Since the first line of ancestors first settled in Leesburg, Indiana, the Tom family has been making a name for itself in agriculture. Now, more than a century and a half later, Tom Farms is one of Indiana’s largest grain commodity production companies as well as a leading supplier of seed corn to Monsanto. Although the multigenerational business remains family owned, Tom Farms has evolved into a global crop production, sales and service company with 20,000 acres at home in Indiana, including CereServ Inc., a grain marketing facility, and seed corn operations in Argentina.
The Tom Farms story begins with George and Linda Tom, who emigrated from Scotland and eventually headed west where they settled in Indiana with their nine children in 1837. “We still farm the same land that they homesteaded on starting in 1837,” says Kip Tom, president and CEO of Tom Farms. “My parents started farming in 1952 with 250 acres and raised five children. Today, the family farms about 20,000 acres. We operate highly productive units, with about 45 percent of our acres irrigated producing seed corn for Monsanto and commercial corn and soybeans.”
“We also have a production business in Argentina producing seed corn crops,” adds Kip. “Although Tom Farms has grown tremendously, we’re still family owned and these values are a strong part of our company culture. My parents, Everett and Marie Tom, still live on the farm and are active in day-to-day operations.”
After decades of consecutive growth, Tom Farms understands that farming today is much more a business than just a lifestyle. As the global population rises, producers face the challenge of feeding the world and the pressure to do so in a sustainable, economically viable way. “Farming essentially is manufacturing with a finite amount of resources that need to be managed in a manner consistent with meeting the markets’ demands,” explains Kip.
Kip came to this realization at a young age and began learning just how important it is to manage resources and control costs in the often unpredictable business. “In the late ‘70s we were some of the first to put a lot of irrigation in this area and we started asking ourselves what we could do besides producing commodities to add value to the business,” says Kip. “I was in my 20s at the time and someone said to me, ‘you have to look at it as a business decision – not a family/personal or emotional decision,’ and that really resonated with me. This is where I think we started to transition from a lifestyle business to what we are today and that’s almost an institution.”
In the early ‘80s, as land values and commodity prices dropped and interest rates rose, business turned into a bit of a survival game for Tom Farms. “It was through this down period that we learned we have to be good cost managers,” explains Kip. “We learned how important it is to be sustainable in protecting the environment while increasing productivity and ensuring we’re growing. We had no choice but to look at ag in a different way.”
Adding value in South America
Kip says this change in perspective came through both increased irrigation and the expansion of value-added products. “We started getting into other crops and especially seed corn, which is still important to our business model today,” he says. “We tried sweet corn, cucumbers, tomatoes, peppers – many different crops, but at the end of the day some didn’t work out due to logistics, but it helped us continue to seek value-added opportunities.”
Today, Tom Farms produces corn for feed, food products and ethanol products consumed locally, nationally and all over the world. The company specialized in seed corn, which is produced both in the U.S. and Argentina with two sites located outside of Buenos Aires.
“Our seed corn production in Argentina allows for the delivery of the latest in genetics and traits to be delivered to producers across the globe,” says Kip. “These new genetic traits deliver value in the improvement of diets, and as well support the delivery of seed products that require fewer pesticides and show an improvement in yields. This operating model of more than 20,000 U.S. acres allows us to leverage our internal resources to support global consumers’ needs for food, fuel and fiber.”
In addition to being active in agribusiness in Indiana for more than 40 years, Kip has also served as a crop production consultant to various companies in Argentina, Brazil and Chile. This experience has facilitated Tom Farms’ entry into the South American market.
Grain handling and marketing
At home in Leesburg, Tom Farms saw another avenue to add value for producers in grain handling and marketing. “We founded CereServ Inc. in 2008,” recounts Kip. “CereServ is a grain handling, conditioning and trading business. There isn’t anything particularly unique about what CereServ does, but the difference is we operate in an area with limited resources in terms of grain handling and conditioning facilities.”
“Before building our first Greenfield project we had limited and dispersed facilities, none of which could even handle our volumes and velocities of grain volume,” says Kip. “So from a manufacturing standpoint we had to do something purely from an operational perspective. From a financial perspective it has been a great benefit in controlling our own trading platforms and creating a certain amount of leverage in terms of capacity with end users of the commodities, as well as increase margins from basis, spreads and carries in the market.”
CereServ is in the midst of expanding grain storage capacity to more than 3.62 million bushels by summer 2015. “We have also built storage and handling infrastructure for our entire crop production operations to handle all crops nutrients and crop care products,” adds Kip. “From a rolling stock perspective, we trade our entire fleet of tractors, combines sprayers and application equipment on an annual basis as well.”
Driving data science
Agriculture, by nature, is a highly unpredictable business and ensuring the production and shipment of more than 30 million pounds of seed corn, 156 million pounds of corn and nearly 15 million pounds of soybeans each year requires innovation, careful planning and forward thinking. This is one reason Kip is a huge proponent of data-driven science and technology.
“Tom Farms is a leader in adoption and discovery of new technologies used in production ag, from agronomics to operations and financial management; we’re involved in a number of data-science platforms to increase productivity, efficiencies and positive environmental impacts,” says Kip. “I’m on the board of five different emerging ag-technology companies that are all driving data systems to help producers better understand their costs.”
One such company is Granular, a software system of tracking tools and analytics designed to manage, measure and improve a farmer's overall operation. Kip is chairman of Granular’s board of strategic advisors.
“A system that can help producers better understand their input costs and margins is something the industry has wanted for years,” says Kip. “That’s the future of agriculture –data-driven software developments to track all input costs and increase productivity through the use of Enterprise Resources Planning systems [ERP] such as Granular.”
This science is what has sparked the majority of Tom Farms recent growth and Kip says other farms can experience the same if they choose to embrace new technology. “Our goal is to obviously grow in terms of volume and velocity of our outputs, but we’re doing it in a way we call ‘farming smart’,” says Kip. “We’re utilizing data science and these advanced tools to allow us to make better cognitive decisions. We also want to add value by taking some of our commodities a little close to the consumer in novel products while diversifying our revenue streams.”
Kip says no matter how efficient data technology can make things, the most important crop to grow is the next generation. “Succession planning is something we invest a lot of time in; if you want to see the farm go on, it’s critical to teach transition skills in leadership, the drive to innovate and ultimately, a passion for the business.”
What began on the fertile prairies of northern Indiana more than 178 years ago as a homestead has grown into today’s Tom Farms and the company remains a leader not only in global crop production, but also industry innovations.