Dear Michael:

We have been farming and over the years we have finally paid for nine quarters of land. I know in today's world, this isn't a big farm by any standards but we do rent another thousand acres to help pay the bills. Over the years, my wife has had to work to help out with paying for the farm.

One of my sons joined us a few years back and is slowly buying machinery and renting land for his use while using some of our machinery. Our problem is another son recently announced that he would now like to come back and farm and we should leverage our farm equity to go out and buy more land. We are in our mid-fifties and don't really want to go right back into debt.

Currently my wife and my son's wife both work to make ends meet. Our other son is single but insists on coming back to farming? I'm really torn because I'd love to see our family farm on the family farm.

signed, Two Sons, One Farm

Dear Two Sons, One Farm:

From what you have told me, the farm has paid for itself over the years but without your wife working off the farm, you never would have been able to pay for living expenses – food, electricity, basic stuff like that. This likely means nothing was 'given' to you and you had to pay for your family farm.

Now you've gone through a generation and finally paid for the farm – which should give your wife some peace of mind knowing the full load of paying for the basic necessities can now be shared with farm income but then sonny came along and he started farming. What would have been all of your income now has to be shared with him so he can start buying equipment and/or land. Even so, his wife still has to work to in order for their family unit to make ends meet.

Economically, this tells me the farm is just starting to reach profitability stage. Any small business goes through these stages – debt, meeting debt payments, and finally profitability where you actually start making money.

A person once told me that any small business will take three years of losing money, three years of breaking even, and then – if you've done 'everything' right – you should start to see a small profit. I said 'that doesn't sound so bad' and he responded 'yes, but ninety percent of small businesses never make it through the first three years', which sobered me up quite a bit while considering the business I am in now. Sure enough, I had to work odd jobs and live on rice and Ramen Noodles for the first three years and go into debt to make things work. Then it was another three years of paying off those debts and then finally – around eight to ten years later, I could afford to go out and have lunch instead of packing a sandwich.

Those are the economic stages of any small business – of which farming is considered one of them. The difference with farming is the three and three scenario is more like fifteen and fifteen years – fifteen years of being in debt, fifteen years of breaking even, and then finally profitability. The only way you survived – and will survive in this transition process with farming son now is you've got two gals who are working paying for day to day living.

The whole bug-a-boo in what you've told me is going to sound overly simplistic. If the second son now wants to join the operation, you now have to provide income to three sources instead of two – and two has been a struggle for you. The problem is this son is showing up without an economic partner (wife) who's willing to support him while he establishes himself in farming.

It also means as hard as it is right now bringing in the first son, bringing in a third partner is really putting the farm at risk. The farm acreage owned isn't big enough to support three families. Being as you are in your mid-fifties, you are looking at a tenure whereby you are eventually going to slow down on labor input but still need income to support yourself when you can no longer work. You and your spouse have earned the right to do this because you paid for this asset.

Now if you split up this asset three ways and expect to have sufficient retirement income, I think you may be overly optimistic – to say the least – as to what this farm is capable of doing. If you owned two thousand to twenty-five hundred acres paid for and needed hired help from time to time and you could economically justify bringing in another partner, you could take the risk.

But your farm is already at risk if economics change in agriculture – supporting two families. Your wife isn't going to be real happy working until she's eighty-five to keep paying the basic necessities to supplement retirement income.

From an economic standpoint – and I know every farm father wants to see all of his kids who want to farm farm – but this is not a feasible situation. Sorry.

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