. Nobody ever says that. That's true. Somebody's like, hey, let's take this chicken. We'll wrap it and bacon.

Let's take this and we'll put bacon on it. But nobody ever says, hey, let's take this bacon and put, nope, they don't ever say that. Nope. And it's a really great way to make a mediocre dish taste a little bit better. You know, when somebody makes a shitty mac and cheese and they're like, oh, we're add bacon on top. And you know it was microwaved in the microwave back in the kitchen. but it has bacon on top. You can tolerate it a little better, you know?

So there's a lot of dishes out there that you throw bacon in that makes it a lot better. So, hey, that's a good, that's a good claim to fame for bacon that it is the perfect food. It is for sure. So anyway, today we're going to talk about, well, we're probably going to end up talking a little more about tariffs and economy, but we're going to talk about ag finance. And the good thing for all of you is that, um, we're gonna have an actual person on here that really knows something about it uh spend his whole life in ag finance and we're gonna talk about how these tariffs are affecting farmers

uh kind of where they see things going just get their opinion on kind of where we're at under the new administration both on ag policy and on uh economics and uh should be a really great show and in honor of our relationship with those guys, we're going to have the market update, courtesy of Contera. So our guest today is a member of the Contera team, and I'm excited for you to meeting. But before we get into that,

I'm going to give you the market update. So corn, and this is the close for corn yesterday because the market hadn't opened and local prices. So I don't know. I think it's actually up three cents last time I looked. So corn for May 484, December corn, new crop, 466. Local around us, 472 and 486 in Cedar Rapids. Beans for May 1038, November beans 1034, 1024 at ADM in Burlington, or 1045 across the river in Quincy, but nobody wants to go to Illinois. bean meal $296 a ton wheat for May $5.47.

Hogs for May, $90, and July was 97. So we might get $100 hogs. I don't know. Not going to go where the cattle market is. Not going to happen. Cattle for April 207, feeder cattle for April, 290. And I threw in here because we're going to talk about this. the 30-year treasuries are 475 the last time I looked and the 10-year treasury was 4.27. S&P 500 was down 25275-7-Tesla 241 Bitcoin I think Bitcoin's getting ready to go

it's I think gold's going to drag it higher it's really leveled out and it's been trading like right around between 80 and 85 bucks for like since beginning of last week, I think. I think this is kind of the base. And I kind of think we're going to get back to $100,000 Bitcoin, but that's my personal opinion. I threw these in because I thought these are interesting. Amongst the stocks, you know, a lot of stocks have been down. But Piedmont Lithium, which is the largest U.S. lithium miner, they've been up. I think they're up about 15%. $6.87 a share. MP materials, which they are, they own the rights to the only, the only rare earth mineral mine in North America, I think, which is in California. And that stock has been up, 27, 21 last time I checked. And then desktop metals. Desktop metals,

all this talk about reshoring and building out and, you know, securing our supply chains. Desktop metals is like a 3D printing company, and it's kind of been the shitter for a long time, but it's rallied up pretty good. It's up about, I think it's up about 15% at $4.96. So, you know, you want to, if you're, if you're, like we talked last week, if you think you're smarter than the market, do your own research, jump in. I'd probably just buy the S&P, though. But anyway, Gold, $3,339, silver, just about $30, crude oil, $63, and, because I like it, Beyond Meat, the meat substitute, hit a 52-week low, like two days ago, $2.50, and it's rallied $0.50. And it's rallied $6.

So, yep, glad to see it. Yeah, I love to see it. No one ever says that Beyond Meat's a perfect, the perfect food. You definitely, the best thing you could do to a Beyond Meat burger, bacon. Put bacon on it. And not fake bacon either. Yeah. That might make a tolerable. Yeah. So our guest today comes from, comes from the metro of Iowa, the Des Moines area. And without any further ado, let's get into it. Well, Jake Espin Miller, welcome to Barn Talk. We're live. We're live. Thank you very much. Yeah. We're pumped to have you here. There's a lot of good topics going around in the ag community. just America, American people talking just about economics, finance. It's an uncertain time. But we got somebody good on here today that's going to just lay it out for us. So we're pumped

to have you here. And you're like the, you're the brand new official cat herder of Contera. That's a good way of saying it. Yeah. So how has that transition been? You know, it's been interesting. Yeah, you don't know like kind of going in where you're, where your hours are going to be spent, you know, until the guy leaves. And I'm talking about Paul, right? And so it's like any job, you know, you kind of take for granted what the guy above he's doing until they're not there anymore. You're like, holy hell.

This is why my elbow hurts from being on the phone all day long or whatever. This is why Paul had John buy him AirPods that he'd lose about every, you know, month, right? Yeah. So, but it's going well. Yeah, it's really going well. And I got to hand it to Paul and, you know, the board at Canterra. I mean, they had a three-year succession plan.

And, you know, I don't think that's very common in the business world anymore. You know, when you get, you're so focused on cost and, you know, but having the foresight to say, you know what, this is three years out. We're going to get, you know, bring somebody in to help us through this. And so that's made it like infinitely, you know, more. organized and easy. And so, yeah, it's going well. So people that don't know what cat herder means, what is your role?

Because sometimes people don't get your sarcasm. No, no, yeah. So I'm president's CEO of Contrarian Capital based in Des Moines. Cool, cool. That sounds, that's more impressive. That's much more impressive. Yeah, and our cats are well, well-trade. So there's not as many, much herding going on.

Good. Yeah. Well, but in that time, so in the time that your transition, you've also grown a lot. So it's definitely a busy time at Contera. And what has been the biggest challenge for you as you've been working towards this? Like you know you're working towards that, but then you've got a lot of other stuff. It'd be different if you were in an organization that is,

I guess you'd say mature where everything is kind of, but you guys are kind of crushing it at the same time. Yeah. Yeah, yeah. It's a good question. Yeah, and then you add on top of that, I mean, what Sawyer said, yeah, it's an interesting time an egg, right? So we're going through a credit cycle.

We're going through a rate cycle. At the same time, we're growing like crazy at Canterra. So, you know, all good things. But I would say, yeah, probably the biggest challenge is kind of as we think about Contera 2.0, you know, what do we want to be, you know? And finding the time or forcing yourself to find the time to focus on what's most important every day. And that's not unique to us, but that is, I think with any business, that's the challenge. You know, where are you going to win?

Where are you maybe average? And what areas of your business is it just time to say, you know what? Somebody else is better than us at that. Or maybe there's not a lot of money to be made in that and we're just going to let it go. right so that would be that's the fun stuff though and we got a great leadership team that i work with you know every day to kind of you know sort through those um but that i would say that's probably the biggest challenge for people that didn't listen to paul's episode last year just give them a quick little blurp about what you guys do at contara you know what what is it about what do you guys

do yep sure yeah so we were founded um paul found the company in 2014 we are primarily an ag real estate lender. So real estate focus lender based in Iowa, but we do deals all across the country. So really the premise of Cantara was, you know, Paul, you know, his vision was he saw some underserved areas in what we call like the credit spectrum, just a fancy word to say, you got your great deals, you know, you got your great farmers, you got your farmers that maybe shouldn't be farming anymore.

there was a lot of business in the middle, right, that was pretty underserved. And when I say underserved, you know, you had lots of capital that's lined up from the farm credit system, to your community banks to your big life insurance companies. You know, any of those farmers, ranchers can go find the right money at the right price. You know, but Paul kind of saw this 10 years ago that when you get in the middle, when there's a little bit more of a story to, you know, why. a guy needs a loan, but collateral's still good. There really wasn't a lot of companies doing that.

So I think Contera was really one of the first. And so that was really the genesis of the company. And that's still the core of what we do today. We do, and so we've built our team and our funding sources. So the capital partners we work with that are actually invest in the money into ag. So we have this well-rounded group where we've got, you know, plenty of investors that want the A kind of deals and lots of capital that wants the B, and sometimes the B minus or the C-plus, right?

And so we're kind of, you know, to use the cat her analogy, an application comes in or we're out talking to a farmer or rancher, our job is to figure out, you know, what's the path of success to get, you know, to get that loan done, you know, based on the investor and what we see. So we're a team about 40 people, you know, spread, you know, 30 of which are in Des Moines and the rest is our relationship management team spread throughout the country. So cool. Yeah, no, that's quick enough. Yeah, no, that's perfect.

What do you think is, what's the biggest challenge in ag today? And that, I mean, that's a pretty broad question. You can pick your favorite one. But it's definitely not getting any easier. No, it's not. I think the biggest challenge that we face is trying to get past the headlines, right? I mean, I've been doing this 25 plus years, been through many cycles with good mentors and good teams and good capital partners who are patient.

And I think whether you're a lender or whether you're a farmer or rancher, you can wake up every day feel pretty miserable about the world. You know, and whether it's tariffs or my input costs or, you know, you name it. You can always find a way to get, you know, down. And so I think that, and especially as, You know, you have new players in the space or even just, you know, new guys and gals that are starting their career in ag, it's a long game, right? And especially what we do when you're talking about farm land lending, you got to take a long-term approach. And so you think about that.

We're making 30-year loans, right, on a two or three-year historical case. cash flow, right? And so that tells you part of the story. So then you think about, all right, how resilient is that operation going to be over the next 30 years? You know, the easy answer is you don't know, right? You just don't know. You can make a pretty educated guess about how they've handled things, you know, up till now, right? But we're in the risk business, right? I mean, it's, you take risk and hopefully get, you know, appropriate return and provide a good service along the way. So yeah, so I think the biggest challenge for it, I think for everybody in ag right now is just take a long-term view, make good decisions, but don't overreact. You know, good times aren't

going to last as long as they should and bad times aren't going to last as long either. As you think they're going to. As you think you're going to, yeah. Yeah, well, I feel I kind of jumped ahead a little bit because you talk about, you're no, you're not fresh off the farm for getting in this. How, what's your journey of getting into ag lending and then finding yourself at Contera? How did you get started? Yeah, so I was born in Logan, Iowa, far western side of the state, in the less hills area. And we can argue about how you pronounce that. But my dad was on the conservation board for like 30 years out there.

So he says less, or he did say less. So, yeah, and if you would ask anybody that I grew up with, if I'd be involved in agriculture, they'd say no. I mean, I wasn't one of those kids that came out and knew and what the heck I was going to do for sure. So my story is more about doors open, and you kind of look at them and say, is that a door I should kind of walk through?

And you walk through and you kind of don't look back. And so, yeah, so when I graduate high school in 93, you know, So I was born 75. Farm community, my earliest kind of experience or exposure to ag was the 80s, right? And one of my earliest memories growing up was we had this activist priest in Logan, Father Frank Cedaro. And every Sunday after Mass, he'd go up to the courthouse and he'd put a white cross in the courthouse lawn for every farm. that had been foreclosed on in the county. Oh, wow.

Yeah, yeah. He was an interesting guy. One day, actually, I think he bought a manure spreader at an auction for like 25 bucks and pulled it up to the courthouse and parked it in the yard too. So, but, you know, just to kind of give you an idea, like when I was growing up, if you weren't on the farm already, right, you know, and I graduated with maybe 30 guys in my class. you know, let's just say my parents weren't saying, hey, you know, pick a egg is a career. So, you know, and I have an uncle that I, you know, who made a pretty good impression on me growing up, you know, and he got an engineering degree from Iowa State.

And, you know, he had a great car and a cool apartment in Minneapolis. And I'm like, all right, that's what I'm going to do. So I went to Iowa State thinking that engineering was in my future. Turns out my uncle's a lot smarter than I am. I flamed out bad. So, you know, from there I went to, so that was a year at Iowa State. And I'm going to Simpson College, met my wife there in Indianola, and really just got a business degree. You know, I still, I was focused on, you know, playing football and girls and, you know.

Drinking beer out of a funnel. That's it, man. Yeah, so, but got a job at a savings alone in St. Louis, Missouri. My wife was going to grad school down there. So that's how I kind of started out in the finance game. It really wasn't much of a start. It was, you know, we had like three products. We had a CD and a 10-year mortgage and a 30-year mortgage.

And the rule was you can't pick up the phone and call out, you know, you just had to wait for people to walk in. Oh, wow. Yeah. So let's just say I was never a good reader. But the funny story about that experience is it was such a boring job. You had to sit your desk. And so what do you do?

This was before phones. And like, we didn't even have computers. So I read every Tom Clancy novel there was written. Wow. Yeah. Yeah. So, but then, yeah, how I got into ag lending, my first job. So we moved back to Iowa in 99.

Actually moved to Tomla. So my wife's from northwest Iowa. I was from Western Iowa. Believe it or not, the closest we could get to like Central Iowa when we were both looking for jobs, when she got down with school, was Atumwa. And so we moved to Atumwa. I started at a bank there.

Had a really great boss. Grew up in Carroll, you know, lifelong farmer, still farms to this day. And I was originally hired just to kind of be a jack of all traits, do some business lending, you know, do some farm lending. And I think within, you know, 30 days of when I started, you know, our two ag bankers resigned. And it was right in the middle of operating loan or noose season. So guess what?

Hey, Jay. Hey. Let's learn this, right? You know, and so it's just kind of funny how, you know, God has a plan and things kind of work out. And so, you know, I was in banking for up until like 2011. and then I started working for MetLife Ag. And that's when I got really focused on ag real estate. So, yeah, so, you know, along the way, you know,

my wife is the farm kid and the family. And so I was the town kid, right, you know, and did what town kids do, you know, you get hired to go out and throw some hay once in a while. Yep. We worked at a tree farm. But no, it was never, never, if you'd ask my younger self, you know, you know, pick 100 different things that you think

50-year-old Jake's going to be doing. This wouldn't even be on the list. But it's just been, you kind of find things that you're suited for and you get nudged along the way. And, you know, and that's how things happen, you know. So, but it's been, yeah, it's been quite the journey. I mean, my wife will tell you that. I mean, we've, I think we've lived in eight different houses in our marriage. You know, when I was, you know, with MetLife, we moved the family down to Kansas City, you know, five kids at the time. And, you know, it was about taking risk, kind of switching things up when we thought we needed to. And we thought it would lead to a better experience and something to learn.

and doors just kind of open. And so most of my time, I've been, you know, it's been on the lending side of ag. I did spend a few years, you know, managing farmland and working for a company that owned land. So that got me closer kind of to the farm gate, right? It's different when you're a banker. You're looking at deals differently.

It's a lot different when you're the landowner. And it's, again, just more of, a longer-term focus and you're that much closer to the farmer who's going to be renting it. Working on cash flows that way versus, you know, figuring out they can afford it alone. And then, you know, life just kind of, you know, throws the other curveball. So my wife lost both parents way too early, right? And they still had the farm. So this was five, six years ago.

And we were trying to do. So she has a younger brother. And I remember we were sitting around after the funeral thinking, you know, what are we going to do? And I was like, let's farm. So at the age of 40, let's see, 44, 43, I was a rookie farmer with my brother-in-law. Yeah. But, you know, I think that's just, as I look back, what's important to me is, like, opportunities learn and grow.

And so we, you know, we said, all right, let's get, we're going to do it for five years, you know. At the time I'm living in Kansas City. So five hours away from the farm. We had an older line of equipment that was paid for. We had great neighbors. We had great people to learn from. we both her brother and I both spent that winter paying a little tuition you know Purdue's got some great online classes like all right let's just start with the ground of me you know you know and so

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So is your farm rocrop mostly, or do you guys raising livestock or just... All roo-com? All road crop. Cool. Yeah, all road crop. And then we had a tough decision this year. We said we were going to do it for five years, right? And this year, my wife and her brother decided it was time to let the farm go.

So, yeah. And it was, we enjoyed the shit out of it. We really did. It was my time to think. It was my time to connect. But we always said, all right, we're going to take a. excuse me, take a look back after five years and see how it's affecting quality of life, right? Are we doing it as best as we can right now?

You know, and it was cool as hell. I mean, I think when we started our average yields, corn yields were about 170, 75, you know, bushel an acre. And so we just made small incremental changes every year, you know, and last year was our best corn crop, you know, like we averaged 220 or something. But, you know, so yeah, corn, soybeans, yeah, no livestock. And then we, yeah, made the decision that it was time to let somebody else take over. And so the neighbors who had helped us the last five years, you know, a couple of them stepped up.

And, you know, and that made, you know, the decision for my wife and my brother-in-law. Easier. Way, way, way easier. These are guys, you know, guys and gals they grew up with. And so it's fun to see it in the community with people they grew up with, went to church with, went to high school with. And they had sons coming back to the farm too, right? And so it didn't make it, you know, that much easier. But yeah, so.

Definitely helps. It definitely helps. Yeah. Wanted to do it the right way. And we didn't, you know, we just didn't feel right about like, all right, you know. And I don't knock anybody that decides to sell right away. But yeah. We just thought we had to get some.

sweat and skin in the game. Yeah. And, you know, we bought a farm along the way. And, you know, I mean, just an experience that I would never, ever, ever trade. Yeah. That's all that's cool that you got into it, though, you know, like, especially working with farmers, just getting the experience of everything that they go through, you know? Absolutely.

Yeah. Yeah. I mean, and that, that's one of the reasons. So, like, my brother-in-law was in Ag Finance, too. We're like, all right. Instead of sitting by on a desk, you know, giving advice and something. we're not doing. Let's dig in, right? Yeah. And so what we did was, yeah, obviously, way less complicated than, like, what you guys are doing or what some other guys are doing,

but it gave us, yeah, it brought such much greater perspective to what I do and kind of reinforced for me, like, if you're going to work for a company, what do you want it to be about, you know? And so living that for, you know, five years was very important. Yeah. Yeah, I wouldn't trade it. Cool. Yeah. So tariffs, that's the big word everybody's talking about.

Right. What do you and Conteara think about the tariffs? And I feel like you have one side saying it's the end all, be all. This is the plan. We need to go with the plan. Trust the process. And then you have the other side that says tariffs are the devil. We're going to go to, we're going to be bankrupt.

We're going to go. It's just skyfall and we're screwed. Right. There's obviously, there's probably an answer in the middle there somewhere. And just want to get your stance on or just hear what you have to say about it. Clear the air a little bit. Mm-hmm. You know? Well, I wish I was an expert.

Yeah. I think we all do. Yeah. Yeah. I mean, my take, it's kind of like Midwest weather. If you don't like it, just wake up the next day. read the newspaper, right? I mean, and I don't say that to kind of be flippant, but you go back to 2018 and 2019, right? And, you know, there were several moments during that period where everybody

thought this guy was falling. What's going to happen? We lose our biggest trading partner in soybeans, right? Well, shit, it's 2024. Still rolling. We're still rolling, right? Now, this round seems a little different in that it's, you know, effect in so many other sectors, right, or could. But honestly, I think there's just a lot of grenades being lobbed right now. I mean, if we know anything about the administration, that's the style, right? We're going to kind of go scorched earth and we'll probably land somewhere else, you know, in the middle. And, you know, whether it's tariffs, you know, or anything else that's in the headlines, right? I mean, I kind of kind of go back to like my job at Cantera, like any other leader, is to stay the course, right?

Don't bury your head in the sand. Make sure you're appropriately assessing the risk in the short term of what it could look like. But yeah, the deck's going to get shuffled and there's going to be maybe kind of a new normal. And how does that affect, you know, the biggest things, yeah, how's that going to affect grain flows, right? but maybe I should worry about it more than I do. But I think just having the experience of going through 1819, MFP, you know, came in and, you know, was funded a little different way than maybe it would be today. But you also have, you know, the people that elected the administration are going to feel the pain at first. And so do I think that there will be.

some help yeah yeah it'd be kind of political suicide if there wasn't the the grain markets in the last week i mean we're they've kind of shrugged off and i think part of that may be the as we go it looks like ag is getting a little bit getting a little bit of relief like one of the big things that i think the board took as a positive last week was uh and correct me if i'm i'm i'm not not going to get this right, but the, like the loading, the ship, the ship fees. Like there was a big deal about all of these, all these ships that come that have a foreign ownership, we're going to get this like million dollar tax to load. And they rolled that all off of commodities.

So whether it be lumber or beans or corn, it looks like, and I don't know if that's, I don't know if that's totally done or not, but it sure looks like they're going to roll that back to where. So ag is going to be exempt from it. And corn and beans took off and now we're getting back to highs. Well, I can follow your logic there. Yeah, because I read some report that, you know, container shipping was just overall down, right? People are like, well, hell, I don't know if I got my product, you know,

halfway across the, you know, the Atlantic. Like, you know, what's it going to cost me to unload it when it gets there? So you think about just supply and demand of moving goods. Well, when it's grain going, you know, that's still got to go, right? So does prices come down on the shipping costs? And then that's reflected in commodity prices? Yeah, I can follow that. Yeah.

Yeah. I mean, I read an article the other day about all the ethanol plants, the corn ethanol plants being built in Brazil, right? there's like nine or ten that are going in and ramping up production right and forever you know like Brazil's been the largest corn exporter right we don't typically kind of factor that into you know the corn produced in the U.S but they take a big step back and I think the estimate was like 15% of the second crop corn can go now towards ethanol production um yeah that's a big dent and supplies. So does that mean corn? I mean, yeah, so just a number of things that could happen here.

And it's really, you know, simple way to look at it, but you got this big pile of grain globally, right? And yeah, some trading partner's going to cut back, but that means they're buying from somebody else, right? Now somebody else needs it. So it has a way of kind of even itself out. Yep. Yeah, I think that's something that we tend to forget about, and the focus is always, and this is regardless of what you're talking about. When it comes to news, no news organization sets new viewership records off of showing the stories about the good guy saving the cat out of the tree.

Right. You know, it's all, like, they're all looking for the sky's falling. The best, oh my God, I hadn't heard that anywhere else. You know, this is terrible. And so a lot of focus has been on that, you know, China is going to, they're going to buy their grain from somebody else. Well, they already do buy a lot of grain from a lot of people. And to your point, that probably just means that every extra,

barge that they buy here is a barge we're going to sell to somebody else because it's the same principle as the meat business everybody's got to eat and they got to get it from somewhere you just got to convince them to buy it from you that's right so somehow we may muddle through but the what that does to in your line of business what's that going to do to rates because what are your thoughts on the idea a lot of people have have floated this idea that Trump's grand plan with these tariffs is to force the 30 year down so we can refinance a bunch of debt and he also believes and I think he's right that the housing market there's a whole lot of people out there that if you could get that 30 year rate for mortgage to like a 5-8

that would jumpstart the housing market. Right. But we don't know if all that's going to work that way or not. Yeah. And so when you're out there trying to, what is all this done to the volatility within rates when you've got people that are trying to put a deal together? You know, in the past, rates,

I used to get a letter from farm credit maybe once a year that the rate on my operating note was going to change by a quarter of a point. Now then you might get two in the same month. I mean, it's, so what's that do for your business when you're trying to put deals together? Have you seen a lot more volatility in those rates that you're able to put together? For sure. Yeah. So if you go back to last week, I think, you know, the 10-year treasury is a good, indicator of where your long-term rate's going to be, right?

I think it swung from, you know, dipped down below three, maybe it hit three-six, and then went all the way up to four, five. You know, like, and that's pretty unheard of, you know. You know, you're going to see your five or ten basis point increases, but to see those kind of swings, and I think that's why, you know, the pause, right? I mean, I think that was this 90-day pause that kind of what drove it, you know, all of a sudden you're seeing something, it wasn't as flight to quality, right?

You typically in uncertain times, right? The world's going to flight to quality. The U.S. is the suburbs of the world economy. All right, I can go buy a treasury and park my money and feel safe. Well, it wasn't happening. The dollar was strengthening, too, at the same time. So, you know, I think it was just one of those unprecedented times. There's no like historical, you know, context to compare it to you.

So it just was just, it was uncertainty, right? I don't think anything fundamentally changed that, okay, now the U.S. is not the suburbs of the global economy anymore. But there's enough uncertainty where people are like, I don't know what the heck's going on, right? So we did see it. I mean, we were quoting some deals, you know, that were closing that week, right? And typically you'll have an opportunity to lock a rate, you know, either like an application or there's a period of time there. And then you get closer and closer to a closing date.

If you miss that window, you can't lock until like the day before or, you know. So, and we saw some pretty wild swings. Now luckily things normalized out. But, but yeah, it's something to keep in mind because I think until this is all settled, you are going to see more volatility. Yeah. in shorter periods of time. Do you think there's,

do you think that there's any sign, any good enough sign of a trend, either to rates going higher or lower? What's your, what's your over under? What's your, do you think we're headed? Do you think rates are going to camp out right where they're at? Or do you think there's a chance they could move lower? I mean, a lot of people would like to see.

see him move lower, but I don't know if there's any good sign that they're headed there, no matter how much Trumpy tells the Treasury that what's his name? Who's the head of the treasury? He can't fire him, even though he appointed him, but he wants to get him out of there. Jerome Powell. Yeah, Jerome Powell. He really thinks Jerome should drop rates, but Jerome doesn't seem to much care what Trump says. Right, right.

Well, I mean, what, his comments yesterday, I mean, you just got to think about the dual mandate they have. It's manage inflation to somewhere around 2%, you know, and keep employment, you know, high, unemployment low. And so rates are a, you know, an after effect of the decisions to affect those two numbers. And the other side of it is, you know, the market's an old. ultimately going to decide what rates are. So the Fed can do all they want, but the market's ultimately going to determine it. And so the other thing we saw last week was,

so this doesn't, I mean, it affects, if you're borrowing money from a bank, it affects it a little bit, but it directly affects us in that, you know, we get a lot of our capital from insurance companies and other investors who are looking at alternatives. So if you're,

if you're an investment officer and an insurance company, if you've got a million dollars to invest today, and I've got an option to either buy a corporate bond or invest in an ag mortgage, right? So we saw corporate bond spreads gap out last week, too. Yep. Yeah, they jumped 30, 40 basis points. So for the same risk.

You can get a higher. Yeah. And so, and so, you know, and that's when they talk about relative value, it's like, what's the value of an egg mortgage relative to what I can go out and buy, you know, just on the street. Yeah. And that, so that plays into it too. So, and corporate spreads, you know, gaped out, again, because of uncertainty, you know. Yeah. So I don't know.

My rate prediction is I think we're going to muddle around this area until there's enough certainty in the markets to make sense of it all. And that's going to take some time. I just, you know, as a lender, yeah, I want the tenure down closer to three. Because I think there's a good equilibrium point where, you know, and I've got older kids who'd like to buy a house someday, you know. And I think, you know, mortgage rates in that five to six range is a good tradeoff for savers and borrowers. That would be my ideal world, right? I just don't think we get there this year. Yeah.

Yeah. Yeah, that's what I'm holding out for because I was just on a call this morning. And Amazon presents Jeff versus Taco Truck Salsa. whether it's Verde, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flamethrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk. Habaniero? More like habanier, yes.

Save the everyday with Amazon. You know, it's a blessing. When I build all these hog sheds and a lot of stuff I did, rates were super and I borrowed a lot of money at four and a half four seven five four two five and now then you know part of those I've paid off but now then I have I have a bunch of I have a bunch of small pools of money borrowed all on different amurizations and I just want simple you know I'm getting to the age and I just like gosh dang and if I could get a deep decent rate. I would just refinance all of it. But you look at it and you're like, God, I don't want to

pay that, you know, you want it better than what you had. And I'm just like, I don't know if we'll ever get back as good as what we had at that time. Yeah. But I was really looking for you to say that, oh, yeah, it's going to go. It was painful when we moved from Overland Park to Iowa. I gave up my 2.5% you know 15 year fixed rate yeah oh that's painful yeah so uh so our house uh our house you know it's on it's like it's like 275 something like that and um now then it's now it's 20 years old and you're like well we need to we need to redo the roof and we need new windows or we need this or you need that and you're like you hate to refinance it why would you refinance it so it's just like oh just, we'll just pay it, pay it as we go because you hate to give up that rate.

So it affects a lot, you know, it affects a lot. And I think one of the, one of the big things, which may play into why you guys and lenders like you see your business increasing is when you think about all of this operating money, I mean, I don't know what that number is as far as the amount of dollar. that are on operating loans in ag, but think about what a huge jump the cost of that money is taken over the last three years,

then equipment loans, because I got neighbors that may or may not have made a combine payment like for four years in a row because they just traded it every year because it cost them nothing. Right. So you just kept rolling it and rolling it and rolling.

And then you came to roll it, and your dealer goes, Uh, yeah, about that. It's going to cost you X and you go, whoa. Yeah. I mean, it's a whole different, it's changed the dynamic on that, on that whole side. So, in turn, when that cost of money goes up and that cost of operating goes up, your cash flow change is dramatic. And that's where are you seeing more and more people that are looking at operating and being like,

we got to get some of this. We got to get some of this stuff off of here. I think easy money makes we all get sloppy. Sure. Because it's easier to just go, I want this piece of equipment. And I've got room on my operating and it costs me anything. I'm just going to go buy it. Now's the time you're like, well, I probably should have amateurized that out or gotten that off that sheet. So are you doing a lot of that kind of stuff? You know, we see a lot of it. We do see a lot of it. And we're able to make, make, so if three years ago we, we get 10 loan requests to do something like that, we could maybe do eight of them. This year, you know, it's like you get 10 applications like that. It's maybe like four or five, you know.

And the problem is, I mean, so not only the rates, but then all the carryover that's on those, you know, they're not able to clean it out every year. So you're getting like a couple years of carry now on those lines. So it's harder, but land values have held pretty stable. And so, you know, I think when you had Jace Young on, he talked about like your first line of defense in a bad year is, you know, or a couple years. If you got to amortize some of those losses, you look to your land. And so we're definitely seeing a pickup in applications for that. And luckily, yeah, I mean, land prices have come back a little bit. I don't care where you are in the country.

you've seen a little bit of that. But knock on wood, there's still a lot of balance sheet strength out there in the farm country because of the land prices. I know you mentioned when we were talking about rates that your dad and like you got young kids and like going into this environment, I could kind of relate to you saying like get in the house someday, you know? Just general dad advice, what do you say into your kids with the landscape that we have?

Because, you know, like right now, a lot of young people feel like, they can't get ahead. They can't get out and start their life. And it's frustrated and they're pissed off and they want something different. Like what are you telling your kids like, you know? What I'm telling him and what they'll actually do, two different things. But I see it is, so, you know, I've got one who lives in the Des Moines area, you know, renting. And one about to graduate and one will graduate in a couple years.

I see it as like, the good thing, the cool thing is, you take what you can buy a house for in West Des Moines, Iowa, versus Winterset, where I live, I think it's going to be kind of this revitalization of small town, not only in Iowa, but across the country. So you think about, like, if you got good connectivity, you know, you got fiber, you got good internet, you know, you can work from anywhere,

why would you go buy a house, you know, for $500,000 when you can get the same thing and maybe have to go into the office a couple days a week. But if you can, you know, if you're an office, you've got to get somewhere to work. Whereas you can go into a small town Iowa and pick up something for a couple hundred thousand dollars, probably better than what you could buy. I mean, so if I was like my younger self and I would. was, you know, give myself advice, it would be that. It would be, well, look where the value is. Look where the value is, right? And it's like, all right, you got good schools, you got good services,

and you got everything you kind of need on a daily basis. Might have to give up your Starbucks every day. Yeah, you might, right? But I love cabin coffee. We got a cabin coffee in Wenderson. We got scooters here. Yeah. Yeah. Right. You know, and I think there's going to be a little reset. And I think your generation will kind of lead it, where it's like, all right, I don't need to be five minutes from the high V. I don't need to be five minutes from the Starbucks. So, I mean, that was kind of refreshing for us when we moved from, I mean, when we were in, you know, in the Kansas City area, right? You're like five minutes from everything you want in the world.

That comes at a cost because it's so easy to go get that $5 a cup of coffee. Yep. So, yeah, and I think prices are, we're going to reset a little, too. right. I mean, because then you add in cost of insurance is going up, right? Property taxes are going up. Yep. So it's, I worry about the affordability of housing for my kids. I really, really do. Yeah. Yeah, that's interesting. And you know something else that is, that plays into that is, so for like our generation, and I'll lump myself into your generation. You're a little younger than I am, but that's all right. It's a couple years.

we we were a lot more social as far as we valued amenities that you could go out and do things but like Sawyer's generation they're not near as strong and I think you've seen that in just look at like the these these brew pubs these this there was this whole wave of small town brewing and and you know but the problem is this generation they aren't like they aren't like our generation where every day after work you go sit on a bar stool and drink beer like they don't do that like they don't go out that much and it's it's had that effect you've seen that you've seen and that's just one of many trends that you know got really popular but that generation doesn't support something the way we do. And so, and I think that generation is a lot more, they don't hold on to,

they don't hold on to, I don't know if you want to say traditions, but, you know, it's, it's not nearly as intimidating for them to pick up and move someplace as it was for us, because a lot of their connections are on here and not so much, oh, I know this guy from the gym or I know this guy from the bar. Yeah. You know? Oh, absolutely. So it's a different dynamic.

And I guess I kind of hope you're right because there's a lot of things that aren't working in favor of small town Midwest, but you may be right. That may be one that does. Well, the opportunities too. I mean, like, you know, you used to have to go to a city to get opportunity, you know. And like, I still think that's somewhat true. There's a lot more opportunity in a big city. But like, you can create your own.

own opportunity now a little bit. You can meet people through social media. You can create something and build a community or follow new people and meet new people through social media to create an awesome opportunity for yourself, even if you live in small town Iowa, you know? Like, it's crazy all the opportunities there are. And so, yeah, and I agree with that. It'd be cool to like see small towns thrive again because we, you know, every day, you know, foreclosures on farms, but you're seeing small towns die and it's sad because they're awesome. Yeah. Oh, yeah.

I mean, it's anywhere I've ever, and I've lived in a few towns. And it was a time where you had to move. If you wanted to learn growing, be around, you know, a different industry or whatever, to your point, you had to get to where the opportunities were. Well, to your point, again, now you don't. I mean, now you can learn a lot. There is, there are things you'll never. ever be able to learn without being somebody, right?

I think about like early in my career, everything I learned just by being around the older guys and the conversations that happened when the meeting was over, right? We sat around the table and we drank coffee and they reminisced about this or that. Well, when the Zoom meeting clicks off, right, everybody just goes back to their desk. So, you know, whether you're trying to build a culture

to a company or train, you know, the next generation, I think being face to face is good, but every day, yeah. And I also think, too, I mean, to your point, like, I was in Grafton, North Dakota a couple years ago, right? Small farm town up there. But they had a great bar, great restaurant, enough to do, right? And then you're, you know, a couple hours down to Fargo, and then from Fargo, you can fly anywhere, right? And it was cool. And I went in there.

It was like lunch. We were doing a farm tour. and everybody in there was under the age of probably 40. So I asked the farmer I was touring around with, he's like, oh, you should see this at 5 o'clock. You know? I mean, it was so cool to see a small town like that. But I think the leadership in the town,

I mean, they kind of figured it out. It's like, all right, we don't got to be everything to everybody. But we do need the right kind of amenities, right? You want a grocery store that you can get most of your stuff, right? You want a nice place to gather and be social, maybe a nice nine-hole golf course, right? But I don't need the top golf here and I don't need this or that. You know, I can drive to go get that. So, yeah, I'm hopeful it's a renaissance for small towns.

I really do. I think if I was a real estate investor, you know, that's right. That's right, but. When you look at where we are in ag today, when you guys are talking internally, what's the biggest opportunity for Contara going forward? Where do you think your biggest opportunity for growth is? What we preach is as really common sense decisions. I mean, what we talk about is like our money is green just like everybody else's, right?

And it's no different than any service business. We provide a service, and if we can't do it better, quicker, less headaches than somebody else, why would somebody do business with us? So that's what we focus on. I also think that, I mean, talking about generations, one of the things that excited me about coming to Contera is that, you know, I'm a part of Gen X, right?

So we're a pretty small generation to begin with. There are fewer and fewer of us who got into this ag finance world. and we were all trained and mentored by the guys who went through the 80s, right? Look at those guys are retired or have retired. You got a lot of just institutional and industry knowledge that is no longer, you know, working, right? They're still there. You call them, I do. So at the same time, we're going through a credit cycle and ag, you've got a lot of brain drain going on in the industry,

which leads to, nothing getting done, right? So if it would, you know, in the old days, you could walk over to the bank president of the chief credit officer, right, and just have a conversation, get a decision made in a couple days, or maybe that day.

Yeah. Those days are kind of fewer and fewer. And so what we try to do is bring, you know, bring the institutional kind of size capital into an older model where it's, you're talking to a decision, maker. I mean, we're very lean and it's by design. Everybody that's come to Contera through the years and has made a career out of it, especially our anybody that's on our sales team, especially,

credit team too. Actually, I would say, you look at the folks we have at Contrera. At some point, they spent time at a very, very large company, got to taste the bureaucracy, how slow it was. that's one of the things that's attraction of Katera. So it's one thing to say it, and then we got to deliver it, right? And it is hard to deliver, right? Because you got to have the information to get the decisions, right? But really that's where I see where we,

and we don't have to do every loan out of the sun, right? But there's a certain set of business that we can carve out because we do it better, quicker. Sometimes you'll win on race. rate, right? Some people, they come in and it's like, I mean, they're going to shop, right? We know they're going to go to four different places and it's going to be a rate driven decision, right? So we behave appropriately, right? It's like, okay, this is going to be a rate decision. We've got other, you know, borrowers that you can win it on the experience, you know? Yeah, you got to be,

you got to have a puncher's chance on the rate, right? Yeah. People don't like us that much where they're going to pay, you know? Right. So, and then there's, I would say the other side of it is, you know, in our business, so you can either win through price, doing it better, or saying yes more often. Saying yes more often means usually that you're willing to dig in and listen to the story and take a harder look at the deal, right? So if it's a deal everybody's going to do, it's probably a rate-driven kind of decision. So those are really the three areas we try to win on.

And I think with everything that's going on in egg right now, the next three years should be pretty fun. What are the guys you guys are lending to, I'm just trying to see what value we can give to farmers. And I was just sitting here thinking, you know, you deal with a lot of farmers, you deal with a lot of guys operating, doing different things. What are the, what are the quote unquote, best farmers doing? Are they doing something different? Are they looking at their financials different? are they diversifying their operation differently? Like what do you see that's working for farmers?

Who's winning and why are they winning? Mostly it's those that are winning run it like a business. They know it. They know their numbers. And they can kind of pick who they want their lender to be. Most who are doing it well have also adapted to, changes, right? So they're not doing it, just like granddad did. They figured out, like, it's not that they're trying everything under the sun, right? But they figured out what would

work for their farm, right? And then they also, the good ones know the game they're playing, and that's not my saying. I heard it from somebody. But if you're in the commodity business, low-cost production wins, right? And so if you're not in that bottom quartile of cost of production, you're probably not going to win long-term, you know? So if you're not going to play the commodity game and be low-cost producer, what's your game and how are you going to win? Is it doing some specialty crops?

Is it I've got great relationships with off-takers, right? Am I going to win through scale? whatever it is is your game that you're going to play you better know it you know make a decision a conscious decision that okay that's how i'm going to set up our operation right i mean my experience was a was a good one in that it's like all right we're not going to be the biggest farm um we're playing the commodity business right and so our newest tractor was 20 years old right and so so we're going to focus on our cost of production and do what we can like incrementally to get better at what we can do with our constraints. So I think it's just the good ones know

the game that they're playing and then make the decisions accordingly and run it like a business, know their numbers. What percentage of guys that come to you actually do know their numbers and actually have put their numbers together versus their banker did their balance sheet form. It's not as high as you think. Yeah. It's not as high as we'd like it to be. Now, most know, like, you sit down and do a projection. Yeah, they know what their, I mean, they know their costs, right?

Yeah. Maybe they haven't gotten down to the granular detail of, of should I have do I really need that extra tractor? Do I do I do I? I mean, but yeah, nobody wants, I mean, I don't like doing it. I mean, tax day was what, Tuesday? I mean, I put it off as long as I can. I don't want to sit down and look back.

So it is, yeah, not as, not as a major thing. I mean, now I would say it is different to obviously the larger, are larger borrowers typically, I mean, the ones who can afford to hire, even if it's an outside bookkeeper. Yeah. Or, you know, some, you know, are big enough to where they hire a CFO, right? They've got somebody who's on the numbers every day, and they just have to, you know, maybe they're more vertically integrated, you know, they're not only growing, but they're

processing, they're storing, they're shipping, you know, those are definitely run like a business. but, you know, but we've seen, you know, even our kind of smaller mid-sized borrowers that they've got a great team around them. Maybe it's, maybe it's son, daughter, doing the books, maybe it's mom or dad doing the books. But everybody knew their role and they worked well together. Yep. Yeah, I was talking to Chet Larson on the phone yesterday, and we were just talking about ag and, you know, get big or die kind of thing if you're playing the commodity game. And he was talking to his banker the other day and he they asked him you know they were looking at their cash flow and you know all farmers are like oh we're not we're never going to make any money we're

not making money whatever but he asks his lender you know what what are you seeing like why did because he the banker told him that his his balance sheet looked a little better than other guys and maybe he was just greasing him and telling him like oh yeah just telling him that's make him feel good whatever, but he said what the guys that are hurting the most this year are the guys that are hiring out a lot of their stuff. They're hiring out spraying. They're getting their soil samples done. All those little things are adding up big time this year. And so that was something that Chet said, like, for us, cost of production, we do a lot of our own stuff because we have to. You know, we spray our own stuff. You know, we're doing our own soil samples. We're doing anything we can to

take control of our costs. And I just thought that was pretty good because if you're going to play that game, you got to know what game you're playing. And so that's right. Yeah. And if they're not doing it themselves, they're doing it. I mean, neighbors are getting together. Yeah. And saying, well, shit, I'm not going to spend $350,000 on a sprayer just for me, right? Yeah. But working with neighbors and figure out how you can kind of share costs. And, yeah. So. So, So I was just thinking about this. When you, within your company, when you have potential clients that are in a challenging spot that are looking to refinance some stuff, get stuff squared away, are you doing any,

or are you referring them? Like, are you in the consulting part of it, too, as far as, are you telling them or getting them in touch with people that are like, you got to get this straightened out or you need to know what this is? Is that part of the process? It depends. Yeah. So in situations like that, we actually get a lot of referrals from bankers who, you know, they've worked. They're scared to death. They're like, all right.

These guys is like, you take this away from me. You think about it. I mean, they're regulated entities, right? I mean, bank examinations every year. And they've maybe been working with the farmer for three years, right? And it's just like they can't do anything else. Yeah. So a lot of times in those situations, they've gotten some, you know, okay advice.

But then we'll take a fresh look at it and say, all right, we could do the deal if X, Y, and Z, right? Maybe you got to sell off the back 40, you know. Nobody wants to hear that. Or, you know, we just had one this week where part of it was, I mean, they had hired, for the first time, I think, maybe ever hired an agronomist to really, I mean, basically do all the soil sampling and come up with a plan that was affordable and could increase production, right? It was just something that had never been done, right? So that was part of the condition of our loan, right? Yep.

So if they're not and we're seeing a gap, and it's like you can look at an area of the country, and it's like, all right, maybe you aren't going to be a top 10% of those county yields, but based on that ground and what, you know, I mean, yeah, there's something going on. Something not right, right? And we're not experts, but we know experts, right?

And usually it just takes kind of pointing out the obvious, right? But maybe it's the second or third person who's done it, and then all of a sudden it's like, oh, yeah. Yeah. Well, sometimes it takes somebody that doesn't have a, doesn't have an existing relationship to somebody that's objective. Objective. Yeah. And I'm not going to make money because I'm going to sell you this product. Yeah. That's exactly right. Yeah. I heard probably one of the best blurbs from a guy the other day and he said, he said the best advice you can get is from somebody. that has no reason to give you advice, but it's just nice enough to do it.

Yeah. No vested interest. Right, no vested interest. Yeah. I'm like, that's kind of 100% true. It's hard to find those people, though. It is hard to find those people. It is.

It's tough to get that opinion. Well, I think that's why it's so important. I think it's why it's so important for people to have, you know whether that be whether that be that you're paying for it for coaching or whether you find somebody that you're that is mentoring you and i think that's hard for it's not as hard for your generation i don't think as it is for mine and let's face it uh your grandpa would have never would have like you don't you would never pay somebody to give you advice but um you know i just have to say, like, I've been involved with what Jace is doing with Legacy Farmer, and the software

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Saving those children is how we all go home. From binge all episodes exclusively on Paramount Plus. But the coaching side of it, I mean, I pretty much feel convicted every time I log off with a damn Zoom call, but I guess that's the purpose is, you know, I asked him, I'm like, how much money do I have to pay for you to just, so I can log on and you can be my personal hype man. So I get off like, yeah, God, I feel good. Oh, it's worth the sweet and gold, though.

Because it hasn't worked that way. Yeah, I mean, having people around you that'll speak the truth to you. Yeah. God, it's a blessing. It's worth a lot. It is. It is. That's 100% right.

Got GROC now, though, too. Grock, chat, GpT, a lot of our generation just asking GROC. You know, that's, it works. It works. That works good. People can ask Barn Talk. They can ask a question. We don't have a vested interest.

We don't have a vested interest. So if you have a question, we can give you our honest, thoughts. It might not be good advice, but hey, at least we don't have a vested interest on what's going on in your life. We won't pull any punches with you. Yeah, no. Well, the other thing I thought that was interesting that Jay said was, I think he'd asked him about what's the biggest kind of deterrent actually sitting out and doing the books, right? And it's like, men don't like to be exposed. Yeah. Ego. So when you think about trying to find a mentor or even a grower group that you're comfortable in sharing, like if it's a lot of people you're going to run into every day,

maybe at church or at the ball game or this or that, you're going to hold a lot back. I would hold a lot back, right? But if there's a cohort group, like with what Legacy is doing, where it's people spread across the country, it's a little bit a safer place, I would have to imagine, where, all right, I'm going to share something like this that maybe I'm kind of embarrassed.

I even did it. But what hell do I care? This guy's in Kansas or this guy's Louisiana, right? It's all about getting better. Yeah. Land, I know. We talked a little bit about it. You said it's coming down a little bit in places that you've seen.

Well, yeah, and to put it into context, I mean, we do business in 30 plus states, right? Yeah. So you're seeing, I mean, California and Pacific Northwest, you're seeing some pullback, you know, 10, 15%. The number of reasons for that. I mean, they're, you know, if you were growing almonds or pistachios, right, you've had a hell of a hard time the last few years. kind of the COVID hangover supply, a lot of supply. Nut prices are starting to rebound, but there's a lot of land on the market and coming on the market because of the failures that went on out there.

And so you're working through it. There must be a lot of price protection in the nut business because I've been, I'm an avid cashew eater and I can't get no deals on my planters cashews. I was at the grocery store the other day. The big bottle, the big cans, like $15. Nuts are not cheap. This shit's not right. Somebody's making it.

Somebody's not passing the savings on. I don't think. I want to be the pecan farmer because, you know, mixed nuts, you're always looking for the pecans. Always eating the pecans. I am anyway. Yeah, this is the son of a bitch that he will go through a can of mixed nuts and he'll eat the pecans and it'll eat the cashews.

And for Christmas, I'm going to find somewhere where you can just get like a five-pound can. of nothing but Brazil nuts. And that's what you're getting. That's what you're getting. That's going to be my coal for Christmas this year. Because you take every time I go and I'm like, that's how I know you're there.

That's how I know if he's been in my house. See, I would always eat the rye chips out of the checks mix. Yeah. Now I see you can just get a bag of the rite chips. Yeah. Somebody figured it out. You're golden. Yeah.

There you go. Yeah. So do you think there's a bubble or do you think land is just going to continually go up? And it is a, I mean, it obviously depends on the area, I guess. But I think we're kind of in a pause right now, you know. Would I, do I think five years from now we're going to, you know, prices are up? Yeah. I think we're going to trade here, you know.

I just think there's until the profitability is back in row crops, I don't, I don't see big increases in land prices over the next couple of years. It's not going to get cheap or sore. I know. Washington County, 80 acres just sold two weeks ago for 17.5. It isn't softening any. Yeah. Now, anywhere that you have, anywhere that you have diversified farming,

like here our claim to fame is hogs. There's so many people that have that diversification and have sheds paid for, have that income. land is not going to, it's not going to soften. Yeah. And I think, too, there's a backstop, even if prices come down a little, which they could, there's a backstop of, you know, compared to even, like, look back at 2014 ethanol kind of prices, right? We came off 10, 15%, stayed there for three or four years and then up it went.

You know, I don't know that, well, compared then to now, I mean, just the knowledge of ag land. land as an investment tool is so much greater, right? And so you see whether it's an institutional investor or it's just the guy in Iowa City who's the doctor and grew up on a farm and sees the 80, right? I mean, I think there's just, there's been so much education in a good way about land as a hedge against inflation.

And when you see all this volatility in the stock market, people start thinking about land again. Yep. That's right. Yeah. So, yeah. Yeah, so I think we kind of putter around here for a year or two, but I don't see huge dips. Yeah.

Unfortunately. Yeah. For people looking to buy. Yeah. Right. We talked about AI a little bit with Grock. Yeah. AI in your business.

Is it something you're looking at? Is it something that you guys use every day now? What's that kind of looking like? Are you investing in it for your own, for you guys? So this guy back here, you know, put them on camera. But we do use it more and more for writing content, right? So it's one of the great things about as a smaller firm. And we don't have a 30-person marketing team or a research team,

but we're using it for content and research and then putting our spin on it, right? Kind of fact check. And so in that regard, like getting our message out, it's really, really helped. The thing I think about going forward is, like, how will my job be replaced? Right. And I say that in, like, how we, as lenders, look at, like, credit. And sometimes we overcomplicate it, right? and I remember looking at software probably 10 years ago that, you know,

so we do a lot of our underwriting based on tax returns as far as a starting point, right? So, and it was the software was supposed to scan, read the tax returns, take the numbers from the tax returns, and put them into your underwriting software, right? And it was a cool concept, but the error rate was so great, right? now I think those error rates are going to get to the point I mean it's I mean it's already happening some you know some bigger firms that have the capital to do it have already bought it and are doing it right so taking out the manual entry of you know all right tax return says this I'm going to plug it into my underwriting so that for sure is going to go away that'll be a huge boost to like processing times and

decision-making times. So I see it as a tool that we can use to supplement everything we were going to, we were doing. So I asked our, you know, something on our credit team today, I'm like, how many, if you look at a deal, right, you get an application in, you've got three years of tax returns, you've got balance sheets, you've got the appraisal and all that, how much time are we spending actually inputting that data and creating a memo versus taking a step back and thinking about, the deal and the risks involved, right? Right now it's probably 90% of your time is actually getting the data into a form where you can make a decision.

So if you can take that down to 50%, we're going to make better decisions. You're going to make quicker decisions. You're not going to get kind of lost and just grinding out the numbers. You're actually going to take a step back. So that time will still be there. But I think it's just you actually, you'll spend more time thinking about, okay, what could go wrong? what could go right?

Is this priced appropriately? What else are we not thinking about? So, and I think, I mean, it's got the potential to really change our business for the good. So I, other than doing a Google search and it pulls up the whatever, I don't use it, and I should. It's one of those technologies I think that I remember I was out in Twin Falls, Idaho, gosh, 15. years ago. And we use a lot of, a lot. We have some key, like what we call correspondent lenders. So these are guys that are in a town, and they're the guy you go to if you want a mortgage, right? It's not as common in the Midwest because we have so many banks. Yeah.

You get in parts of the country where you don't have a bank in every county or whatever. It's like, you got the loan guy. And so, but I remember him telling me, you know, 15 years ago, he really hadn't embraced at that point, like, even just an electronic spreadsheet, right? And, you know, I mean, he was just, he's the guy. I'm like, it was, we're going to sit down on a napkin or a scratch pad or scratch it out, whatever. If I have a good feeling about it. Of that good feeling about it. And maybe his way was better, right? It was kind of the old saying, good man, good land, good loan, right? But I remember him telling me, he's like, there'll be something come along in your career, Jake, that if you don't embrace it, you're going to be obsolete.

Yep. You know? And I've thought about that. I think about that in terms of AI and like, all right, I still got a few years left. Yeah. Probably should embrace this a little more and figure out not only for me, but as a company, you know, how we should be utilizing it. Yeah. Yeah.

Yeah. It's moving fast, man. It's rapidly growing and changing and getting smarter. It's crazy. Yeah. I think the, I think the surprising thing, well, I'll give you a perfect example, how fast this technology is moving. So my oldest son, he has a company and they do real estate photography.

And all these realtors want, they call them Twilight photos. So they want you to give them a photo, give them a set of pictures of what the house looks like as the sun is setting and all the lights are on in the house because it looks pretty. So years ago, you know, obviously you had to traips your ass out there to take a Twilight photo. Well, now they literally take the photos and then they would drop box them or put them on a server to what country? Is it Thailand? land. Some foreign country that was up when we go to sleep. I don't remember which one. And for $4 a photo, I think, $4 a photo, they would take a regular photo and they would make it a Twilight

photo, which, so they could do it themselves using Adobe Premiere. Yeah, okay. Or what's the? Photoshop. Photoshop. But it takes a lot of time. But they would send it there and pay them $4 a photo, and the next morning, it'd be in your drop box done. Right. Well, now guess what? AI is so good. They can just do them themselves. And the guy that they were that they were working with called him the other day, upset that he's not using them. And he wanted to know who was doing it and he would match their price. And they had to explain to him that, no, we're not using another guy. We're using AI. And I just thought, that's a bad feeling. That is wow.

Because that guy had to have been like, okay, what was my plan B? Because, you know, it's just, that just means that tomorrow somebody else is going to find out. The next day, somebody else. And then next week, four people and da-da-da-da, and next thing you know, done.

That's right. But I think that's where AI is going to be so surprising is a lot of people thought that, you know, AI is going to replace all the remedial tasks of like assembling cars and factory, factory linework and all that. That might be true to a point, but you're going to need those people, are all going to be employed to actually service whatever piece of equipment is doing that. I think the ones that nobody saw coming are copyrighting, like legal people that do research

for lawyers, research for this, because that stuff is so, it's just going like that. Right. It's just, it's moving so fast. So fast. And I feel that hog building, chore, toady, I think my job will be safe. I'll be one of the last professions to get upended by AI. Oh yeah. Unless the robots, unless the robots start. I do, I, I, I keep messaging Elon about that Tesla bot. You got one yet? No, and I think it'd be a great, idea. I think they're worried about when they get it back, how they'll get the smell out. Yeah. Yeah. Yeah. Well, I do think we're kind of at a tipping point in our business. I remember like my first job, I had this IBM think pad. It was like a brick. Yeah.

But, you know, the screen was about yay big. And you did all your work on it, right? But there was enough paperwork, you know, in addition to that. And now I walk into my office and I'm like, I got two big, huge screens and this and that and the scanner. And I think about how many, you know, deals that we can process in a day compared to what I could have done 25 years ago. And it's certainly a lot, lot more, but it's not like this exponential end of the hockey stick yet.

And that's, I think, where AI will come in. And it's already, I mean, it's already happening. And other, so you think about like residential mortgage market, right? So that's a very homogenized loan. It's like, all right, house is worth this. It's based on your debt to income and your FICO score. You got really three factors going in. All that stuff's been automated for years, right?

But in ag, it's, you know, we always say it's such an inefficient market because every farmer is different and their operation is different and the quality of financials are different. And it's not, to get to the answer takes you, you know, say 12 more steps. than it does on a residential mortgage. But I think we'd be foolish to think that because it's been that way, right, and we just think we're smart because we know how to do it, that it'll always be that way. Right? Yeah. So it does, it worries me, well, just because of my job, but it excites me in that.

That would be good for agriculture. Yeah. Yeah, I just picture you in the conference room. You got everybody in there. this thing in the middle and you just go Jarvis. Okay, what do you think of this deal? And it goes, that's right. You know? He can pull 100 years of data. Yeah. Just like that. He can talk about water in California. He can talk about. You call him Paul. Yeah. Right. Paul 2.0. What do you think? He's got it all. We just downloaded Paul into Jarvis. Yeah. All right. Yeah. That would be.

That's actually a pretty good idea. Yeah. How do you, how do you get, I guess, let me start over again. Since you change positions, do you ever feel like you don't get as honest opinions as you did when you were just one of the guys? Honestly, no. That's good. I wanted, because I wondered about that because that's an interesting dynamic. It is. Yeah. Because I was going to say when we introduced you that I guarantee you there's at least one of your guys. when they found out that you were going to take that position, they were thinking, ah, shit, I probably shouldn't have, I probably shouldn't have hazed him quite as hard when he started here. God, I hope he doesn't hold that against me. Yeah. No, I don't, I honestly don't feel it. And I would

be disappointed if I did. So that goes back to culture. Yeah, for sure. How do you, how do you keep that culture? You talked about how, you know, people have come there, have worked in the bureaucracy and, and they That's part of the reason they're there. As the head of a company like that, how do you keep that culture and not lose that? Yeah, I saw an interesting quote the other day. It was like leadership. You're not only the leader,

but you're the protector of the standard, right? Yeah. So I think it's harder, right? The bigger you get, it's just harder to do it. But we talk about it every day. and I think it's how you hire, it's how you fire. And I say that because, like, we know what our values are, right? They're on paper.

They're just not on paper, but we've stated them, right? And then when we're looking at people to come in, it's like, okay, resume's great and everything, but, like, do they check all five boxes here? And if they're short in an area, like, they're probably not going to be a fit. so we try to attract people who want that culture and aren't going to come in, especially if they're in a leadership position. Yeah. You know?

And then you're also quick to fire, right? So it's like, all right, not hitting your numbers is one thing, right? Maybe there's some external factors, but are you hustling, right? You're still getting at bats. You know, if you're lying, you're gone, right? Yeah. But I think it's just, I've been in a, enough places where what you just said happens a lot where you got a lot of yes people around

and I've just seen it destroy organizations right maybe not destroyed but maybe it's like a slow death yeah yeah you know so it is hard though um but you just got to be aware of it and it's just how you lead and what I try to do is like I'm hopefully our team would say this but I try to be as transparent as I can. Open book. Here's what we're doing. We share our financials at the entire with the whole team. You know?

I think it builds that trust where, and we don't over-react, right? I think it's kind of like just like raising kids. If they come to you with a problem or something happened and you chew their ass and you make them feel like, you know, like shit, well, what happens the next time they have a problem? Exactly. not going to come to you. So it's just building trust with our team, being transparent.

Here's where we're at. Here's where our challenges are. Being honest. And hopefully that creates that environment where they're going to tell you the truth. Right. And to this point, yeah, our team has no problem saying, are you sure about that? Yeah. But I value that, right? I mean, I've been a lot of different places, but, you know, I've never been a place where I think we have as open a dialogue about what really matters to our business, how it can move it forward. We might, we may not be able to do, we still have a board that we salute and shareholders that we salute, right? So it's not that we're going to, you know, just run it every day like we, you know,

like we want to or, right? There's gives and takes, right? But, um, and it's choosing your partners wisely, too. What do you do for fun outside of Contra? What do you, what gets you going? Oh, anything outside. So, I grew up fishing. a ton. We like to escape up to Northwoods in Minnesota. So do a fair amount of hunting. I came into hunting late too.

You know, talk about a rookie farmer. But I didn't hunt growing up, fished a lot. I started hunting when I was out of college. And I got into boat hunting here a couple years ago, again, trying to learn something new. I just never had an opportunity to do it.

And, man, you can go down a rabbit hole. Yeah, that's the thing. Like hobbies are just like, gosh, there's so many. And it doesn't matter which one you pick, there's a lot of money to be spent. Yeah. And there's a lot of shit to learn. There's a lot of shit to learn. Yeah.

Yep. But I think anything that gets me outside, especially with my family, you know, sharing their passions. And I like hopping on the mower and just grass, you know. Swivel coozy. I mean, that's right. It's my retirement. You're talking about your dad and, uh, his trips home in the P-51 Mustang.

And it was funny because I had just had this talk with my wife about, like I was thinking back to the five years we were farming. I'm like, honestly, out of all those years, I probably had the radio on in the tractor one time. I basically disbanded, harvested, hauled grain in silence. And it was like, I heard it called on a podcast, I don't know if you ever listen to Arthur Brooks, but he said it's a default mode network where your brain goes, right?

Especially now or so many distractions. So back to your question, anything that I can kind of just reset and it's quiet. I think that's why I like hunting so much and fishing. And, you know, it's just away from, you know, the phone or the computer. You do your best thinking in those times. Mm-hmm. I think people don't do enough thinking anymore.

I think that's the hardest. That's the hardest thing because it's like you said, it's all right here, information all the time. And just sitting with your thoughts, people don't sit with their thoughts probably enough anymore. You may have seen this. And I'm sorry to this guy because I should know who this comic is. But I saw one of the, and this is so true. And it kind of goes back to our generation.

He's like, we got to get, we got to bring six. we got to bring cigarettes back. Because he goes, he goes, do you know how much mental health has suffered in this country without cigarettes? He goes, like I remember, he goes, do you know how many holidays were saved by Aunt Bertha going out on the porch smoking a cigarette? No, he goes, you don't have that thing. He goes, you used to be, if you pulled into a, if you pulled into a 7-Eleven and there was

a guy standing in the parking lot, speed smoking a cigarette, walking in a circle, that guy was doing therapy. Yeah. Yep. He goes, we don't have that today. I laugh so hard. That's so true. My dad tells the story.

So my grandpa, he was a union electrician for four years in Chicago. He moved to Iowa after he retired where my dad landed. And whenever he had to wire a three-way switch, he would stop. He'd go out and he smoke a cigarette. And he'd draw the diagram, you know, because like the three-way switches were like, okay. Yeah, but they're complex, right? Yeah. But yeah, to your point, it was, he'd go outside, slide up a heater, write it down,

sketch it out. That's how we thought. Yeah. And I think that's just an example of how people process stuff. And today, well, instead of stuff, well, now it's like when it's hard, when you got to think about something and you don't want to think about it, you just go, shut my brain off. Uh-huh. Yep.

You know, you don't go relieve your. yourself and then start thinking about the problem more deeply, you just go, I don't want to think about that right now. Let's open my phone up. That's right. You know, yeah. Fidgeting is always, I was listening to another podcast. It was on, oh, the acquired podcast. They talk about, you know, different companies in their story, but they were talking about Rolex. The interesting thing, I don't know how the way through it, but they were talking about how they had a real struggle going from the pocket watch to a wrist watch. And they surmised that like the pocket watch

was like the fidget tool of the early 1900s. If you're standing in line, right, waiting for something, pull out your phone. You're just kind of fidget in there. You're playing with changing your pocket. They pull out the pocket watch, look at it. They knew what time it was. They flip it, they, they know, wind it, right?

And so when it was on the wrist, it was just weird. Yeah. They needed something to fidget with. They didn't know it. That's crazy. They struggled with that. That is crazy. Yeah.

That's insane to think about. Yeah. Getting back to like we were talking about how we think all our problems are new problems. Like, yeah. Our brains have kind of worked. We should read that. We should read that on the podcast. Yeah, let's grab it.

Let's grab it. This is, have you probably seen this, Dad? You read it, Jake. Okay. Yeah. You've probably seen this on Twitter, but it talks about, you, you explain it. Yeah. Okay.

So this was, uh, printed in a newspaper called Farm and Dairy Magazine in 1927, and it was printed by the extension of the University of Tennessee. So written in 1927, it's titled How to Go Broke Farming. And it gives 10 reasons. So number one, grow only one crop. Number two, keep no livestock. Number three, I think is interesting.

regard chickens and a garden as a nuisance. Take everything from the soil, return nothing. Don't stop goleys or grow cover crops. Let the soil wash away. Then you will have bottom land. Don't plan your farm operations. It's hard work thinking. Trust it to luck.

Number seven, regard your woodland as you would a coal mine. Cut every tree, sell the timber, and wear the clear land out by cultivating it in corn. Number eight, hold fast to the idea that methods of farming, employed by your grandfather, are good enough for you. Number nine, be independent, don't join with neighbors in any form of cooperation. Number 10, mortgage your farm for every dollar it will stand to buy things. You would have the cash to buy if you followed a good system.

of farming. Holy cat. That's like spot on, man. Not a hundred years ago. That is crazy. You can just take this today, you know, and so. There's not really any new problems. We like to say that there are, but, I mean, there are, but, you know, a lot of problems. Right. They're the same problems. Yep. That's crazy. I thought that was interesting. Have you ever seen that before? No, never seen it. Yeah. I was floating around Twitter about a year ago, and I was like going through some, like journals I keep it and it was on there. I'm like,

that would be a good one time. That was good. Yeah, that's so true. That's shit people need to hear. Yeah. Apparently, repeatedly.

We all have to. Repeatedly, yeah. Yeah. But it kind of goes back to your original question about what are you worried about, you know, with everything. It's like, we've been through all this before,

right? And I wouldn't bet against the American farmer. I really wouldn't. Yeah. But you got to recognize. Okay, which one of those 10 things are you doing? Yeah.

For sure. Or you're not doing. Or you're not doing. Yeah. Yeah. Yeah, for sure. Well, this is a great episode, Jake. We appreciate you coming on. Where can people find out more about Contera or get in touch with somebody or even like that? Yeah. No, thank you for having us. This is, you know, you guys are great. Always enjoy it. Conteraag.com is where you can find us.

Okay. Awesome. Cool. Well, Jake, we appreciate it. Guys, if you got any value from the show, shared out with the people that you know, leave review on Spotify or Apple, use code Barn Talk to save 10% off your farmer-grade order. and we'll see you back here next week for another episode.