Making better choices for the farm doesn’t have to be complicated.
A young farmer sends a distress-filled email at 2 am. He calls for help to try and figure out whether he should chuck his dream of farming and find another life. His father has just demanded two-thirds crop share for new land the young farmer has rented. His goal is to get ahead. His father wants to be well paid for the use of Dad’s equipment. Oh, and Uncle has a say in things as well. Unfortunately, it is disclosed later in conversation that there are no written agreements to be found, none for the partnership of Dad and Uncle, nor for the use of the equipment by the striving-to-succeed son.
During my morning quiet time I reread the story of the prodigal son. There is a phrase in the context of the young man wanting to return home to his father after he has “come to his senses.”
This morning we have spent hours rouging a barley field to remove oats and volunteer wheat in order for the field to pass inspection – which thankfully it did. As I was pulling out the oats I was reflecting on the three farmers who declared yesterday that they did not have accountants, a lawyer or power of attorney in place. I couldn’t believe the sadness of the farmer who said, “Elaine, I’m like a hillbilly farmer who didn’t use professionals for the farm transfer, and now I have no income.”
Come to your senses. Some things we do out of habit need to be “unlearned”.
Maybe you’ve had a lifetime habit of saying yes when you’d like to say no – that’s an Unlearning! Or, you need to control less and delegate more – that’s an Unlearning! Perhaps you eat when stressed and you want to stop – that’s an Unlearning!
As an aging bookkeeper you might want to find a decent accountant to help you with tax planning, and setting up a workable business plan for your farm transfer to the next generation.
You might also want to visit an FCC office or other ag lender of your choice to see if you have a viable operation, and what a fair appraisal value would be. The younger generation could also get a lesson here as to the value of debt servicing based on their off-farm income and farm income, and their ability to be very frugal with lifestyle choices in order to manage more debt. As far as lawyers go, many CAFA (Canadian Association of Farm Advisors www.cafanet.com) members could give you a decent referral to a lawyer who can help get some of those partnerships and operating agreements in place that the guy in the opening paragraph of this column could really use.
The path to making better choices for your farm business doesn’t have to be confusing, twisted or in the dark. The best thing you can do to regain some “common sense” in the planning process is to start by having conversations about what you want and what the next generation wants. The prodigal son was clear about wanting his inheritance early, and his father also was very forgiving and welcoming when the impoverished prodigal son returned home.
Some farm families are struggling with who should be welcomed home to the farm business.
What do the financial statements tell you? Being in denial about losing money with your livestock, and pretending that you aren’t going backwards with equity depletion is a huge “Unlearning.” You need to face the facts and figures of the operation. You also need to know whether the cash flow of the farm can support the living expenses of more than one family, and at what amount. One smart farmer has set up his “personal wealth bubble” outside of the farm so that he and his wife don’t depend on farm income for their lifestyle choices. This is ideal, but not common.
Maybe you need to sit down with a financial planner to see how you can grow your personal wealth bubble, and sit down with the farm business management specialist to crunch the numbers for farm revenue that can flow to family needs, and still run a profitable business.
Old habits may be killing your ability to succeed for the future. In September the school children return to schools or home kitchens to “learn” new things. Adults also need to have the mindset that they are “lifelong” learners.
So what is your farm family’s learning plan for this fall? What do you need to do to embrace more common sense in your farm family decision-making? What do you need to stop doing?…and “unlearn bad habits?” What do you need to start doing and take as the next step to feeling more in control of your farm family’s vision and purpose?
We had a decent crop until last weekend when 17 quarters got significant hail damage. We manage risk with hail insurance, but we don’t control where the hail or excess moisture falls. We make plans, and sometimes those plans need to be adjusted.
Many farm families this fall are going to have to take a hard look at cash flow, and the lack thereof. What resources do you have to generate income, reduce expenses and manage debt so that you can have healthy sleep at night?
One resourceful farm woman set a deadline, by Friday, for her “men” to have the appointments made for the appropriate professional advisor. She was tired of waiting for them to figure out the succession map on their own. The other “hillbilly” farmer I spoke with had wished he had phoned me before the transfer, rather than long after the fallout of poor planning.
I strongly believe that no matter how tough things get, we still can make good choices. We need to collect the data and information that helps us choose the best options for our path, evaluate the costs both in money, time and energy, and use sound common-sense-driven advisers to guide us. Some of those wise people may be the senior partners on your farm team, or your trusted special professionals or your spouse!
For those who have a crop, I wish you a bountiful and safe harvest. For those facing weeds, I hope you get the winter wheat planted on time. For those seeking grace, peace and mercy from fathers who will welcome you back home, I wish you lots of common sense and good advice for successful plans to prosper. Let me know what your new learning plan is going to be for this fall. Check out ideas on my blog at www.elainefroese.com or www.youtube.com “farm family coach”.