January 1, 2018
My father and I have farmed together for several years. He is retiring. I am buying him out and will pay him rent for the land he owns. He still wants to help in the spring and fall. What would be a fair wage to pay him if he is an employee and no longer a partner?
The Profit Planners panel includes: David Erickson, farmer, Altona, Ill.; Mark Evans, Purdue University Extension educator, Greencastle, Ind.; Steve Myers, farm manager, Busey Ag Resources, Leroy, Ill.; and Chris Parker, cattle, forage and timber producer, Morgantown, Ind.
Erickson: Your father would obviously be very good hired labor since he is so familiar with your farming operation. I suggest you at least offer him the best possible wages for comparable labor in your area. You could ask others in your area with hired labor about the range of compensation so you know you are being fair.
Evans: What would it cost to have a person in the role your father is assuming? Are there other paid employees in the operation? If so, how are they paid? Locally, labor markets vary, and currently it’s difficult in most geographies to find skilled ag workers for seasonal time demands. Generally, all employers are finding it’s difficult to hire employees who are drug-free and who will dependably show up, even with planned and fixed hours.
Your dad may have special income needs for retirement that may or may not mesh with your needs. Moreover, recognize that there are other dynamics here besides money — with relationships, plus psychological and social aspects. Your dad’s attitude could range from wanting every penny to just wanting to be involved because he would miss farm life if he quit completely. The dollars may not matter so much. Likewise, you must look out for the operation to assure it has adequate labor while making sure it’s profitable. In the end, it seems paying at an hourly rate would be easier, since it is a seasonal role.
Myers: To begin this process, it seems reasonable to ask your father what expectations he has for a wage or compensation. If no great insight is provided by him, I would suggest paying him the “going rate” for someone with his skills and expertise. Pay him similarly to how you would pay someone else on a part-time basis to work in the spring and fall. Ask other growers or your bookkeeper for guidelines.
Parker: I would say in the $15-to-$20-per-hour range for experienced help is a fair rate. If it is farm help only, maybe you go toward the lower end of that range. But if there is farm management decision-making involved, which you ask for, then I would go toward the upper end of the pay range. This arrangement of having experienced help could be very beneficial for you. But if it starts to involve the questioning and second-guessing of your farm management decisions, it could prove to be an added stress that you don’t need. When fathers retire, it’s sometimes hard for them to step away from overall farm management decision-making cold turkey.
Summing up: This could be a good situation for you, but you need to remember there are family relationship issues involved. Work with your father to determine what he believes is a fair rate. And understand that you are employing someone with the experience to run that $150,000 used sprayer or planter in the spring and $200,000 used combine in the fall — not just someone off the street.
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