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Published July 16, 2015, 10:02 AM

Opinion: Arranging a family farm operation

Throughout my years as a secondary agriculture instructor, I have had many discussions with students about their future.

By: Lori Tonak, Center for Farm and Ranch Management

MITCHELL, S.D. — Throughout my years as a secondary agriculture instructor, I have had many discussions with students about their future.

Many of those students wanted to work in production agriculture on the family farm, but not every person who wanted to go home and farm could. How do you know if a family farm arrangement will work? I found an Iowa State Extension publication called “Getting Started in Farming: On the Home Farm,” and some of the ideas in the publication are worth sharing.

Iowa State recommends “making a complete appraisal of all aspects prior to initiating a family farming arrangement.”

This appraisal determines the potential of a family member joining the current operation. By all parties putting their thoughts on paper and discussing them, it can possibly save dollars, personal heartache and strained family relations.

Established farmers

The established farming or ranching generation needs to consider the following questions:

1. Do we still have minor children at home to be cared for and educated?

2. What is the likelihood one or more of these children will want to farm in the future?

3. How much income do we currently spend for family purposes, and how will this likely change in the years ahead?

4. How many more years do we plan to actively participate in the farm business before retirement?

5. How hard do we want to work in farm business operations in the years ahead?

6. What are the personal, business and financial goals for the future?

7. Are we willing to totally disclose all aspects of the financial situation with our family?

Young farmers

The younger generation needs to consider these questions:

1. Why do I want to farm with my family?

2. What can I bring into the home farm business in terms of interests, experience, education, finances and other resources?

3. How well do I get along with my family in personal matters?

4. Can I talk openly with my family?

5. If married, does my spouse get along with the rest of my family? How does my spouse feel about the possibility of farming with my family?

6. What are my (our) goals in life? What do I want to accomplish professionally, personally and financially?

7. Are my intentions to eventually take over the home farm, or is it just a way to get experience, land and financial stability until I become established on my own?

8. Am I willing to gradually mature into acquiring more managerial responsibilities, or do I want to become boss immediately?

9. How much income do I believe I will need for family purposes?

10. Am I willing to make the sacrifices, compromises and extra effort to make the family farm arrangement work?

It is essential to know the goals and future aspirations of nonfarming brothers and sisters or other potential heirs.

The fact most parents want to treat all the children equally with respect to inheritance provisions can sometimes be devastating to the farming family member unless provisions are made ahead of the death of one or both parents. If personal, business or family goals are not compatible, it is best to know it before a formal agreement has been drawn up. As the average age of farmers and ranchers increases, these questions need to be discussed by families in transition.

For information on farm management and records, contact the South Dakota Center of Farm and Ranch Management at 800-684-1969 or email sdcfrm@mitchelltech.edu.

Editor’s note: Tonak is a farm business management instructor at the South Dakota Center for Farm and Ranch Management in Mitchell.

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