Despite two tough years, these brothers make their farm partnership work
No one knows a man like his brother. Siblings who grow up playing together learn the importance of solidarity. They might be rivals in the sandbox, but they are comrades against the world.
That alliance is serving brothers Ryan and Chad Esther well as they close the books on the second of two tough years in farm partnership. As part of the Farm Journal Legacy Project, the Esther family of Beardstown, Ill., is transferring the farm operation from parents Chet and Lori Esther to their sons.
Despite all the planning, goodwill and historically high crop prices, the brothers have suffered two of the worst cropping seasons in the farm’s history, with corn yields 50 bu. under average due to excessive summer rainfall and flooding.
"The timing was pretty poor for us to start farming together," says Ryan, 34, who is three years older than his brother, Chad. "We’ve been around farming long enough to know you are going to have bad years, but two in a row is rough. Even Dad says he hasn’t seen crop years like these."
The bright side is that these brothers are going through the bad together. Ryan and Chad are equal partners and owners in Esther Farms, which includes 1,800 acres of corn and soybeans, of which 150 acres is owned by the brothers. The farm business (EFFCO) that encompassed 4,700 acres owned by Ryan and his father still exists for Chet’s financial and estate planning purposes, but leases are slowly being transferred to the brothers’ partnership. Any growth going forward is solely through Esther Farms. This allows Chad and Ryan to develop their business on an equal footing.
Good and Bad. Luckily, the partnership started on solid financial ground and higher crop prices are softening the blow of lower yields. While the brothers won’t make what they had budgeted at the beginning of the year, there will still be some money available to reinvest and apply toward capital purchases.
A few more years under their belt and more equity in the business sure would have made things easier, Chad says. He and his wife, Tanya, just celebrated the birth of their second daughter, Jocelyn. This summer, they finished building their dream home. He admits the stress of the farm situation is working on him.
"I tend to worry more than Ryan, but I’ve not been farming as long either," Chad says. Chad went to work as a forester after graduating from college and returned home to the farm three years ago. Ryan came home to farm with his dad shortly after college.
Both brothers agree that the two bad years in the beginning might provide good perspective later in life. "The bright side is it will keep us grounded," Ryan says. "If we started our farming careers with a blockbuster year, it might be hard to resist purchasing new vehicles and expanding the operation."
Going through the good and bad together is one of the reasons advisers with the Legacy Project have been guiding the brothers toward establishing their own farm partnership. "It’s important for Chad and Ryan to start out as equals," says Josh Sylvester, a Certified Financial Planner and member of the Legacy Project team. Allowing the sons their own space and freedom to farm also sent a message to landowners about Chet’s faith in their individual abilities.
An important part of the Esther family succession plan is transferring lease agreements from Chet to his sons. Currently, Chet’s farming operation, EFFCO, leases about 1,000 acres from Chet’s brother, Joe. Two years ago, Chet and Joe transferred the lease agreement from EFFCO to the new partnership for Chad and Ryan to farm.
Just because there is family financing doesn’t mean they are immune to the reality of higher commodity prices. In 2011, rent on this land rose $100 an acre.
"Cash rents around here have skyrocketed," Ryan notes. "There are ads put in the local paper by farmers offering $400 an acre minimum in cash rent. Landlords see those ads and automatically think they should get higher rents. That’s hard to compete with when you are starting out in farming."
- Legacy Project 2012 Report