Fultz Farms: The Value of Cooperation

fultzA year or so before investing in his first jointly-owned farrowing unit, Dennis Fultz played a key role in changing a Minnesota law that would’ve prevented more than five people from joining together to build such a unit.

“Minnesota has a strong tradition of small, independent people working together,” says Dennis, noting that the first U.S. farmer-owned cooperative was formed in this state. However, laws written to keep big corporations out of Minnesota also prohibited producers like Fultz from joining with his neighbors to access emerging technologies at a time when giant pork producers in North Carolina threatened to dominate the hog production in the United States.

Dennis was among those who compelled state legislators to change these laws. In 1996, the Tracy native and his brother Eric joined with their neighbors to build Shetek, which was subsequently managed by Pipestone.

Today, Dennis and Eric own shares in two sow barns and finish (on their own and on contract) about 30,000 hogs per year.

He wanted to be his own boss
Graduating from high school in 1965, Dennis headed for the University of Minnesota – St. Paul Campus to study soil science and agricultural economics. He wanted to work with the Soil Conservation Service, but interning with a soil scientist who was frustrated with his office hierarchy made Dennis realize he would not be happy working inside a corporation or government agency. He wanted to be his own boss.

With a brief side trip into and out of the military, Dennis returned to Tracy in 1970, where he joined his father, Bernard, and his brother, Dean, on the family farm. A few years later, Dean decided to strike out on his own, and Dennis’ youngest brother, Eric, joined the family business.

The farm was very different in 1970. “We had a farrow-to-finish hog operation with about 40 sows and a crop base of about 900 acres,” says Dennis. By 1996, the hog operation had expanded to 400 sows and the cropland to 2,500 acres.” Eric oversaw the crop production while Dennis took responsibility for the hogs.

“I struggled to be efficient in my farrowing house,” said Dennis. When the law changed that allowed independent producers to band together and adopt the same technologies that big companies in North Carolina were using, Dennis jumped at the chance to join his neighbors in building the 3,000-sow farrowing unit called Shetek. “That is the secret to the success of Pipestone,” he maintains. “They work with family farms to achieve efficiencies of scale while the producer remains independent.”

Other benefits of the System
Today, Eric, who is 15 years younger, and Dennis have doubled their investment and now own shares in two managed sow farms: Shetek and Blue Stem Family Farms, Inc. By the end of the year, they will take pigs out of Jackrabbit Pork LLC, which is similar to Blue Stem.

But group ownership of farrowing facilities isn’t the only aspect of Pipestone Management that Dennis utilizes. “We’ve also taken advantage of Big Stone, the system’s joint marketing program,” says the Tracy producer. He’s especially happy about being able to lock in specific dock times three weeks in advance for the delivery of his finished pigs. “I’m still a very hands-on manager, and being able to schedule dock times helps me even out my workload.” Dennis notes that Big Stone’s fees are offset by the extra price manager Brian Stevens negotiates for his customers.

Dennis also takes advantage of System Grow Finish’s records service. “I would rather be in the barn, working with my pigs than in the office pushing a pencil,” he explains. I had a very poor set of records to show how well my individual groups were doing.” Dennis says working with System Grow Finish forces him to keep more complete records in order to get a report back in his efficiencies, or lack thereof.

Dennis and his wife Linda both turned 65 this year and still enjoy what they are doing. Linda runs a gift shop in Tracy and Dennis, like his father, Bernard, who at 86 is still involved in the farming operation as much as he wants to be, plans to stay involved in hog production for the time being. “My son, Jay, will gradually take over,” Dennis states.

“When we bought into the Shetek farrowing unit,” he adds, “we knew we were buying something that could be sold.” If Dennis and Eric had spent those same dollars on expanding their own farrowing unit in 1996, they would have found it next to impossible to sell the farrowing facility on their farm. “But by investing in a managed sow unit, we knew there would always be someone interested in buying our shares,” he explains.

“For some producers who don’t have a younger generation coming up, that liquidity and ability to recoup their investment is a real advantage,” says Dennis. “In my case, I see my son, Jay, and my brother, Eric, continuing on whenever I decide to reduce my involvement.”

He adds, “my son, Jay, who is 40, and my brother, Eric, are my succession plan.”

Editor’s Note: Dennis and Linda Fultz have raised two children: a son, Jay, and a daughter, Jen. Jay and his wife have two children. Jen and her husband teach in the Tracy public school system and have two children. “We’re fortunate to have both families living within a mile-and-a-half of our home and to see our kids and grandchildren several times a week,” says Dennis.