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Re: Advice Please Kay NC

Every situation is different, but ....letting him use your equipment may not be doing him any favors. I'd suggest an equipment lease/purchase tied to the land rental or buying your equipment on an installment contract or him purchasing things that you don't have or need replaced while working together. This would be a good finacial move for you and you can dispose of your stuff over a longer period of time. Just my opinion. I farmed with my father until he was 69 and we kindof ended up with alot of duplicate equipment. I bought the other stuff over about 6 years, but would have been better for him for tax and social security if he had leased it to me, but no auctioneer to pay. He did have it appraised to set the value. I have an aquaintence that is helping his son start up, but they've told me they really could use the funds from the sale of equipment and would prefer to be clear of the physical and mental demands of farming in their 70's(with a partner). Sounds like your intentions are good.

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Senior Contributor

Re: Advice Please

frenzy, peak behavior.

 

its all about behavior.

suppose we ration corn use by 5% and have a record yields (common why not) and ESgoes to

1.8 B.

cbt will be 3.25.

 

Where was this kid 2 yrs ago?     BIG $$$ makes em overbid

 

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Advisor

Re: Advice Please Kay NC

People tend to talk about land and equipment, but the real issue is who is in control...who makes decisions, who can take on debt and use what for security. 

Our daughter works, mostly weekday mornings, sometimes spilling into the afternoon, managing our hog farm.  She supervises an employee who does most of the heavy and tedious chores.  Mike covers her if she needs off, takes a vacation, or (very rarely) is sick.  He covers all weekends. 

Our situation is a bit odd in a way, since we have to by law take the hay off of our land application acres for the hog farm, to satisfy our permit for removing nutrient in the manure stream from the farm. It does us a very necessary favor by her having to deal with hay customers, and haying takes some long days and a lot of labor. 

In her second year of working for us, we offered her the hay crop, saved with our equipment brought from another farm.  She and her husband work with Mike to cut, ted, rake and bale all of the hay.  We keep what we need for our sheep,  they use what they need for roughly three dozen horses involved in her riding school/boarding barn business, and they can sell the excess in their own hay business. 

We started by using all  our machines, and some used are still ours.  They have bought another tractor, baler, and tedder when ours wore out or were too slow.  All of this supports our permit, and they get the hay sales money.  We buy some seed, and they buy some.  We all use our no-till drill to plant, and the nutrient from the manure is "free" fertilizer. 

The arrangement has worked out pretty well for twelve years now.  She has her hay and horse businesses, and we are in charge with hogs and sheep.   In essence, she runs two small enterprises of her own out of our farm, has very low risk other than her equipment payments, but we control the Big Enchillada of the livestock business. 

It does matter that you get to be the boss of something.  If you are worth a **bleep**, you want to make some decisions for yourself.  Half of her day is on salary for us - and we pay well for that time commitment.  She is sure of making that money.  She gets to enjoy working with horses, which is her passion, and gets to deal with the horse-crazy people like herself in the haybarns, because we do not have the patience for them anymore.   

I used to help sell the hay when she first started up, spent a lot of time talking to customers who called and needed educating about the different forages we raise.  Now, her customer base is well-established and the new ones I give her cell number.  She knows what to tell them now. 

We have a less structured arrangement with her brother with the sheep that graze on the farm where he lives, and the rental houses there.    He has his own contracting business that is his mainstay now.  Kid #3 is still in low Earth orbit, and we are not sure where she will land. 

Age thirty seems to be when they need to be in charge or disgruntled..at least in my bunch.  In retrospect, that was when we got into hogs, which was straight from my farming background.  Livestock was our only real option for farming, with the land hog of all time across the road form Mike's homeplace.  So, I can empathize with young people who cannot see opportunity, for being in someone else's shadow. 

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Veteran Advisor

Re: Advice Please Kay NC

Cowfarmer I must have missed this post. You really should make him pay a rent on the equipment for what it is worth and the rent on the land should be average for your area. By doing this you may humble your nephew into realizing its not as easy as what he thinks. He probably looks at rent as small potatoes when he has no equipment cost. When one is thrown to the wolves they will either sink or swim. If he can manage your farm with realistic inputs he will learn how to manage a farm for real and in a sense be able to swim on his own. Im glad I have had to earn my farm. My grandfather owns 300 acres in the block around my place. I got out of the service and expected his help into farming being that he recently retired. He instead told me I would have to earn his farm. I had to buy my own equipment, find land to rent or buy and make it work. He didn't want to see me farm anyway and probably figured I would get sick of it or go broke by now, neither of which has happened. He still leases his farm to a local big guy but he is running out of excuses as to why I can't take it on. Did you start from scratch? If so you would know most BTO's kids wouldn't have the grit and determination to start with nothing. Your nephew may or may not fall into this category. When I look at paying big rents I look at the real possibility of loosing all that I have worked to gain over the past 4 years. If your nephew had to look at things the same way he may change his mind about those overpriced rents.

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Senior Contributor

Re: Advice Please It continues

This morning the nephew and I tried to work out a deal so he could rent my own ground, but to his credit he said he didn't want to take away my most profitable ground. So I guess we are at a bit of a stand still. This kid is bright and does a real good job of farming, but patience is a real problem, he also thinks that the good times are here forever because of ethanol, direct payments, etc. I keep telling him that there will be guys that fall,  he gets red mad with disagreement when I tell him that , So as of now he still gets paid, use of my equipment free of charge, and has 120 of his own to rent, the more I think of it he has a pretty dang good gig here.LOL. Thanks

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Senior Advisor

Re: Advice Please Kay NC

Perhaps make him a partner on your owned land. You furnish land and equipment and he furnishes labor in return for a 25 % stake in the profits. The objective is to give him experience without making a permanent contract. And you would finance the operation so that he would not be loaded with debt.

 

His objective is to learn the ropes and save capital so that he can become self suffient.  As he grows into the operation he can rent ground on his own and start buying equipment as needed which could be shared by both you and him. Perhaps use some of your older stuff as trading stock.

 

Lots of us had to start out small and with parental help. There is no shame in that, It speaks well of you that you are willing to give him a boost. However the objective is to give him a hand up and not a free ride. Teach him responsibility with a future that he has earned and paid for.

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Advisor

Re: Advice Please It continues

Anger is a red flag.   To me, it says that he may be telling himself that you are actually standing in his way, instead of giving him a great leg up.  Getting red in the face ticked-off when having a business discussion is a sign of his immaturity. 

While he would not be the first generation of young farmers who are fristrated with a more fiscally conservative older generation, he may be the last.  The fallout is getting to be a much longer, dead drop when the debt-weighted  trapdoor opens now. 

The fact that he is unwilling to look at history, and focuses on the very positive present is a true sign he is not ready to take over the reigns.  Those who ignore history are doomed to repeat it. 

Given his age, he cannot be judged for having no direct memories of the eighties, but there ought to be a good video or so of it out there now, and pictures shout.  Maybe you could walk him through the cemetary where some of those who could not take the failure ended up by their own hand.  I could show him too many markers back home. 

Program payments are one vote in Congress away from extinction at any given time, and it is hard to make a case for their continuance, with present prices for commodities.  It is politically incorrect to live too well and take the dole at the same time. 

The general population has the perception that it pays for farm subsidies.  In fact, most households - at least 85-90% of them - are net drains on the federal budget.  It doesn't really matter, since perception is reality.

Each citizen's share of the federal budget is nearly $13,000 per year, and a family of five must pay almost $65,000 in federal taxes annually to carry its own freight.  Not many do that...so, how long can we as a naiton keep up the pretense of prosperity? 

Present pundits tell us that we are borrowing forty cents of every dollar the federal government spends.  Interest on existing debt accounts for a staggering load, and it's growing by the minute.  .  Clearly, this is not a sustainable economic model. 

When times get really rough  - and they could in very short order - the farm programs will be low-hanging fruit to sacrifice in order to try to achieve something nearly approximating a budget that balances.  It may be a moot point...the money just really isn't there. 

Does he factor in ten-dollar diesel?  It's pushing five here today. What happens to him when the Fed raises interest rates to stem inflation?    Historic lows can turn into breathtaking highs pretty fast.  I remember people paying 20% in the eighties, and you do, too. 

I think he's got it so good right now, he hasn't got sense enough to appreciate the advantages you've provided him.  Let him earn what he gets from here on out, so he will know how little of it stays in his pockets when he pays enough for all his inputs. 

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Veteran Contributor

Re: Advice Please

Like others i think you have the right idea. You dont want to just give him everything, but yet you want to give him a chance. I started with my dad when i was sixteen. He let me take over the rent of a 15 acre patch that he rented. I got to use equipment for free, but i have never been payed a salary, it was just always expected of us sons to work. So my work was equaled out as pay for using the equipment, plus it saved the hassle on taxes. The fall after i turned 17 i had overheard a neighbor complaining about driving to far for a 90 acre field, i immediatly took advantage and asked him if i could rent it and he said go ahead. I never asked my dad to do it because i know his response would have been..."If you want to do it then do it, what do you need me for"...he wanted us to do things on our own, yes he always gave advice and corrected us if way out of line but never forced us to do anything and rarely did anything for us. We continued with the same deal, i payed all the expenses except equipment costs which was covered by my labor. Now i own 240 acres and rent 417 acres some which is crop and some which is pasture. Im still in college so dad is required to take care of a few things, but he understands that im working at this college thing and i come home when ever i can to do it on my own, so he does take care of a few things to help make it easier, but it wouldnt be possible if he didnt. We still manage things the same way, we both make seperate dicissions on our own land but work together to get the work done, and we do plan things so everything flows together to, some of our marketing is combined and some is seperate. I own some equipment now and he owns his and we share. Its worked out pretty well so far. I wont be able to do a complete buy out because he wants to be able to split the ground between me and my brothers. Which is one reason why i have focused on doing my own thing. I dont want my farming future to be dependent on what other family members decide, keeping the farm may not always be in their best interest. Best case scenario i buy or rent out my brothers and i go on down the line, but if i were to lose it all i should have plenty to stay afloat. This is something you should consider and so should ur nephew. Would he be able to make it, if something suddenly happened to you, or does he plan on you living forever so he can use equipment for free?

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Senior Contributor

Re: Advice Please maybe a good endin

Well I got my young protege settled down, he is content with what he has for now. And is going to buy a nice little 4630 to put the plsnter and baler on. Im gonna pay him some rent money to do it and he can start to slowly get some equipment of his own, (Wrong color but what the heck) I have a selfish motive here i have a bad heart from bad life experiences and I need to rretire sooner than later. But I won't until this good young guy is ready. Im 63 but I feel 80 too much livin I guess.

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Veteran Advisor

Re: Advice Please maybe a good endin

Good for him! As long as he has you as a teacher and land available to him, he already has a leg up. You may be doing him a good service by cooling him off a bit. 

 

P.S He has the right color but should go with a 40 series. Smiley Very Happy

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