C32—Lancaster Faming, Saturday, June 27, IStl
This is the second of a series of six
articles on how to get into farming
Subsequent releases will discuss
selecting a farm, financing farm
enterprises, managing finances, and
budgeting for financial changes
LANCASTER So you’ve
decided to farm. To be successful,
you need three things financial
backing, control of business
decision-making, and a sound
knowledge of farming. Eventually,
you’ll also want a farm of your
own. How do you go about getting
it?
There are several ways to get
into the farming business, says
University of Delaware extension
farm management specialist Dr.
Don Tilmon. Inheritance,
marriage, purchase, lease or lease
with purchase option can all lead to
ownership. It’s also possible to
manage someone else’s farm, if
you aren’t able to own your own.
Chances are that most people
don’t “get started” in fanning.
They remain there after growing
up in a farm family. Even if they
don’t take over the actual farm,
they inherit know-how, philosophy,
and sometimes financial backing.
If you’re in a position to inherit a
farm or an interest in one, ask
yourself these questions. Does the
land constitute a viable economic
unit? Do I have a good working
relationship with other family
members? Is there presently
enough income for more than one
household? If not, are there
alternative sources of income?
Will I have a decision-making
role before I inherit the farm? Will
the place be mine alone, or will
other heirs be in the picture, too?
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Getting started in farming
Will I have to buy them out? If
that’s the case, will I be able to do
so? Has the estate been well
planned so that when I inherit the
tax burden will be minimal, per
mitting efficient transfer of the
term assets to me?
Some farm operators have the
opportunity to join compatible
farms through marriage. If you
find yourself in this position, ask
yourself these questions.
Which family members will be in
control? Will this matter to us?
Will I have a compatible working
relationship with my in-laws? Will
I have as much say as I want in
managing the farm? To what
extent and in what form will I and
my spouse be able to achieve
ownership of assets? If there are
young children, what will their
eventual role be in management or
ownership of the farm?
Outright purchase on the open
land market is the most clean-cut
way to enter farm ownership says
Tilmon. The buyer of a com
mercial farm today must usually
compete with other potential
buyers. Some of them may want
the land for residential or com
mercial development or other
nonfarm uses.
Per-acre costs of up to $4,000 for
commercial land aren’t unusual.
This pnce is probably mote than a
farming income can meet. This is
why there’s a big financial ad
vantage to acquiring a farm
through marriage or inheritance.
Cost of land is a very serious
restriction when you’re trying to/
get started in farming.
“Purchases within the family
may have an advantage over
inheritance,” says the
management specialist,
“providing appropriate terms can
be worked out.” This can limit the
size of the estate by limiting the
size of the mortgage. It also brings
immediate control to the younger
purchaser. At the same time, the
seller (usually a parent or in-law)
is protected through provisions of
the mortgage.
Here are some questions to ask,
if you're considering, buying a*
farm. First, why is the place for
sale? Why hasn’t it already been
bought by someone else—possibly
a neighbor? Is it a problem farm—
poor soils or other hidden con
ditions? Is it priced too high? Is
there enough land for the type of
farming I want to do? Can I lease
with an option to buy, so that I can
try the place out?
It might pay to discuss yoqr
interest in the farm with your
county agent, extension farm
management specialist, a
representative of the Soil Con
servation Service and personnel of
other agricultural agencies before
you commit yourself.
Money requirements for direct
purchase of land, equipment and
livestock often make leasing a
farm a more likely way to get into
farming than outright purchase.
If this idea appeals to you, take a
look at probable leasing cost. Land
particularly cropland is often
leased by the acre. The rate will
vary, of course. Low rent often
implies a poor farm, while high
rent suggests better land. Rent in a
particular region will vary widely.
You can expect to pay anywhere
from $2O to as much as $lOO or
more per acre of cropland,
depending on its location and local
competition. Right now in
Delaware the average rental price
is |6O an acre.
Throughout most of the Mid-
Atlantic and Northeast, renting
farmland is cheaper than buying
it Renting could leave you with
more working capital to improve
your herd or some other aspect of
your farm operation. Just
remember that facilities often
become outdated on farms which
have been leased for several years.
For example, a landlord renting a
dairy farm may be reluctant to
“keep up” the milking facility.
Annual verbal leases are
common for straight cropland
rentals. Written leases are more
common 'when buildings or a
dwelling - are involved. Tllmon
recommends all leases be written,
to proted the interests of both
parties involved.
An option-to-purcbase clause is a
lease provides an alternative to
immediate purchase of a farm.
This option provides an entry
procedure which will permit you to
.test your ability to operate the
farm and eventually earn a down
payment. The option also benefits
the landowner in that it provides
an incentive for the lessee to take
care of the place. After all, you
may own it someday. An option to
buy may or may not specify the
purchase price. This can be an
important consideration when land
values are increasing.
Don’t give up the idea of fanning
just because you can’t afford to
buy or rent your own land. There
are also non-ownership ways to get
into fanning. The modem com
mercial ' farm is a highly
specialized operation. Not only the
type of farming done,'but also the
tasks performed call for special
skills. Consequently, the farm with
more than one worker often favors
specialization.
You may find that being a highly
skilled employee on a large farm is
the most satisfactory way for you
to become involved in farming.
For a reliable, productive em
ployee, work or. a farm in
cluding fringe benefits could
bring a return comparable to
similar non-farm work. The fringe
benefits may include housing and
use of farm products. It’s certainly
an option worth considering, if you
want to be involved in farming,
says the specialist. It’s also a good
way to gain practical experience
you may put to use on your own
farm later on.
With the right skills and
knowledge, managing a farm for
someone else can be a satisfactory
alternative to ownership, both in
terms of income and professional
challenge. A manager needs to be
knowledgeable of most farming
tasks and should also be able to
perform bookkeeping and general
management duties.
Tilmon has one final word of
advice on this aspect of getting into
farming. “Farm leases, part*
nership agreements, and em
ployment contracts are all legal
arrangements,” he says. “You
should always consult an attorney
when entering any such farm
agreements. Partnerships may
provide a source of backing, but
each party must fully understand
the legal implications involved.”.