Creekside View – January 11, 2025 – "What is Keeping Farmers Awake at Night?"

Our Group’s work with farm families gives us firsthand insight into the challenges they face, particularly in forward business and estate planning

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Having recently navigated this process myself, I can say it’s far more complex than most articles or seminars suggest.

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Too many family farms don’t have a formal plan in place.? I am here to say if you let the inevitable happen on its own, the results may be disappointing to say the least.

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No matter what your profession, creating a will, appointing powers of attorney, and discussing healthcare directives with loved ones requires time, wisdom, and careful planning.

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On top of that, when you own any business, compiling good legal and tax information also becomes expensive, as the tax implications can be wide-ranging if your strategy is not properly prepared.

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We are often brought in early on to provide the owners and their advisors with a snapshot of the value of their real estate assets, farm and / or commercial.

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Personally, I’m involved in two enterprises, one with each son.? Their investment, both financial and sweat equity, must be protected while balanced with the interests of the whole family, especially my long-suffering wife!

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Besides the death of the old folk, what are some of the other issues facing today’s young farmers?

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Let’s start with land rental.? Farm Credit Canada recently released a report saying if it is cash flow you need, then it is better to lease acres, not buy.

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But in the quest to overcome the competition for lease land, farmers in this area are tempted to alternate just two crops, canola and wheat.

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For soil health and sustainability this may not be the healthiest use of the land as it can invite disease.? Canola straw doesn’t put much back into the soil either or when a tenant is tempted to make some extra cash by baling the cereal residue and removing it from the field.

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However, when rent pays the landlord’s pension or mortgage and not yours, and with no long-term promise of keeping the acres, it is natural to do what is best for your own farm, and not necessarily the land.

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Farmers and ranchers are living and farming longer these days with the median age reported to be 56, the highest of any occupation in North America.

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Should their beneficiaries have an emotional attachment to keeping title within the family for a few extra years, the opportunity to purchase may only come up once in two or three generations.

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Consequently, very little land becomes available on the open market.

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The opportunity for the young farmer, with older, smaller equipment, fewer workers, and limited operating capital often gets shoved aside by the more established operator in the district.?

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The cost of equipment and rapidly changing technology needed to operate today’s farm means a larger proportion of a younger farmer’s balance sheet is made up of depreciating assets, whereby the older farmer is often benefiting from the escalating value of their land base which was accumulated years before the major price hikes hit.

So, it was an eye opener to me to discover how many 35- to 45-year-old farmers have invested in non-agricultural assets ranging from an office building in the city or a vacation rental in Kelowna or Canmore.

Not only does this generate a steady income stream, but it may also house a spouse’s off-farm enterprise such as an accounting firm or esthetic salon.?

In any case, diversifying risk from the low margin, weather dependent core operation is a wise move.

Today, more and more of our clients use us to “bird dog” investment opportunities outside of the farm.

They are also open to alternative sources of capital for both their agricultural and commercial ventures, often quietly welcoming investors who are willing to share risk rather than working with traditional lenders.

It can be a boon to the local rural community, stabilizing local business and bringing more families in to live.

The skill set and entrepreneurial talent needed to manage a prosperous farm or ranch can easily be applied to non-agricultural enterprises.

Whether through strategic estate planning, innovative land use, or diversification into non-agricultural ventures, today’s farmers must navigate a complex and ever-changing landscape.

As a real estate consultant and broker, it’s rewarding to help families turn these challenges into opportunities.

Vern McClelland is an associate broker with RE/MAX of Lloydminster, founder of ProgressiveTender.com, and an active partner in his family’s livestock operation.? Comments on this article are welcome either by emailing [email protected]? or calling (306) 821-0611.

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