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Corn+Soybean Digest

Sell Land And Get Out Of Debt: A Couple’s Dilemma

At a recent seminar, I was asked an interesting question from two participants. This couple is 59 years of age, has $2 million in assets and $800,000 in liabilities. Their son works on their farm while maintaining full-time employment. He is married with little desire for future farm ownership. The question of the day was, “Should we sell 200 acres of land at $4,000/acre and liquidate our debt?”

The husband said, “No, it will impact the efficiency of the business.” The wife, who was quite insistent on selling, indicated that in recent years they had little principal reduction despite good commodity prices. She was concerned about the future of the economy and interest rates, particularly at their age. He responded by indicating that he had upgraded his machinery line instead of reducing debt to minimize income taxes. Non-verbal communication between the couple became intense, and thank goodness I was interrupted by another person who wanted an answer to their question.

The long and short of this dilemma is that the couple needs a third-party facilitator to work through these issues. First, a profit and enterprise analysis needs to be conducted to determine if the farm is profitable, particularly if the land was liquidated. Is this a case of a millionaire on paper who has not earned a dollar?

Second, this couple needs to examine their personal, family and business goals to determine priorities. The farm may be the husband’s self-worth. Will liquidating this land impact his purpose in life?

Before any land is liquidated, a deferred tax analysis must be conducted, particularly in light of possible changes in the tax laws. Finally, what are the future implications to the remainder of the farm as a viable, saleable unit?

I have noticed when I mention this story in seminars, many people can identify with it because they are facing the same issues.

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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