This industry has super high barriers to entry. Can any young person really start farming on their own? Here are four things young farmers should consider as they pursue a future in agriculture.
1. Find a Mentor
If there is not enough “room” for you to return full-time to your family farm, seek out an established farm operator who isn’t lucky enough to have a related successor, get a job working alongside this mentor, and make yourself indispensable to that operator, that family, and the landlords who lease to that operation. This should be approached as a long-term goal taking years of work, and not a quick fix where the youngster feels entitled to handouts right away. We have several clients nearing retirement who are desperate to find the right match with an unrelated successor who can buy/earn their way into ownership of the operation and continue farming the clients’ and their landlords’ land - but it’s HARD to get the right match.
2. Don’t Be Afraid to Ask
If there is a family operation with room for you, don’t shy away from the difficult conversations with older generations about “what happens when you die?” Phrase it like, “I’d love an opportunity to buy into this operation and have skin in the game, let’s start thinking about a timeline and payment terms.” The next phase is: “Once I buy into the operations, will I still have access to farm this family land when you’re gone? Should I plan on having to buy out my siblings, uncles, aunts, cousins, whoever else might co-own the land?” If that answer is yes, then buying life insurance policies could help the young farmer have cash available to facilitate those purchases when the older generation dies. Maybe compensation from the farm operation could include a bonus to help fund part of the premium on such insurance. This approach doesn’t come across like asking for a handout and may be more well received by mom and dad than “I’ve worked my butt off here at home, and my siblings have never lifted a finger, so I’m entitled to have all of this and they shouldn’t get anything!” It may turn out that after years of putting in the sweat equity, mom and dad may decide you’ve earned a discounted price or free machinery or additional acreage. Maybe your parents hate the idea of you having to buy family ground at death and may be open to a comprehensive plan that keeps the land base together and available for you to lease, perhaps on favorable family terms, while providing cash flow to all their children through a Trust or LLC. That frees up any insurance proceeds you secured during the early discussions to pay down machinery debt or operating lines of credit and be well-positioned to buy the neighbor’s land when it goes up for sale!
3. Be Worthy of Consideration
Who wants to bid against the big dogs at an auction? Be good to your neighbors and your landlords. Provide them fancy reports about what you planted, where and how the yields were and consider newsletters updating landlords throughout the year. Send goodie baskets at Christmas. Plow snow off the widows’ driveways in the winter and keep ditches and roadsides free from litter and mowed in the summer. And then after all that, don’t be shy about asking your landlords for an option to purchase their land following death. Again, not a handout, just a chance to purchase their land that you’ve helped them care for and earn income from, at a fair price, without having to compete with the highest bidders. Although some small percentage of landowners want their kids to get as much money as possible by selling their land at an auction after their death, most enjoy the peace of mind knowing someone they know and trust will gratefully appreciate the opportunity to buy and care for that farm. Who knows, they may even set the purchase price at a little discount and might allow payment on installments. If conversations go well, then say “I’ll have my lawyer draw up this option to purchase for your lawyer to review with you, and once we agree on terms I’ll pay you $500 (don’t skip this, consideration is important to have a binding contract), and we’ll record the option at the courthouse.” Handshakes don’t count! Contracts regarding real property must be in writing, and these options only work if they’re recorded in the chain of title!
4. Make Smart Investments
Also, don’t build grain bins or shops on land you don’t own! If you’re going to make that kind of investment, get a survey and split off that area from the surrounding tillable land. Then make sure your name gets on that land at some point. I’ve seen terrible messes when siblings or cousins end up owning the land underneath the shiny silver stuff a young farmer has paid to put up.
Polly Dobbs is an Indiana attorney who is part of a seven-generation farm family that specializes in estate, wealth transfer and business succession planning.
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