Defining Success on Your Farm DSC_0743

CRAFT- WNC Farmer Round Table

What does success with your farm look like? How do we set ourselves up to best meet those goals? In this conversation we’ll discuss how we each define success as individuals and as farms, and how we incorporate planning for the future like with health care & other “benefits” or adapting the farm and it’s enterprises to suit what we can do as we get older. Facilitated by Tom Elmore of Thatchmore Farm


This year’s first CRAFT-WNC farmer round table was held at the Carolina Farm Credit office on January 22nd, 2015. Our focus for discussion revolved around the idea of “Defining Success on Your Farm.” Since success on one’s farm is a very personal decision and can involve a variety of factors we decided to narrow the field by nominating the most interesting or most urgent smaller subtopics for discussion that evening. We ranked the ideas by voting, and started with the most popular working down the list.

To prompt discussion Tom put together this table (by no means exhaustive) that lists the different benefits of having a “typical” 9 to 5 day job for a company versus the benefits of being a self employed farmer. How can farmers provide the benefits of a day job or work around the need for them? How can farmers maximize the benefits of farming over time?

“Day Job” Benefits Package

Farmer Benefits

Regular Year-round PaycheckState and Federal Taxes WithheldSocial Security – withholdings and employer matchMedicare – withholdings and employer matchRetirement Plan contributionGroup Health Insurance

Life Insurance

Disability Insurance

Workers Compensation Insurance

Paid Holiday Leave

Paid Vacation Leave

Paid Sick Leave

Compensatory Leave for hours worked beyond 40 per week

401(K) Program with employer match

Deferred Compensation Program

Post-employment health insurance

Tuition reimbursement for work-related education

Maternity/Paternity Leave

 

Home office

Limited commute

Great supervisor

Adjustable workload (plant less or more)

“Free” food

Scenic workplace

Family friendly neighborhood

Wide ranging tax-deductible expenses

Option to be an owner or employee

Possible tax shelter for off-farm income

Use value property tax reduction

Flexible wage and hours requirements

Pay family members tax free (to a point)

Work-related educational conferences

Depreciation of capital expenditures

Income averaging over several years

Creative lease arrangements

Mortgage Interest on farm is deductible

Home office deductions

“Alternative” 401 K ideas – high value hardwoods?

Raising children at home

Highlights from the discussion:

How to define success in your 1st year?

  • Finding a place to market or sell your stuff at all
  • Selling your first produce & getting that first payment,
  • If you can go into the 2nd year that’s success!
  • Having a 5 year lease on the land
  • Having a good rapport with our landowner and we can come back next year that’s a success!
  • Having some systems in place and know they work
  • Have a presence in front of customers and know how to reach them
  • Have solid base for growing next year
  • Knowing what you want to grow
  • Some form of stability is a measure in the 1st few years. It’s a crazy time figuring out who you are and what you’re doing.
  • While farmers do have some advantages with tax deductions that other small business owners don’t necessarily get, if you’re not making enough income to begin with it can be hard to take advantage of those. But, in general the benefits of owning and running a farm business are pretty similar to running any type of small business, asking the same kinds of questions about success.
  • We had an awful 1st year, but at end we knew what could be done about it. We learned what we didn’t know and more about what the land needed, what infrastructure and capital investments we most needed for the workload we had
  • We did not realize how much of a business it was and over the course of the year learned how to lace things up tighter and to run farm in order to make money.
  • It’s important to minimize risk in the first year. We had low risk up front by using land of a long time friend. Try to find ways to set yourself so that you have low risk up front.
  • Face the fact that you’re going to spend money. You will have expenses, it’s inevitable. The key is making sure your expenses are low risk and knowing the difference between high risk and low risk.
  • Think strategically for example. Getting your water figured out. Water is a requirement on any farm. A low risk option is to buy a used pump that you can resell if you need to and get some of your cost back.
  • With farming it’s important to take a lifetime approach, it might take longer than you think to reach certain goals so try to account for that and adjust your decisions to minimize the risk over the long term. Structure success incrementally.
  • When we started out we said, “We’re going to bust out asses for 5 years, we’ll get our systems in place, and then we won’t have to work so hard.” It took 5-6 yrs to know what systems we wanted. We didn’t work on other farms, so it was a lot of trial and error. Now we’re creating Standard Operating Procedures for diversified crops and trying to create a farm manual.

Success after 10 years:

  • Fewer hours working!
  • We’re meeting financial targets to live how we want to
  • To be able to travel once in awhile and take time off
  • Not just taking it year to year anymore.
  • I feel like having a baseline of a teacher’s salary is a livable range for us. It’s not terrible, includes health insurance, retirement, & time off.
  • Farm sustaining itself as far as income – instead of out of our personal pockets
  • Working full time on the farm goal – we’re redefining each year what that means
  • Being able to relax a little on some things – what you’re growing, where you’re marketing, etc.
  • Improving quality of your products and efficiency of your work. Feeling good about you do.
  • A successful labor flow on the farm
  • When we started we both had full time jobs, plus part time farming with goal of farming full time eventually. Eventually, the farm started paying for itself and then started making the house payment.
  • Farming is inherently physically risky and we need to be able to step away at times. How will that look when you’re away from the farm? – An intern model or a trusted friend that can care for things. Being able to have that stability is a part of success.

What can farmers do to make it a success for employees?

  • There is a gap between intern and farmer. I hear apprentices talking with one another asking, “What’re you doing next year? I don’t know. I can’t afford to keep apprenticing, but I’m not ready to jump into farming on my own either.”
  • Need to be able to have long term employees on farm the farm. It should be a good job to be a part of a farm.
  • How can I make this viable for my family and this person and their family, create a livelihood for more than just the farm.
  • How can you create a career for someone else on the farm while still being competitive?
  • How do folks feel about paying the employee more than the farmer – yay or nay?
  • If employee feels undervalued they can leave, but as the farmer you’re taking the risk and typically working more hours year round.
  • What is a model to create careers as farm managers?
  • Scale may be the issue – once you hire help you have to grow to accommodate that help.
  • Key is to be able to employee year round
  • What would it take to get somebody for the long term?
  • Obviously have to be able to pay them higher wage than an intern
  • As a farmer planning for a fair wage for yourself is a long term goal. In business classes planning is theoretical in beginning. When you’re starting out you realize it’s easier to live on less than jump to the scale where you might theoretically to meet that fair wage.
  • But, remember living with less is a strategy but it’s not a smart business strategy in the long run.
  • If we think about typical farming in our region a substantial amount or percentage of the farm household income doesn’t come from the farm. The farm income is sheltered under the off-farm income of a spouse. Our tax system isn’t really set up to support a household where the total income is from farming, not enough income to shelter farm income
  • But, the government says we may be living in poverty but in reality we all feel like we’re better off than that.

Alternative 401K

  • I just don’t want to end at retirement and the only way to retire is to sell everything.
  • Joel Salatin uses hardwood is his 401K. He fells trees each year on his land, saws it into raw lumber and puts it under sheds to cure. He’s creating a stock pile of lumber and when he retires he’ll start selling it.
  • What about powder beetles? Or Fire?
  • He could sell it now and invest the money.
  • Could plant standing hardwood
  • Some farmers use cabin rentals. It might not be farming but it is a way to build worth off the land and strategically capitalize on your labor in the winter.
  • It seems we’re operating under a paradigm where farmers don’t make much money. A paradigm where farmers are poor and going to be poor.
  • We need a paradigm shift. Why can’t farmers make money? Why settle selling the farm or relying on your hardwoods, why not just make enough money to open an IRA, or invest.
  • But, part of that is having confidence in your prices at markets, not cringing when people ask. Know your actual costs and share that honestly with customer, show the value of your products and they’ll respect you for it.
  • We didn’t pick an easy system to try to change from within, but things have changed so much in the past twenty even ten years.
  • We’re at an innovative time with farming right now. The future looks bright for our kind of farming, there is room for that we want to do. We just need to take advantage of it.

Thank you all for sharing your inquisitive thoughts and honest experiences, thanks to Tom Elmore for helping facilitate such an interesting & needed discussion, and thanks to Carolina Farm Credit for welcoming us into their meeting space. Until next time!

Cameron Farlow

Cameron Farlow

Cameron Farlow is the Farmer Programs Director. Hailing from Greensboro, NC with dairy farming in her blood, she has now made her home in Western NC. After earning her undergraduate degrees from UNC-Chapel Hill, Cameron dove headfirst into the realm of sustainable agriculture and local food systems, and later completed her Master’s Degree in Appalachian Studies and Sustainable Development from Appalachian State University. She also brings experience in the realms of farmland preservation, food security, farm to university, and land access for farmers. She came on board with OGS in April 2012. In addition to her work with OGS, Cameron is a beekeeper, dancer, baker and avid adventurer.