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Corn+Soybean Digest

Returning To The FARM

Like an oasis in the desert, the family farm beckons to children who grew up there. But for many, the oasis is only a mirage that turns into a much harsher reality.

Agriculture is changing so fast. A family farm that would have provided livelihoods for several families a generation ago now has trouble supporting just one family.

The family farm isn't disappearing, it's just getting bigger. For families that don't have the opportunity to expand, it's tough to bring children back home.

Difficult and impossible, however, aren't synonyms. Some farm kids do return and find a way to enjoy the lifestyle while earning a living. The process is just a little different than it used to be.

That didn't discourage Rusty Olson, Garner, IA, when he graduated from Iowa State University last spring with a degree in ag studies. In fact, he's confident he'll make it work.

“I'm the fourth generation of farmers in my family. I'm up to the task. I've been successful in the past and I'll be successful in the future,” he says. “I have so much respect for my father (Bill), and he's been wonderful to help me get started.

“That doesn't mean we don't have disagreements,” he says. “But we manage to overcome the little things that bother us. You can't expect changes to occur overnight.”

The changes at Evan and Roxanne Brandes' farm at Central City, NE, started long before their daughter Carly, and her husband, Jeff Johnson, decided they wanted to farm with the family. And it was a little more complicated than in Bill and Rusty Olson's case.

The Brandes family has always farmed together. Evan and his brother Roger once farmed with their dad, eventually bought him out and still farm 3,200 acres together.

The brothers knew that whatever decision was made for Jeff and Carly would need to also be workable if the Brandes' other daughter decided she wanted to farm. Or if Roger's two sons decided they wanted to make their living from the land.

To make room for future generations, the brothers each deeded three quarter sections of ground to their wives, a financial move they could make without tax consequences.

“Carly and Jeff will rent two quarters from Roxanne. They'll buy all their own inputs and do their own marketing,” Evan Brandes says. “They'll be able to use our shop and machinery and Carly will pay off those charges by working full-time on the farm. Jeff will work here part-time, but keep his job with Pioneer.”

Carly will join the farm operation in May after she receives her University of Nebraska MBA with an emphasis in agribusiness.

Rusty Olson's start in farming began while he was still in college. Health problems reduced his father's ability to plant and harvest crops, so Rusty spent the last two years traveling between college and home to plant, spray and harvest crops on the 900-acre farm.

At the same time he was working part time for Story City, IA, farmers Steve and Marcy Johnson.

So it's clear to Olson that he isn't coming home to a full-time job. “Mom and Dad have been able to make this work, but Mom also has a full-time job in town,” he says. “I have to find a way to make a living off the farm and still have time to do the work here.”

That can be a concern, according to Deb Rood, director for the Returning to the Farm program at the University of Nebraska Department of Ag Economics. “While many young farmers need to work off the farm when they get started, you have to be careful about burnout,” she says.

But hard work is nothing new to Olson. He paid cash for his college education and other expenses with income from moving grain bins during the summer. He'll continue with that job now and, in fact, has several bins he would like to get moved before spring work starts.

“Last fall I custom combined more than 700 acres, which provided a good income. I'd been working for Dad without a wage, so he agreed to let me use the combine for custom work in exchange,” he says. “I'll do the same thing this year, except I hope I can increase the number of acres.”

Like many young farmers, Olson has thought about getting into contract pig production. He finds that risk a little daunting, however.

“To put $800,000 into a building in such a volatile market scares me a little,” he says. “That building has to cash flow every day of every year. If you don't have pigs in it for some reason, you've got problems.”

Other outside investments might be possible. “We're thinking about buying an apartment building,” Olson says. “You can buy one for less than a hog building and the turnaround is a lot better.”

Financing isn't a major concern for the young Olson. He's got a lender who's willing to work with him on making decisions.

Olson understands the value of relationships and his development as a young farmer. “I can't even put into words what it meant to me to work with Steve and Marcy Johnson. You get a different perspective when you work on someone else's farm,” he says.

Olson intends to stay active in the ag community to continue building relationships. “I've been involved with Farm Bureau for the past few years, serving on the county board, as well as being selected to participate in its Ag Leaders Institute,” he says. “Getting involved is a good way to get your name out in public so people know who you are and what you're trying to accomplish. It's good public relations.”

Those communication skills also tend to keep families together, according to Rood.

“It's important to have those skills with all age groups. Sometimes young farmers are working with only their parents. But often grandparents are involved, too,” she says. “We recommend that families have weekly meeting times set aside so everyone stays informed.”

Olson realizes that when his 60-year-old dad decides to quit farming, the challenge isn't over. “We're looking to pick up more land,” he says. “But it's tough to find. My goal isn't to farm more and more acres just to do it. I want to reach a size that is sustainable with either acres or livestock.”

Evan Brandes intends, initially, to keep the hired labor that he uses now. “We've got a 200-head cow-calf operation, about seven miles of gated pipe to lay along with our pivots, and seed corn. Plus, we custom harvest seed corn,” he says. “We have to overhaul the harvesters each year and the calving starts in January, so we have to stay busy to get the job done.”

With multiple operations, Brandes has used the Nebraska Farm Business Association recordkeeping system for years. “The enterprise analysis capabilities have helped us sort things out,” he says. “We've tried anything and everything to make this operation work.”

Small farms need that accounting ability as much, if not more, than larger operations, according to Rood. “Actually, I think the smaller the farm, the more important it is to have good books,” she says.

It doesn't take financial errors to slow down some farms. When parents and students go through the farm books as part of the Returning to the Farm program, the evidence is clear that there's no room at the table to feed another mouth.

“Sometimes the students see the numbers and just decide not to farm,” she says. “If they do still want to farm, they know it's going to take major changes.”

The Consultant's View

“It excites me to see young people like Jeff and Carly Johnson, who want to start farming,” says Moe Russell, Russell Consulting Group, a risk management company headquartered in Panora, IA. “I still see tremendous potential for making a good living in production agriculture.”

Russell is excited enough about that potential for young farmers that he's agreed to provide his risk management service to the Johnsons, Central City, IA, for the first two years of their return to the farm operation run by Carly's dad and uncle.

While the Johnsons will start with two rented quarters and swap their labor for access to equipment, Russell doesn't see that as a limitation.

“When we review our clients, we see farms that have 6-10% return on assets, and 12-18% return on equity, regardless of size. We also see people struggle in all the size categories,” he says. “So, success isn't a function of size. More important than starting big is starting with a well-thought-out plan combined with good risk management. You have to have a clear understanding of your financial needs before you can start making decisions.”

A standard maxim of Russell's: “Work on your strengths and hire the rest done,” he says. “Our parents always taught us to work on our weaknesses. But when you think about it, that really doesn't make much sense. We encourage our clients to figure out what they're not good at and surround themselves with people who are.”

Along with Russell, Soybean Digest will stay in touch with the Johnsons to track their progress through their first years as farmers. In future stories readers can get a glimpse of the successes and failures, and how Russell counsels the couple to make decisions that will keep them on the family farm.
by John Russnogle

Checklist For Success

No ag economist keeps his thumb on the pulse of American agriculture better than Dave Kohl, Virginia Tech professor and trends editor for Soybean Digest. He talks with and listens to farmers of all ages as he travels the U.S. and Canada, presenting his ideas on what it takes to survive and thrive in farming today.

Kohl suggests that the younger generation give his checklist a hard look before making the decision to return to the family farm. These aren't absolutes, but they're certainly trends for what makes a return to the family farm successful.

  • Do you generate $40,000-70,000 of net income either through farm or non-farm earnings?

  • Have you worked three to five years off the farm before returning?

  • Are you making management decisions within six years?

  • Do you have a job description?

  • Do you have performance measurements?

  • Do you have a formal compensation plan?

  • Are fringe benefits or perks spelled out with a value?

  • Will the area offer a compatible lifestyle for your spouse and family?

  • What will be your spouse's role?

  • Is the business large enough to accommodate additional family members?

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