When considering transitioning the family farm to a member (or members) of the next generation, all parties should carefully evaluate the financial health of the farm. Some of the questions may be sensitive, but both the parent and child will need to face them openly and honestly in order to ensure the current and future success of the farm.
Few questions will be more important than this. Can the farm support the additional family without jeopardizing the family that is already depending on it for support? If the immediate answer to this question is not “yes”, then the family will need to discuss options.
The returning family member that is joining the operation may, for a time, increase the labor costs during periods of training or if errors are made. However, the returning family member can also create increased income or a reduction in other expenses (through additional production, new products or services, or use of innovative processes).
With the return of a family member (and potentially his/her family as well), the farm may be able to operate with less paid, outside labor. While this will result in a cost savings, how that cost savings factors into the financial calculations of paying the family member a salary must be considered.
It may be necessary to find outside employment, at least for a short time, to minimize any financial impacts during the initial phases of training and transition.
Keeping the family farm operational is a goal that is worth fighting for. Contact AgriLegacy to schedule a complimentary consultation with one of our AgriLegacy approved planners.
