We live in south-central Wisconsin. Our neighbor surprised me and my son last month by telling us he is going to quit farming, sell his cows and machinery, and rent out his land. He asked if we would be interested in renting his 180 acres of cropland next spring. He said he was hoping to get $200 an acre but would rent it to me for $175. We farm 240 acres, milk 125 cows, and raise 50 heifers and 75 head of dairy-beef cattle. We grow all our forages but buy corn to feed the cows. I’m thinking we might be money-ahead to rent this extra ground and grow our corn this year. What do you think?

Tom Kestell: Opportunity only comes along once in a while. So, you must always consider the possibility it presents when it does come along. There are two things for certain in 2022: Grain prices will be high, and input costs for raising grain will also be up. However, there are already signs that input costs might have some downside in the coming months. Consider all the different angles with taking on new work, planting, and harvest expense. If you do not have grain handling equipment, this can be handled by a custom operator, but you must always book this service in advance and plan for the expense.

If you let this opportunity to operate this new land slip away, it might be a long time before it comes around again. So, I would suggest rent this land from your neighbor on a trial basis for a few years, and if after a year or more it does not seem profitable to you, then you could sublease it out or give it up all together. I would seize the opportunity as it presents itself and then you have the opportunity to control your future plans. Good luck and keep good records, because this could be a new avenue to improve your bottom line!

Sam Miller: This sounds like a great opportunity to access additional land close by to provide grain for your dairy herd. Corn prices have risen substantially in the past couple of years, making it likely you can grow this grain at a lower cost than you can buy it given the reasonable rent stated in your question. Crop inputs are much higher in cost this spring, so please complete a partial budget comparing the cost to grow this crop vs. what you could buy corn for in order to be certain it makes economic sense.

Also, since you already grow your own forages, you likely have planting equipment but may need to hire a custom harvester in the fall. Be certain to line this up well in advance and include these costs in your partial budget. Your Extension ag agent can suggest a partial budget format and provide custom rates for analysis purposes. Lastly, be certain to put your rental agreement in writing so each party understands their rights and responsibilities. Good luck adding this acreage to your business.

Katie Wantoch: Most often, feed costs are the largest expense of any livestock enterprise. These costs may increase when extremes occur, such as drought or excessive rainfall. In fact, feed expense could be the deciding factor to determine if your farm will be profitable this year. So, it is important to try to minimize feed costs if you have an opportunity like this one from your neighbor.

Keep in mind that this decision to rent more farmland should be evaluated only when it can be accomplished without hindering your other farm production. You should complete a budget to review feed costs compared to renting this land. Do you have equipment that will be sufficient to operate this additional acreage? Will you need to hire a custom operator or part-time labor to plant, spray or harvest the corn? Be sure to also consider additional costs for seed, fertilizer, chemicals, etc.

You should also consider any quality and quantity shortfalls that may occur during extremes to avoid purchasing feed and also renting this farmland. By reviewing these details and developing plans, you and your son can make a decision that best meets the needs of your farm business.

Retiring gracefully

My wife and I milk 75 cows and farm 210 acres in northwestern Wisconsin. We are both turning 65 years old next fall. We are wondering if we should sell our cows this spring or next fall. After we sell the cows, we plan to continue to farm the land for a few years. We owe $40,000 on a 2-year-old tractor — that is our only debt. We are in good health, but we both have aches and pains, and we are starting to feel like we are 65. We would like the opportunity to spend Januarys in southern Alabama with our son and his family but still farm. Please advise.

Tom Kestell: Congratulations on a successful farming career. In my opinion, it will make little difference financially if you wait six months longer to sell your cows. I think the most critical timing position is to match your feed inventory to the dispersal of your herd. Feed inventory leftover in silos has little value and can be a painstaking task to dispose of. I feel cow prices will be solid this year because of respectable milk prices. Whenever you decide to sell your cows, try to have them in salable condition. This means bred back on time, low cell counts, feet trimmed, etc. You want your herd to be the kind of cows you would want to milk or purchase for yourself.

In my opinion, the most important factor after all these years is to quit milking cows on your own terms. If you have six fewer months milking cows, that might be just the ticket to take away some of your aches and pains and allow you to have fun on your month of vacation in Alabama. This is your time to enjoy the fruits of your labor, and my recommendation is to enjoy it on your terms!

Sam Miller: Congratulations on your plans to transition toward retirement first through exiting the dairy business and then eventually farming the land. There are several considerations to guide you to the best time to sell the herd, including tax implications, feed usage, value maximization and others. Make an appointment with your tax adviser to understand the tax implications of selling the herd, including exploring the timing of selling the milking herd and youngstock; ask about both capital gains and ordinary income impacts. Evaluate your current feed inventories to determine if you have the correct feedstuffs (silage, haylage, etc.) but not too much to coincide with when you sell the herd.

You may want to visit with cattle brokers or auction markets to get a sense of both historically and what they anticipate for this year as to the best timing to sell. Maybe there is a dairy expanding and you can fill their barn either this spring or next fall. Making some inquiries can assist in this decision. Good luck researching your options; they can guide you to the best decision for you.

Katie Wantoch: I am happy that you and your wife are thinking about what life might look like in the future. It sounds like you are considering a “phased retirement,” or a gradual reduction in the day to day and reducing the number of farm enterprises. Most farmers say they will never retire, but scaling back on your work and reducing labor-intensive production, like milking cows, while managing your crop operating will continue to keep you engaged in farming.

Some farmers struggle with the question, “If I’m not farming, what else will I do?” It sounds like you and your wife have one idea already. You will have more downtime after your sell the cows, so consider where else you will devote your time and efforts. Many farmers have numerous talents and skills that will transfer to other businesses, volunteer work, etc. If you enjoy operating machinery, is there a neighbor who might need some help? If you qualify for a commercial driver’s license, you might consider driving a truck. Applicators are needed for application of fertilizer and chemicals. Think about these options for your phased retirement, and explore what will work best for you and your wife.

Agrivision panel: Tom Kestell, dairy farmer, Sheboygan County, Wis; Sam Miller, managing director, group head of agricultural banking, BMO Harris Bank; and Katie Wantoch, Extension agricultural agent specializing in economic development, Dunn County, Wis. If you have questions you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919; or email [email protected].