Post-secondary education needed for young farmers
I am a 17 year old high school student. I am a girl. I live on a 275 acre dairy farm with my parents and younger sister. We treat 77 Holstein cows. My mother works full-time at a cheese shop in town and helps with chores on the weekends. My sister is a freshman in high school and helps with household chores. I do chores and help my father with the field work.
I will be graduating from high school in June. My parents want me to go to college. I want to cultivate full time. They need help, and that’s what I really want to do. My dad says I need to go to school, work for a few years, and save my money before I decide to go back to farming. My parents are 50 years old. My dad told me I could still help out on the farm on weekends when I’m home, as well as during the summer and vacations. I’m afraid that if I go to university, my parents will decide to sell the cows because they don’t have enough help. My dad says if he needs help, he’ll hire the neighbor’s boy to help him out for a few hours after school during the week. What are your thoughts?
Tom Kestell: Congratulations on your pending high school diploma. This is a critical time in a young person’s life, so spend it wisely. I don’t know where you live, but in many parts of the state there are excellent technical colleges that can be attended at a relatively low cost. You could attend one in your area and fill in the gaps in your education that could help you in your career as a dairy farmer, or set you up for a relief career if farming doesn’t work out in the long run. Future farmers will need to be technologically advanced, excellent accountants, precise planners and creative innovators to survive in an ever-changing profession. It never hurts to get a fresh perspective on farming from outside sources.
Many successful family farms and businesses require family members to work for an outside company for up to five years before joining the family business. It worked well for them and contributed to the success of the family business back home. Now is the time in your life to keep your eyes, ears, and mind wide open, and to do the things that will enhance your ability to first enjoy life’s journey, but also to succeed both personally and professionally.
Rather than working off the farm, I suggest a side business you could start while in school that would help your dad. Raising beef or selling beef already raised on the farm are just a few suggestions, or maybe even renting out some extra acres that, with your dad’s mentorship, you could farm yourself. The possibilities are limitless. Use your imagination and involve your dad, and it will help foster a better working relationship or flag future issues that need to be resolved.
Sam Miller: I admire your dedication to your parents for working on the farm and your desire to want to farm with them full time, but I think you should take a step back and look at the long term. My bias is to agree with your father that you get an education and work somewhere off the farm for a few years to gain education, experience and perspective. If returning to the farm is the right thing in a few years, the knowledge and skills you return with will make you an asset to the business and prepare you to eventually take over the business. If your parents are selling the cows, there are plenty of other farming opportunities working for or with other operations, and you will have more skills that you can bring to the business. Good luck with your choice.
Katie Wantoch: Agriculture is a broad field that encompasses farming, growing, growing, and breeding in a rapidly and constantly changing world. The study of agriculture is important and critical with the introduction of technologies that continue to revolutionize production and distribution worldwide. These are the reasons why your father wants you to continue your studies in a post-secondary school. We never stop learning and acquiring new knowledge, behaviors, skills and values or modifying existing ones.
You want to continue farming with your family, so identify areas you can learn more about that would improve your family’s farming business. What interests do you have that you could pursue? Your father wants you to learn from others in addition to what he can teach you. Continue to show your interest in taking over the farm by working with your father on weekends and school breaks. I hope your dad appreciates your newfound knowledge and that you can work together to incorporate these new ideas on the farm.
Sell or rent mas, buildings?
My wife and I are in our late sixties and have decided to retire from farming. Farming has served us well and we are healthy, but we are ready to retire. I sold the cows a few weeks ago. After I finish harvesting my maize, I plan to sell the equipment in January. We found a nice house in town to buy for a friend. He said he would sell it to me on a land contract at 4% interest for $190,000, which seems like a fair price for a three-bedroom ranch house he recently renovated. Other than painting one of the two bathrooms, my wife says we have nothing to do in the house.
My question is, can I rent out my farm and use the rent money to make our mortgage payments on the house? We deposit $50,000 and will owe about $140,000 for the house. What we can get on rent for our farm will pretty much pay our mortgage payments for the house in town. Our friends think we should just live in the farmhouse, but it’s an old farmhouse with lots of stairs. Our only debt is that we owe the bank $100,000 for our equipment, but what we get at auction should more than cover that. We are going to lease our 200 acres of cultivated land to our neighbor for $200 an acre. We plan to start taking our social security when we turn 70. We’re both on Medicare. Please let me know your opinion.
Tom Kestell: Congratulations on a successful and fruitful career. Now is the time to live your retirement as you wish. If you want to change your lifestyle and move to town in a newly renovated ranch house, do it! Maybe your friends would like to rent your old farmhouse, but I doubt it.
I would seriously consider selling the buildings if you could find a qualified and willing buyer. Farm buildings that are no longer in use tend to deteriorate quite quickly and require constant maintenance to keep them in good condition. However, in the right hands, these unused buildings can be perfect for a young family to grow and explore how best to use your facilities. Land is what holds value and also increases in value over time. On that note, set your expectations for how you want your land to be operated. If you offer a long-term rental agreement and the possibility of a right of first refusal to buy the land in the future, this will encourage your tenant to maximize the management of your most valuable asset.
There is a time to sow and a time to reap – do things during your retirement that will enhance your harvest of all your hard work.
Sam Miller: First of all, congratulations on a well-deserved retirement! Your plan seems well thought out. You must have consulted your tax preparer to help you plan the sale of your assets by spreading the sales over a few years. Moving to a ranch house with the ability to age in place seems to make sense as you get older rather than having to climb stairs on the farm.
If you are able to lease the farm for an amount equal to the land contract payment, it sounds like you have a good financial plan. The combination of land rent and social security will likely provide sufficient funds for living expenses. If you are concerned, complete a family budget by comparing monthly expenses to income from all sources. Good luck with your transition to retirement.
Katie Wantoch: You have planned a lot for your retirement, in particular by thinking of a residence that would more easily meet your needs as you age. A recent article by attorney Tim Halbach shared the pros and cons of land contracts. Although the land contract for the house seems logical, I encourage you to consider the term of this mortgage and your age. Do you want to have a mortgage payment for the next 10 to 15 years? Will you be able to retain a tenant(s) on your farm to match the term of the mortgage? Keep in mind that you may have double some expenses for both properties, such as insurance, property taxes, utilities, etc. In addition, you will need to claim rental income from your farm and farmland, with the possibility of deducting related expenses, but may be subject to tax on net investment income.
I would seek advice from your tax preparer or accountant for the tax liabilities that will arise from the sale of your assets and future rental income. You should weigh your long-term options and determine if selling your farm to buy a new home might be a better option than a land contract.
Agrivision Panel: Tom Kestell, dairy farmer, Sheboygan County, Wisconsin; Sam Miller, Managing Director, Agricultural Banking Group Head, BMO Harris Bank; and Katie Wantoch, Farm Management Outreach Specialist/Professor of Practice at the University of Wisconsin Statewide Extension. If you have any questions you would like the panel to answer, send them to: Wisconsin Agriculturist, PO Box 236, Brandon, WI 53919; or email [email protected].