Episode 32 How it began with Ty Kelly

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[00:00:01.210] - Intro

Welcome to Beyond Agriculture, the podcast that takes you beyond the scope of AG and into the real-life stories, conversations, and events taking place in our community. Who we are and what we do is beyond agriculture.

 

[00:00:20.920] - Ben VanHook

Hello, and welcome to Beyond Agriculture. This is Ben Van Hook with Central Kentucky AG Credit. Here today, got a full house in the podcast room. We've got a special guest, Ty Kelly with us, Ben Robin with IT, Cassie Johnson, Lisa Yeager, a loan officer here in Lexington, and Marcum McLean, intern. Had a busy week so far here in all of our local branches. Had customer appreciation day yesterday. I think we'll do a little roundtable here, but I think every branch was pretty busy and had a good day, especially here in Lexington, Lisa, what did you think about our turnout yesterday?

 

[00:01:04.560] - Lisa Yeager

I thought we had an awesome turnout. One of the great things about that, too, besides getting to hand them a check that's got some money in it, is people that you typically don't get to visit with or you get to see come in to pick up their checks. It's good getting to reconnect with people and see how their operation is going and maybe some needs or wants that they might have while they're in.

 

[00:01:26.930] - Ben VanHook

Yeah. It's definitely an important piece of our cooperative membership. If you haven't listened to the last podcast, it might be a good time to go back and do that. Our CEO, Jonathan Noe, and Chief Lending Officer, Richard Medley, went into detail about that membership. The Patronage and Customer Appreciation Day is a big piece of that. It's something our customers value and gives us a good opportunity to connect with them here in the office and eat some good food and talk about their operations, and it was something that, looking back on the day, I was pretty happy with. We had a lot of young, beginning, small farmers and new borrowers that came to the association just this past year in 2024. It was definitely good to see all of our members in all of our local branches. Moving forward here, got a couple of events in the coming weeks. I think Lisa and I are going to be attending a Scott County Ag Adventures Day next week. We're going to the Blue Grass Stockyards and working with other members in the community. I'm going to be hosting roughly 500 fifth graders, I think.

 

[00:02:46.200] - Cassie Johnson

I think the number is actually closer to 700. Oh, 700. Goodness. Big jump. 700 fifth-graders. Can we handle that? I don't know. Can you?

 

[00:02:55.940] - Lisa Yeager

We'll see. We'll find out.

 

[00:02:58.650] - Ben VanHook

Ask us next podcast We'll see if we can pull it off. But that's something we definitely value is giving back to our communities and reaching the youth. They're the next generation, and we want to make an impact when we can. What are you doing over to Clark County.

 

[00:03:15.730] - Cassie Johnson

Can you tell us? So Marcum and Olivia Randolph, our loan officer here in Lexington, are going to be going over to Clark County to Gilkinson Farm. And we're going to be helping out with, I think over there, it's third and fourth graders. They come and they tour the farm and they get to see the different livestock species, the different crops that can be grown. Olivia is going to talk to them about swine. I'll be talking to them about beef, and Marcum will be leading the groups around and making sure the kids all stay in line.

 

[00:03:48.220] - Ben VanHook

Good luck, Marcum. Yeah. That's exciting. Like I said, it's something that we look forward to being out of the office and reaching our communities. Without further ado, our special guest today, Ty Kelly. He's been a borrower here of ours in the Lexington office, and loan officer Lisa is with us. If you don't mind Lisa, just to maybe introduce Ty, and then we'll open up into some questions and let him speak.

 

[00:04:22.300] - Lisa Yeager

Okay. Ty is, like I said, from Scott County, young farmer over there, been expanding his operation over the last three or four years. One of the things that I've always been impressed with Ty about is his financial ability, his management ability, operation. He does really well with his operation. I think he's going to tell us a little bit about that today and the way that he's able to put some cost-saving measures and all. We're getting into this. Ty, if you don't care, tell us about who you are, your family, your farming background, and how you got into it.

 

[00:05:04.000] - Ty Kelly

Well, thank you all for having me. We started talking about this day. It was actually last fall. Lisa had come to the field and took some pictures and brought me lunch. They asked me to get on the podcast, and I laughed it off. I said, uou'll have to catch me on a rainy day, but you caught me. Here it is, the rain is just coming down. But no, like I said, my name is Ty Kelly. I farm in Stamping Ground, Scott County. Married and got two boys. Operation, fairly diversified. I got cattle, crops, alfalfa hay, as well as custom bush hogging. On the cattle side of things, I guess the backbone of the operation would be a fall-calving cow herd. Then here in the last few years, I've started adding value to my heifers, offering reputation bred heifers. I've really enjoyed that. Then background, 200- 300 feet of cattle, steers a year. Then got into the horse farms. Worked out pretty good. I started mowing horse farms, and then that led into... They were looking for a consistent hay supplier, so I started square bailing hay and selling round bales to them. And here we are.

 

[00:06:22.990] - Cassie Johnson

So did you grow up on the farm?

 

[00:06:26.630] - Ty Kelly

I always had farming around. When I was growing up, my great grandfather had cattle. I remember being with him, chasing them around. I had a couple of uncles in Bourbon County that farmed full-time, so I didn't get to spend a lot of time with them, but I was always fascinated with it. And then the opportunity came about in 2007. I got a job working for a local tobacco farmer, and that's when I really fell in love with it. I was getting paid to be outside. I think my first job was chopping out tobacco. So I spent the whole summer when I was 14 with a chopping hoe. And if I wasn't in a tobacco patch, I was in his wife's garden, tying up tomatoes and picking sweet corn. So that's where I got started.

 

[00:07:11.560] - Cassie Johnson

And if I recall, what was that tobacco farmer's name?

 

[00:07:14.910] - Ty Kelly

Alvin Lyons.

 

[00:07:15.780] - Cassie Johnson

Which is now one of our board members. And I think there was a story that Alvin actually told on you, where he may have left you in the tobacco field.

 

[00:07:25.510] - Ty Kelly

Yeah, of course, he was always busy. And my mom was taking me down there at the time. I was 14 I couldn't drive, no cell phone or nothing like that. So it was just throwing me out there and see what happens. But it got to be about 9: 30 one night, and I think they finally remembered me, so I got a lot of iron in that day. But it all worked out.

 

[00:07:45.630] - Ben VanHook

That's funny you say that. That reminds me of a story that my dad tells. Long story short, my grandfather took him to a tobacco patch to cut tobacco, and he got tired of cutting. My grandfather told him he'd be back to pick him up, and he never came. So he broke his tobacco knife on a tree and walked to the barn and said, Dad, the tobacco knife broke. He said, Well, go find you a new handle. We'll fix it and you can go right back out there.

 

[00:08:18.890] - Ty Kelly

Sounds about right.

 

[00:08:21.880] - Cassie Johnson

At what point, really, did you decide that you wanted to make farming your career?

 

[00:08:27.710] - Ty Kelly

Like I said, I started 2007, helping Alvin. All through high school, any chance I got, I'd go down there and help him. Graduated high school, and my parents insisted that, I have two sisters, that we all try at least one year of college. I enrolled to get an industrial maintenance degree. I got through the educational part of it, and they signed me up to work in a factory to get the hands-on experience. I remember I spent one day there inside. I couldn't tell if it was daylight, dark, raining, sunshine. I went home and I told my parents, I said, That ain't the life for me. I don't know if it's possible, but I'm going to try my best to stay outside. If I can, I'm gonnaa farm. So we went from there.

 

[00:09:18.210] - Ben VanHook

You mentioned there that your main focus on the farm was the fall calving cows and how you're adding value to those heifers. I'm sitting When you're thinking where we are in the cattle cycle. Inventories are low and we're trying to build back that herd, and I don't know that that started yet as far as heifer retention. But tell me what your heifer development plan is and what you do to prepare those to be good on someone else's operation.

 

[00:09:51.130] - Ty Kelly

 Well, it all started. Of course, cattle have been up here the last few years, but the problem started when the cattle it was actually down. I saw that my heifers weren't paying their way on the farm, so I come up with a plan to try to add value to them, and that's where it started. I actually fell in love with doing it. I like watching them grow and people coming up to me saying, your heifers are some of the best I've ever had. So I'm just growing it from there. Yeah.

 

[00:10:23.470] - Ben VanHook

And we've got a really good program, several sales through local stockyards, Blue Ribbon Heifer sales right here in Lexington. I'm forgetting the names of some of the other sales at the other stockyards.

 

[00:10:37.820] - Cassie Johnson

 Bourbon is like the Heifer Select or Elite Heifer.

 

[00:10:41.000] - Ben VanHook

Elite Heifer sale there in Paris Stockyards and others in other stockyards around the central Kentucky. But do you market through those programs?

 

[00:10:49.330] - Ty Kelly

Yeah. I'm 100% Blue Ribbon at Blue Grass. They've always been there for me, so I take my heifers up there. I don't really sell anything off the farm. I feel like once I'm committed to the sale, I try to keep my word and run everything through the auction ring. I think that's the best works out for everybody. Yeah.

 

[00:11:06.130] - Ben VanHook

There are some requirements in order to market that way that hopefully the buyer sees a premium and will pay a premium for that. What are some of those requirements that you have to follow in order to be eligible for the Blue Ribbon sale?

 

[00:11:19.970] - Ty Kelly

The main thing is you got to get them started on a modified live vaccine. If you're familiar with it, it's a funny way to do it. You can't do it while a cow is pregnant, so you have to start them out as young. That's the main thing. Then we require a PI test. They all have to be PI negative. They have to have a certain pelvic measure and bred to cost share eligible, low calving, birth weight bulls. I mean, pretty much everything you can do to add value to them, we require it because we want to sell them at the top of the market and we want them to stand on their own.

 

[00:11:55.260] - Ben VanHook

Yeah. It's a good program. If you haven't ever bought any females out of definitely attend. They do a pretty good job of getting that word out there. If you're expanding your operation or looking for quality replacements, that'd be the place to get them.

 

[00:12:12.800] - Lisa Yeager

Ty, I know you've had some mentors at the Stockyards that have helped you get into it at a young age and guided you. Could you expand on that just a little bit?

 

[00:12:22.780] - Ty Kelly

When I first started, I think I was looking through my notes. 2013, Alvin had a little farm. The rent was reasonable on it. The fence was in horrible shape, so he decided to let me tackle it. And 2013 came, I bought 10 steers with a cattle buyer, did good on them, and I haven't switched since then. I still got the same cattle buyer. He helps me just to someone to talk to, bounce ideas off of, and the relationship's growing from there.

 

[00:12:57.220] - Cassie Johnson

So as far as your farming side of it goes, what is just getting started and getting into it and getting your feet settled, what's been some of the bigger challenges that you've seen?

 

[00:13:09.850] - Ty Kelly

Well, when I first got started, getting access to the land was the biggest challenge, and I was going about it the wrong way to start with. Eventually, I looked around and all the land there around Stamping Ground was the older semi-retired farmer. I really started picking them up as mentors and helping them on weekends as much as I could. I think that's the best way to get access to land, find somebody that is doing what you want to do and help them out best you can. I never got paid for doing it or anything like that, but it's paid me back in the long run.

 

[00:13:48.760] - Lisa Yeager

Ty, I think early on, I remember you telling me that you went door to door. Yes, ma'am. Asking about leasing the farm and wanting to work with them. I think that's really unique, too, and a good way to start out and make those connections.

 

[00:14:02.540] - Ty Kelly

Yeah, I think actions speak louder than words. You can knock on all the doors you want and tell them you'll do this. When it comes down to it, just jump in and help them out. One of the biggest moments of my career was an older gentleman. Finally decided he was out, but our relationship started. I was driving down the road one day, Sunday. I was wore out. I noticed he had a tractor in the field hooked to a rake and a round baler, and he would rake up one windrow and then get on the round baling tractor and roll it up. I watched him do that for four or five minutes, and I said, Well, I can't handle that. I went up there and didn't ask him to do it or nothing. I just jumped on the tractor and started raking from him. He said, Well, let me pay. I said, No, you ain't got to pay me. I'm just doing it to help you out. Then he actually ended up owning around 700 acres. Just from that one day raking hay for him, I actually, the next year, rented rented all of his land.

 

[00:15:00.830] - Ty Kelly

So little things like that, you never know when they're going to get paid back.

 

[00:15:06.600] - Lisa Yeager

And I think that word spread pretty quickly, and you had a lot of different farmers then begin approaching you, wanting you to lease their land.

 

[00:15:15.950] - Ty Kelly

Yeah, I think in the long run, just try to do good and be honest with people and reputation will get you farther than anything. So I've always tried to do the right thing. Even if I come out with the short end of stick, I always try to treat people like I want to be treated, and it's paid off.

 

[00:15:32.610] - Cassie Johnson

So how many years have you been farming full-time?

 

[00:15:35.550] - Ty Kelly

So when I started, I bought my first set of steers in 2013, and then I was working for Alvin, and that progressed and progressed, and I was starting to pick up a few more farms and still helping him. Then I got into the custom bush hogging, so I was doing that on the weekends. Then finally, the operation got to a point where I was just spread too thin. I couldn't do it all. And 2020, we sat down, had a talk, kicked me out of the nest, and I've been running ever since.

 

[00:16:08.450] - Cassie Johnson

So you've experienced a lot of highs and a lot of lows with the markets.

 

[00:16:12.360] - Ty Kelly

Oh, yeah. I think everybody, the 2014, '15 cattle market crash, that set me back. But luckily, I Ag Credit was on my side, and we come up with a plan how to pay it off and go from there. So it helps having a lender that knows what they're doing. They've been there and helped me out.

 

[00:16:29.240] - Cassie Johnson

So what, How did you get into finding a relationship with Ag Credit?

 

[00:16:35.340] - Ty Kelly

Well, actually, it's a funny story. I don't know if Lisa remembers or not, but when I acquired that first 24 acre lease, Alvin recommended Ag Credit. I just walked in here one day and said, My name's Ty Kelly. I want some money to buy some cattle. Lisa said, Well, come on in. Have a seat. We come up with a business plan and financial plan and started from there.

 

[00:16:59.180] - Lisa Yeager

It's been a great relationship, too. I mean, Ty is one that you want as a borrower and you want to see make it as a young farmer and become successful, and he's done that. I think I've appreciated him just as much and enjoyed watching him grow and with his family, too, and to the two boys now. I think the boy, one of them, the oldest one loves going out on the farm with you, right? Yeah.

 

[00:17:26.860] - Ty Kelly

I got two boys. Baylor's three, and Clancy just turned I didn't think it was possible for anybody to be outside. Love being outside more than me, but Baylor and Clancy, they can't stand being inside every morning at daylight. They're outside. Of course, we live at the farm that my shop's been on. As Baylor was growing up, we'd always leave the house and go to the shop, but now we've acquired the property, so we live at the shop. Every morning, he said, Daddy, we're going to go to work? We're going to go to the shop? I said, Yeah, we'll go to the shop. That's just been a great... You can't imagine how good it is to walk outside and have my son with me and growing up there on the farm.

 

[00:18:05.770] - Ben VanHook

The ag industry really is a... It's a lifestyle. You got to really want it. You really got to love it. Most of the time growing up on a farm. I know a lot of folks have gone away from the ag industry, but some part of you pulls you back in at some point. Baylor sounds like he's got it already, got the itch, and he might start at a young age, like you did. But I even see older folks getting back into it and coming back to their roots just because of that lifestyle and being out there on the farm.

 

[00:18:43.670] - Ty Kelly

It's really a seven day, a week thing. If you love what you're doing, you don't call it work. But when you sit back and look at it, there's always something to do on the farm. I'm blessed. My wife, she wasn't raised on a farm. She was born and raised in a city, and she just fell in love with the farm life. So she's there seven days a week with me, whether it's feeding cattle or going to check on a crop or see if the hay needs to be cut or dried down. It's just been a blessing.

 

[00:19:11.680] - Cassie Johnson

So I think that your wife works full-time, right? And having the kids and all that. You are the run of... Not icon. You're the person that... Jeez, Louise, what word  am I looking for? I don't want to call you average. You're the typical young, beginning, small, farmer getting started and trying to build something. You have the off-farm income to help with the family, to supplement them, just like Ben has his... Ben and I, we all have our outside income. So what are some things that you do that you could give advice on for trying to eliminate some of those extra expenses or trying to run a tight ship from a farming perspective while still trying to raise a young family?

 

[00:20:09.330] - Ty Kelly

Well, the first thing is you got to be diversified. I couldn't imagine just having one thing trying to make a living off of. That's why I've got the cattle and the hay and the crops and the bush hog. I always try to keep some money coming in every month out of here, whether it be mowing a horse farm. I think we got five farms we mow, and we got two back wings to try to keep running five days a week during the summer. I've got constant cash flow in the summer. The corn and soybean market fluctuate, cattle market fluctuate. You always got to have a backup plan for your backup plan. One year, something does really good and the other one doesn't do much. Being diversified is the main key. You can't just do one thing. You got to keep your options available for any market condition.

 

[00:20:56.420] - Lisa Yeager

Ty, tell us a little bit about the people help you on the farm, the ones out of high school, and FFA, and how you work with them and help train them.

 

[00:21:08.590] - Ty Kelly

Last summer, I got into a program with a local high school. They actually, I'm going to say they sent me a student, but he contacted me, wanted to work on the farm, and they actually gave him half a day. He goes to school from 8: 00 to 12: 00 and then co-ops at the farm. So he comes back, and they're pretty green. They're thinking about wanting to farm or just want the on-hands experience. So that's worked out good because I can train somebody the way my operation goes, and it gives him experience. So it's been a pretty good program. I've been pleased with it.

 

[00:21:42.490] - Ben VanHook

How was your approach in starting that program with that student? Do they tag along with you day to day, or do you assign them a task and let them get their feet wet and do it on their own? Or just walk me through a day if he comes to the farm, what that might look like.

 

[00:22:02.220] - Ty Kelly

Well, I can tell you how I learned how to farm, and I don't know if this is the way you're supposed to do it, but Alvin was always good about... He would give me a job, and I might not even know what he was talking about, but he'd say, Go do this. When I started, we I don't have cell phones or anything, so I just had to figure it out on my own. I think that's the approach I've taken. Sometimes maybe I give him too much of a rope, but most of the time, you can pick it up on your own, and I'm there to watching him. Of course, I had to sign some papers that said he has to have proper PPE, so I don't put him in any dangerous situations like that. But as long as his safety is not at risk, I just let him go and figure it out.

 

[00:22:42.300] - Ben VanHook

You were mentioning earlier there, as as far as the cattle cycle and the 2015, 2016 crash, and it struck a bell with me. I'm thinking about risk in this time. The cattle market has gone off the rails here lately in a positive way. But what can you do and what can other cattle producers do to mitigate their risk and position themselves well for the black swan event that you can't see coming in the future? What do you think? What's your plan look like there?

 

[00:23:18.420] - Ty Kelly

Well, I'll just tell you, unfortunately, in 2015, I didn't have any hedge on the cattle. I was just leaving it up to risk. After I learned the hard way, I've been using in a program called LRP, Livestock Risk Protection. It's based on the commodity futures trading, but it's more of an insurance policy. You can do it on one to a thousand head, so you don't have to have a a lot load of cattle. You can do it on five or 10. Mike Tansel is my broker there, and he's always been, I think you should probably go for this weight or this date. I just learned to the... You have to have something because I can't do the 2015 thing again. When COVID hit, I had a bunch of feeder cattle turned out. Luckily, this time I had the LRP coverage on them, and that really helped me out. It paid to get the bank paid back for the cattle. I don't know where I'd be if I had made the same mistake twice. Yeah.

 

[00:24:23.140] - Ben VanHook

It definitely takes a lot of capital in this market to buy those cattle. There's a lot of things that we can control, but there's definitely some that we can't. So some risk hedging there in an LRP plan is a good deal. What's your strategy when you buy that LRP insurance? Do you purchase that when you purchase the calves and just forecast when that sale date might be, or do you play the market a little bit there?

 

[00:24:50.820] - Ty Kelly

When I first started with the LRP, I was a little more lenient with it. Of course, the cattle prices got really high now, so you're playing with a whole lot more capital. When I first got started with it, I would just get a load of cattle together and, of course, nobody can predict what the market's going to do. But if I thought I could wait two or three weeks to get them locked in, I would do it. But this year, the cattle had a record high. As soon as the calves got to the farm, I was on the phone. If I bought five that day, I put five in on a LRP. I just think that's the way you got to be right now because it could go limit down five days in a row and you've got thousands to lose.

 

[00:25:30.830] - Lisa Yeager

What advice would you give to young farmers just starting out?

 

[00:25:36.070] - Ty Kelly

Advice for a young farmer? I would have to say, don't try to keep up with the Joneses. Go at your own pace. Get done what you can get done in a day. I know with social media these days, you can get on YouTube or Facebook, and some guy, two counties over, he's farming 5,000 acres and just bought a new combine. It's just everybody's highlight, really. You don't get to see behind the scenes of what's going on. So just work hard, get what you can get done, and go at your own pace. Don't try to keep up with your neighbor. Just do what you can do.

 

[00:26:13.890] - Cassie Johnson

It's good advice. That is some of the best advice I've heard in a while. Yeah. Well, we're about to wrap it up, but I'm going to ask you one more thing. Where do you see yourself in five years?

 

[00:26:26.940] - Ty Kelly

Well, I'm really liking the value-added small packages. I think in my operation, that's the direction I'm headed to. I talked earlier about the square bales, a premium off-alpha square bales. I can get into that. Just this past year, I started putting my corn in a 50-pound bag, selling it to deer hunters. I see myself the next five years trying to add all the value I can on the farm because if you take it to the elevator or take it to the stockyard, you get well, this is what we're going to give you. But if I can keep it on the farm in a small package, I set my price, and it seems to work out a little bit better that way.

 

[00:27:09.370] - Cassie Johnson

I like that, too.

 

[00:27:10.500] - Ben VanHook

That shows the power of creating a relationship and that's what we try to do here at Ag Credit. Definitely what you're doing on your farming operation is making those touch points with your customers and selling things right off the farm. And you're seeing a premium for that. And that's a great move moving forward for your your farming operation.

 

[00:27:31.460] - Ty Kelly

I'll say one more thing. Scott County land value has got crazy high. It's a blessing and a curse. I've been able to acquire some land, so on a balance sheet, it looks really good. But as far as expanding, it's hard to do when you compete with development prices. So me and my wife talk all the time about what's the future for our two sons, because I don't think they're going to be able to farm at scale, for a say. So the two things I've got going for me in Scott County, we've got a huge group of people that just want to get out of town. They want to buy five acres. They want a horse. They want to go deer hunting on the weekend. Well, how can we make money off that. So we can take a bush hog, mow their five acres, charge them X amount, and then, Well, here's some deer corn for you to go hunting this weekend. And yeah, I can feed your horse. So I see the operation going that way. I think farming at scale in my area is going on the downside, but there's hidden value if you just look outside the box.

 

[00:28:34.110] - Ben VanHook

That's super smart.

 

[00:28:36.320] - Lisa Yeager

Yeah, it is. You got a lot of good plans in place to be successful. You already are, but to stay that way and continue to expand your operation and go a different route.

 

[00:28:48.540] - Ben VanHook

To see future opportunity right now, it's pretty neat. Well, that was a great conversation, Ty, and we definitely appreciate you coming. You've brought value to our podcast and gave him some tips and ideas and told your family story and your AG story. So we appreciate you coming. And to all our listeners, thank you for tuning in today. Please like, comment, and subscribe to our podcast, Beyond Agriculture. And with that, we'll close out. And thank you all.

 

[00:29:21.860] 

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[00:29:39.320] 

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