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| I came back to work with my parents in 2007. We did our best to make everything as realistic as possible for me. This is advantageous in several ways.
1. It doesn't make farming seem easier or harder than it really is financially. You develop real world experience that will serve you well when your parents are not helping you.
2. It makes everything fair. Your parents can't say "I've given you all this equipment for free and I've got nothing to show for it!" if an argument occurs and you can't say "I've given you all this labor for free and I've got nothing to show for it!" in the same situation.
3. You could put this as a disadvantage, but I'm going to portray it as an advantage. It makes you do your paperwork so you really understand where all your expenses are going and where all your income is coming from. Keeping a good grasp on your financial well being is important for any business manager. Doing what my parents did with me dumps you into that experience right off the bat.
So how do you go about making things as fair as possible? I've got a list for that as well:
1. Pay your own way. If you rent land from either your parents or your neighbors, use your money to pay for the expenses, not your parents. If you do not have the financial capabilities to do so, obtain financing. Do not increase your parents risk, that's not realistic. Instead, take your own risk. If you cannot get financing from a commercial lender, contact your friendly FSA office as soon as possible. Be nice to them. Be professional. Be on time. Be courteous. Be prepared. Find out what you need to do to qualify for their loans and then get to the point that you qualify for them as quickly as possible.
2. Don't share equipment. Either buy your own equipment or determine fair (not advantageous to you) rental rates. These rental rates should reflect what it costs your parents to own the equipment when you include depreciation, interest (whether they are borrowing for it or not), repairs, taxes and insurance. This will be fair for them, and it will be realistic to you, but there is a subtle advantage to you. You do not have the risk exposure of owning shiny paint so you can focus all of your financial reserves on paying for inputs for your crops. If you are like me and you started at ground zero or worse because of college loans, you don't need a higher debt to asset ration that is created by buying all kinds of equipment, but you do need an introduction to the realities associated with farming. This method accomplishes both.
3. Document everything. My parents and I buy and store inputs in the same places. A lot of the time buying in bulk can save you some money. To do this and keep things straight, I have to maintain an inventory spreadsheet so I know how much of the Roundup I own and how much of the diesel in the bulk tank I own and so on and so forth. I have a spreadsheet for each field and when any operation is done to any field I put down how many hours worth of time I used on whatever piece of equipment it was, how much of what herbicide I used and so on and so forth. You have to keep up on your records to make this work. But if you do it this way and there is every any discussion regarding anything, you have it all on paper and you can figure out what happened and make things fair.
In addition to the things above, when I came back to the farm, my parents were short on labor. I worked for them, and they paid me. The way they determined the salary is they asked me what I wanted. I calculated all my expenses up and said that I would need this much to live. They said "ok". It was not an elaborate salary by any means, and that was good because that was motivating. If I wanted to grow, I needed to figure some things out. I needed to learn to be a good farmer and I needed to have my ducks in a row so I could say yes if I had other rental opportunities presented to me. As more income came from the farming side of things, they paid me less for my labor services to them.
I am grateful for the way they handled it and for the opportunities they've given me. If you do it the way they had me do it I think that you'll succeed if you try and you won't succeed if you don't try. There won't be some deal where you're leaning on someone else so much that it's hard to tell whether you're succeeding or they're succeeding.
As far as how much land they should rent to you, I would say that's up to them. I rented 230 acres from my parents initially. The next year I rented significantly more and I rented some land from a neighbor as well. You and your parents should make sure that they retain enough land that they can continue to make a living no matter what. You're the one trying to come back and make a go of it. You don't need to force them to find another job so that you can farm. If they are making a comfortable living and they feel they can let you farm some ground, that's great. If not, and you don't have neighbors you can rent more land from than you're already thinking about, you may have to think outside the box. Get some livestock, start a seed cleaning business, sell some seed, start a soil sampling business, etc etc to help you make some money if the farm can't generate enough for both families the way it is. | |
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Returning to the Farm
