Tackling tiling

MAYVILLE, N.D. - Field drainage seems like an old story in the Red River Valley, but until recently, it's been mostly "surface" drainage. In the past few years - especially the past two - there's been an accelerated trend toward subsurface drainage - tiling.

The big reason is that land prices have increased. The price of tiling is smaller, in comparison.

But there also have been two decades of wetter Weather and the advent of salt soils. And with the recent run-ups in crop prices, there is available capital for this kind of long-term improvement. Experts say there is a lot of room for investment.

If only commercial company activities are considered, people in the business estimate there may be fewer than 75,000 acres tiled in the Red River Valley region. (To compare, that's a land mass roughly one- fifth the acreage of American Crystal Sugar Co.'s valleywide production of 500,000 acres of sugar beets.)

Per-acre costs of tiling, using a professional installer, range from about $400 to $600, according to a survey of installers. Companies say the cost typically is recovered over a five- to seven-year payback and is almost immediately recoverable in the selling price of land.

There are only about three or four established companies doing the work in the region. Field Drainage Inc. of Brooks, Minn., has been installing tile for 24 years. Ellingson Cos. of Fargo, N.D., have been there for eight years. A new kid on the block is Agassiz Drain Tile L.L.C. of Mayville, N.D.

Four muddy feet

Ross Johnson and Derek Peterson, co-owners of Agassiz Drain Tile, both are 28. They've known each other all their lives and were good friends when they graduated high school together in 1997. They were roommates at Northwest Technical College in Moorhead, Minn., where Peterson studied commercial art and Johnson took up electrical contracting.

In 1999, Peterson returned to Mayville and worked for farmers in the area.

In 2000, Johnson returned to the farm to help his father, Neal, and two uncles, and started his own farming on a small scale.

In the Mayville, farmers were hit by excessive moisture in 2002, 2003 and 2004. In fall 2004, the Johnsons decided to install drain till on some of their wettest parcels. They hired a local firm, but the economics of the transaction got young Ross thinking that this might be an opportunity. In spring 2005, Johnson and Peterson started doing research and after that fall's harvest, they went on their own tiling education expedition and found themselves in Ohio, Michigan, Illinois and Iowa.

There were three installers they wanted to meet.

"We called them first, told them what we were doing, and they said 'Sure, come out,' and they put us to work on their crews," Johnson says. "We jumped right in the mud with them."

They visited Timewell Tile of Timewell, Ill., a tile manufacturing subsidiary of ADI (Ag Drainage Inc.) of Piper City, Ill. They spent time on several farms with ADI crews in all of those states. Near Lansing, Mich., they stopped at the Land Improvement Contractors Association, a trade organization.

"That area of the Midwest has been tiled for 100 years," Johnson says. "Being it's brand-new up here, we wanted to learn from their mistakes - the newest techniques of design and installation."

One difference between the Corn Belt and North Dakota is that they can tile all winter down south. If the southern areas get frozen out at all during a winter, it's just for a month or so. The deepest frost there runs 2 or 3 feet, while Red River Valley area soils usually freeze to the 5-foot level, and sometimes 6 deep, depending on snow cover.

In January 2006, Johnson and Peterson formed Agassiz Drain Tile L.L.C., initially partnering with ADI. In spring 2006, Johnson and Peterson were ready to jump into the tiling game.

Agassiz Drain Tile subscribed to the ADI philosophy of narrower, shallower spacing of field drainage tile - 40 to 50 feet, rather than a traditional, 80- to 100-foot program that has been used for several years.

"We'll go down to 30 feet (apart), too," Peterson says. "But 30 to 50 feet is ideal, depending on soil structure."

At the narrowest spacing, Agassiz uses smaller, 3-inch lateral lines - slightly smaller than the more typical 4-inch diameter. And they place the pipe 2.5 to 3 feet deep, which is shallower than some competitors. The theory is that the water doesn't have to move through as much soil to get to the pipe.

The jobs usually start with "mains," or main pipes. These are deeper than the smaller "lateral" tiles that run through the fields. The mains typically are drained into a ditch, and the exit points are fitted with animal guards and also must be maintained for weeds.

The most expensive are 12-inch diameter, dual-wall pipe and are for the areas closest to the exit point. This tile is smooth on the inside instead of corrugated.

The next sizes are 12- and 10-inch single-wall - corrugated on the outside and on the inside, and then 8- and 6-inch, corrugated. Tubing is sized larger as it goes closer to an exit.

Changing course

Initially, ADI was a major shareholder Agassiz Drain Tile and expected to operate it as a tiling crew. ADI, which bills itself as the "nation's largest and lowest cost provider of subsurface drainage systems," said it planned to increase to four crews operating in the Red River Valley.

ADI supplied bookkeeping and training for Agassiz Drain Tile and considered bringing a pipe manufacturing plant to the region. Johnson and Peterson thought they could run the plant in the winter, their off-season, and produce enough for their own need as well as others.

But in April 2007, ADI gave Johnson and Peterson an opportunity to buy out ADI's share and operate the business independently. ADI, which 20 crews nationwide, agreed not to compete in the region and continues to supply piping to Agassiz Drain Tile. The company has since decided to install a manufacturing plant in southwest Minnesota in 2008.

To buy out, ADI got help from Choice Financial.

"Lots of money," Peterson says. "They realized it was a leap of faith, and they stood behind us."

The biggest investment, of course, was the self-propelled tile plow. The one they bought is a different brand than the one ADI had supplied. Brand new, and fully set up, such a machine could run into the half-million-dollar figure. This machine is a year old and didn't cost that much.

They also had to purchase a track hoe (excavator), a tractor and stringer trailers, which carry the coils of tile. There's also laser equipment, global positioning system gear, trailers and tools galore.

In 2006, Agassiz Drain Tile installed 650 acres of tile in the spring and another 750 in the fall - nearly 1,400 acres total. They hope to put in about 1,750 acres in 2007.

While exact costs are based on conditions, Agassiz Drain Tile typically charges from $450 to $600 an acre. On 30-foot spacing, you need 1,500 feet of tubing, while with 40-foot spacing you need 1,100 and with 50-foot spacing it's 900 feet.

The fledgling company is only one amid a small, but aggressive field of competitors.

Established players

Ellingson Cos. (often referring to itself as "Ellingson Drainage") of Fargo, a full-service company, has been tiling for 35 years in southern Minnesota. The company is based in West Concord, Minn. (just northwest of Rochester) and started installing tile in the Red River Valley in 2001.

Max Fuxa, Ellingson's sales manager based in Fargo, says the company has been working with two crews for three years. Fuxa says his company is seeing increases in interest among a wide range of crops, all across the region, from Sisseton, S.D., into Canada. He declines to be specific about how much tiling his company has done in the area.

Citing high land prices and high commodity prices, Fuxa acknowledges that the tiling trend probably is following land value changes, which generally are south to north.

Fuxa says tile drainage often is the "most limiting factor" in crop production, and farmers need the higher yields to make money. He says the reason tile has been less prevalent in the Red River Valley has been historic misconceptions that tile wouldn't work here because of the flatness or heavy soils.

Fuxa says that first, there are a number of sandier soils in the Red River Valley, but he also says it works with heavier soils, too.

Similarly, Field Drainage Inc. of Brooks, north of Mahnomen, Minn., also has two crews. Del and Cindy Determan, owners of the company, are some of the pioneers of the business in the region. They came from southern Minnesota in 1983. The Determans and their sons, Jess, Brad and Aaron, operate two crews that each install roughly 2,000 acres of tile drainage in the region per year.

Determan says it initially was a tough sell to get farmers to invest $300 per acre into land that was worth $200 an acre. To supplement his income, he traveled to southern Minnesota and to irrigated areas of eastern Montana to pay the bills.

"Every year for the last 10 years has been our best year," he says. "When you look at $1,000 land today, now when I tell them it's going to cost $400 to $500 to put some tile in, it's not such a big deal."

Determan says an increasing number of farmers have purchased their own tiling installation equipment. Most of those are pull-behind machines that cost about $5,000.

As for the spacing issue, Tom Scherer, a North Dakota State University agricultural engineer who specializes in irrigation and water issues, says research at the University of Minnesota Crookston indicates 40-foot spacing in the heavy soils of the Red River Valley probably is appropriate for proper draining. But soils vary, even within Fargo clays, and designers can optimize systems in various ways.

Much of that research involved Hans Kandel, who did some of this work while he was a University of Minnesota area agronomist in Crookston. On July 1, Kandel started work at NDSU as an Extension Service broadleaf crop agronomist.

"We're just scratching the surface with this new technology," Kandel says of the tiling trend. Besides the crop and yield response, which averages 10 percent to 15 percent, Kandel says other benefits are real.

"You have less cost for fuel," he says. "The soil is mellower for planting. You're getting into the field, in a more timely fashion. Harvesting is timelier. When I talk to farmers, they talk about how they can sleep better at night because their crop is safer."

Peterson and Johnson say the payback on tiling generally follows the value of crops - sugar beets and potatoes are fastest, followed by edible beans, corn, soybeans and then small grains.

"Yield monitors have sold more tile than any other salesman," Peterson says.

"I would say, right now, that 70 percent of the land we've bid has been corn land," Peterson says.

To get the job done in a timely fashion, Agassiz Drain Tile crews sometimes will want to do their work before the harvest is complete and will pay the farmer accordingly for crop damage.

"On a quarter-section, we might tear up 3 acres," Johnson says.

And as more bin sites are being built or improved in the region, farmers in the Red River Valley also are looking at tiling to provide better drainage to get away from frost boils.

Like his competitors, Johnson sees a big bright future for tiling in the Red River Valley.

"It'll take a long time, but I think 100 percent of all the farmable land (in the region) will be tiled, but that's going to take a long time," he says. "In 10 years, we might be at 10 percent. I think that the limiting factor will be how much money people have to do it."