Large specialty crop farm is hot topic during economic downturn
ST. THOMAS, N.D. — Ron McMartin Jr. doesn't seek the limelight, but the scale of his farming activities often make him a subject of conversation and rumors in times of commodity price declines.
McMartin, 50, is the president and CEO of McM Inc., in St. Thomas, N.D., one of the largest farms of high-value specialty crops in the region. The farm is about 39,000 acres, with about 2,000 acres of sugar beets and 4,200 acres of non-irrigated potatoes.
He's cut back from the 59,000 acres he farmed at the peak of 2012. The farm once included a whopping 11,000 acres of beets, in the late 1990s before the Roundup Ready beets came along.
McMartin's scale is unusual, but he keeps a low profile. Instead, he sticks close to home, focusing on red potatoes, sugar beets, four types of dry beans, corn, soybeans and spring wheat.
The farm grossed $45 million in annual crop sales and is now at about $35 million. "People are naturally curious about things they aren't familiar with, or don't understand," McMartin says. "Most of the critics have never met me. I swear I could be in a group of two people and no one would know who Ron McMartin is."
In the family
McMartin grew up with his younger brother, Larry. Their father, Ron Sr., raised small grains, and in 1974 added pinto beans to the mix.
It was an era when farm children saw it as their role to help the farm succeed. "We were collectively invested in the success of that farm," Ron remembers. "Working on the farm didn't feel like we were being punished; it made us feel like we were a part of it — contributing."
But in 1983, brothers' maternal grandfather and the farm's hired hand, Lester Aasand, died. The grandsons stepped in to fill the gap — often leaving school at 1 p.m., and spending afternoons on the farm. "You wanted to contribute. You thought this was what you were supposed to do," McMartin remembers.
In 1983, the family added sugar beets to the mix. It was a time of high interest rates and low commodity prices.
McMartin graduated high school in 1984 and attended North Dakota State University, where he majored in agricultural economics. He relished the agronomy and marketing classes, some taught by his adviser Bill Wilson. He remembers being sobered by classmates who were in their 40s, forced off the farm by the poor farm economy. "They wanted to be in agriculture, but they couldn't farm anymore," he recalls. "I thought, 'Holy crap.' That's what the 1980s is doing to farmer."
In 1987, a sizeable farmer back home approached the McMartins to rent eight quarters of land. He left NDSU one year shy of a degree. "Opportunities aren't something you can put on a table and hold until it's convenient," he says. The McMartins were farming 4,000 acres.
Ron Sr., Ron Jr., Larry started farming as sole proprietors. Ron Jr. got financing with what is now the Farm Service Agency. He started with 40 acres of stock in American Crystal Sugar Co. He rented land and tried to emulate the work of impressive, larger farms in the Drayton and Hoople areas of North Dakota.
He enjoys fieldwork, but not as much as many other farmers. "I've always felt more at home at a desk than in a tractor," he says.
From 1986 to '87, farmers were starting joint ventures with American Crystal beet stock. The trend accelerated 1988 and 1989 when the region suffered back-to-back droughts. The young McMartins used crop insurance, while more established farmers were self-insured.
In 1993, weather turned wetter and farmers started being hit with fusarium head blight in their wheat, barley and durum. Again, some wanted to rent their land to McM Inc. to raise sugar beets. Farmers would approach Ron Jr. and ask if the company was interested in taking over operations. "They'd say, 'Here's my land base — turn-key thing of 4,000 to 5,000 acres,'" McMartin says. "'And do you want to raise my beet stock? And by the way, do you have a job for me, driving tractor?'"
There was also the "biblical" winter of 1996 to '97, when Red River flooded in Grand Forks, N.D. Some sugar beet farmers near the Red River weren't able to plant their beets and American Crystal allowed "shift acres" to be planted farther away. "That year we went from 9,000 acres of beets to 11,000 acres," McMartin recalls.
The farm peaked at 11,000 acres of beets before Roundup Ready beets came along, making them easier to grow.
St. Thomas home
In 2000, McM Inc. leased the big Larimore Farms land, base in Larimore, N.D. — 22 irrigated circles, each at 130 acres, for about 2,860 acres. McMartin started raising corn on part of that land when prices were $1.50 per bushel cash and the profit in the crop was the federal Loan Deficiency Payments.
In 2003, the company dipped its toe into the potato world, growing red potatoes for the so-called "fresh" or "table stock" market.
"We didn't have the history of it, but had the land quality and land base," he says. Much of the growth came because they hired employees with potato experience and they were able to make relationships with wash plants that would store and market them.
In February 2007, Orten Brodshaug, near Kindred, N.D., offered 10,000 acres for rent in a rare-for-the-day land rental auction. McMartin picked up 5,000 acres in the Hickson-Mapleton area of Cass County, in what he'd call the Fargo farm, and another growth spurt occurred from 2008 to 2013 years, primarily driven by the strong corn markets related to drought and the corn ethanol market expansions.
"Corn was king and we raised dry beans in rotation with that," he says.
In 2008, farmers in the Red River Valley started planting Roundup ready sugar beets. Some joint venture partners with McMartin started raising beets again, in part because the weeds were easier to manage.
McMartin remembers maxing out at about 59,000 acres in 2012. "I was actually farming biggest when prices were quite good," McMartin says.
But in 2012, he had about 19,600 acres of corn when the prices "went berserk." People were selling corn off the combine for $7.50 a bushel, and farmers planted early to harvest corn by the end of September. Ironically, one of his career regrets is missing "a large chunk of the market" in 2008 because of his long-term strategy of selling crops forward — "sometimes years forward." He sold with profitable pricing, but missed the top, which happened in July 2008.
"That wasn't a deal breaker, but it irritated me," he says, smiling.
And yes, he returned to the conservative strategy, which eventually paid off. "You wait for so many years for a market rally of that magnitude, and you're oversold. You were rewarded for being a lousy marketer that year."
In 2013, farmers had a late spring snow and a bad corn year. Commodity prices started to spin downward. Corn prices went from the $7 per bushel downward and now are below $3 per bushel, with similar ratios for wheat and soybeans.
In 2015, McM Inc. shifted its potato production to the north at the St. Thomas-based headquarters, and invested $2 million in a potato transloading facility. Soils in that area are the Glyndon soil types, which are favorable to growing and harvesting potatoes without creating bruises or other blemishes.
They concentrated their sugar beets in the Grand Forks area, dropping from 3,400 acres of beets to 2,000 acres in 2016 because one of his major joint venture partners wanted more money than he was willing to pay.
In late August, a friend in the potato industry called his office and McMartin answered.
"The friend said, 'I'm glad you answered,' and I said, 'Why?'" McMartin remembers. "He said 'I just had someone call the day before, and say you had taken your own life.' Obviously, I can laugh about that now, but it wasn't funny at the time."
He thinks the rumor originated from a failed tractor trade at a Red River Valley dealership. The trade deal that involved nine pieces of equipment wasn't consummated, but led to a false rumor that his equipment was being repossessed. Three of the McM Inc.'s tractors ended up on the dealer's lot. "They were surplus," he says. "They weren't repossessed. Everything else is functioning or residing on our farms."
"Telling something negative about somebody definitely scares the bejesus out of them," McMartin says. "I've had a few (landlords) that I've had to calm down and a few that haven't given me a chance to visit with them" and correct the rumors, he says.
Certainly, farming isn't as much fun as it was when it was more profitable, he says.
"Is there reason for people to be concerned in production ag right now?" he asks. "I am. In this part of the country, we've seen terrible commodity prices and terrible weather in 2016. It's difficult to manage when your farming area is hit with 30 to 40 inches of rain in a summer."
He thinks it's remarkable that his 2016 crop has been as good as it's been, despite the weather. He was still harvesting potatoes, dry beans and corn as of Nov. 9, when others have given up finishing. He hoped to get finished the week of Nov. 14.
Commodity prices are low, but prices have come up on dry beans, soybeans and potatoes. Sugar beets averaged more than 35 tons an acre, but projection that 2016 beets would be worth only $38 gross per ton, which is not good news.
McMartin says he knows of farmers who won't be able to get operating loans next year. Some have planted a crop without a bank involved. "Nobody talks about them because it's boring," he says, noting that they get their funding from vendor input financing, or have found.
"We're trying to do what every farmer in the Red River Valley is trying to do: trying to make sense with a very challenging time," he says. "We're changing crop mix, land base, input resources, changing everything we can to make things perform better. Whether we're going to have success, I can't say, but all I can do is try. It's not about ringing the bell anymore, but how to stay in an industry and career that I enjoy. I think it's going to take a helluva lot of creativity, to tell the truth."