January 15, 2008
Purdue workshop opens eyes to farm succession issuesWEST LAFAYETTE, Ind. - Those dreaming of owning a farm could be jolted awake when they see what it costs, said a Purdue University agricultural economist.
"Agriculture is so capital-intensive," said Alan Miller, a farm business management specialist. "It takes so much money to get into a business."
When it comes to purchasing a farm operation, that could mean a $2 million to $3 million investment - an amount few people can afford. It can be especially hard for children of farmers to come up with that kind of money to buy the family farm.
Hard, but not impossible. One way of gradually purchasing the farming operation is by setting up a limited liability corporation or similar business entity and then leasing the farm assets - an agricultural rent-to-own, Miller said.
Miller will discuss shared ownership and related issues during a presentation at Purdue's Farming Together Workshop. The 28th annual event, which covers such topics as succession plans and organizational structures, takes place Jan. 25-26 in Stewart Center on Purdue's West Lafayette campus.
The workshop is geared toward farmers and their children or partners who hope to eventually run the operation, and farm managers interested in adding partners to the business.
Workshop registration is $110 per family/farm business. Enrollment is limited.
Some people have to be creative to purchase a farming business, said Miller, the workshop coordinator.
"How do you deal with the capital problem? One of the basic strategies we see used over and over again in the context of farming together is the multiple entity strategy," Miller said. "In that strategy you create a new business operating entity that doesn't have much capital. It then rents farm assets from already existing business entities, as well as individuals involved in the farm business. It makes it easy for those who don't have a lot of capital to be able to get into business with a reasonable investment share. That's been a popular strategy for at least the last 20 or 30 years.
"I've known farm operating entities that were started with initial shares of $5,000 or less."
The Farming Together Workshop moves in a logical sequence from one issue to the next.
"We start out focusing on communication among the different people involved in the operation," Miller said. "Communication is critical to any successful transition in a business. We then help participants build a plan for that farm operation by getting the family members or potential partners together to think about where they want the business to be in the future.
"After that, we talk about what kind of resources are required, followed by different ways to own and share in the ownership and management of a business. We then discuss the legal issues involved. And, finally, we talk to a family who has already been through this process and they share what was important to them."
The workshop runs from 9 a.m. to 9 p.m. EST Jan. 25 and 8 a.m. to 12:15 p.m. EST Jan. 26. The speakers are Purdue agricultural economists.
For additional information and a workshop agenda, visit the Farming Together Web site at https://www.agecon.purdue.edu/extension/programs/farm_together.asp, or contact Miller at (765) 494-4203, email@example.com.
Writer: Steve Leer, (765) 494-8415, firstname.lastname@example.org
Source: Alan Miller, (765) 494-4203, email@example.com
To the News Service home page