Financing and leveraging

Question:
You need capital to start making money. You need money to get the capital. How do you get one without the other?

In the past few years we have been investigating different options on how we can generate more cash flow (and hopefully profit) on our little farm in northern Huron Cty. Currently it is cropped, with the use of borrowed family member's equipment. I personally have a preference to do livestock due to the current building set-up on farm.
One avenue we have looked at is the dairy sector (we like cows for various reasons). When talking with bankers - "so how much quota do your parents have?" Oh, so we need "sponsorship" program in order to start. :-)
Lately, with the drop in the value of quota, we have talked about it again. One former banker suggested borrowing no more than $20,000 per kg quota. Yeah - that works great when quota is $25,000. So we start with 6 cows. Whatever.
This is where young folk have an issue with beginning farming. We have ideas that could improve efficiencies, labour management, productivity gains, reducing environmental "footprints"... etc. But to get the "elder" generation to agree is about as easy as moving Mt Everest.
One example I recall from Prof. Kohl was a 60 year old man walked up at a family succession planning meeting. He was interested in talking more about succession planning. Kohl was thinking "Oh he wants to retire and get his son more involved." No. His father and his son were walking up behind him. He wanted to get the farm from his 80+ yr old father, who was using a cane. So when would his 40 yr old son be able to farm? After he is eligible for retirement?
A few years ago every banker was willing to lend hundreds of thousands for a pig barn fully stocked. We always said no since I felt there was no future in pigs in Ontario for me. They also were willing to lend the same amount for a modern dairy - if my father would "give" his quota over.
In a super-big-box store in London one day a conversation with another customer came around to "taking over the family farm". She thought ALL farmers literally gave the farm to their children. because that is what happened in her family, her in-laws, and her neighbours - in the old country.
Well with that kind of capital, why do we need to worry about the question at the start?

Replies to This Discussion

Permalink Reply by Andrew Campbell on September 29, 2009 at 3:08am

This raises a lot of great points Wayne - thanks for posting it. I know in our case - we're very fortunate to have parents who WANT us there, and know part of us being there is being owners. It also brings up this video with Elaine Froese on AgVision TV - Barriers to Succession Planning - http://agvisiontv.farms.com/default.aspx?vid=vid_342009135751534

Let's get a good discussion going here. Do you agree with those barriers? Any way to work around those.

I know the thing we really have to watch for is around that conflict. We need to make sure we put those conflicts on the table - rather than trying to avoid them. None of us like conflict, but it is something we are going to have to get better at dealing with.

RSS

Welcome to
Ontario Agriculture

Sign Up
or Sign In

Agriculture Headlines from Farms.com Canada East News - click on title for full story

Keith Kreps Appointed President of 21st Century Equipment

Scottsbluff, Neb. — 21st Century Equipment is proud to announce the appointment of Keith Kreps as President, effective July 1, 2025. Kreps steps into the role following five years as chief operating officer and brings more than two decades of executive leadership experience in the agriculture equipment industry.

Crop Outlook Improves Across Alberta, But Peace Region Remains Parched

Timely rains in June have brought some much-needed relief to Alberta’s crop producers, particularly in the Central, parts of the Southern, and North West regions. While conditions have improved significantly in recent weeks, it’s a mixed bag across the province — and farmers in the Peace Region are still waiting for a true turnaround. As of June 30, provincial crop conditions are sitting at 61% good to excellent. That’s a full 11-point jump from mid-June, though still trailing the 5- and 10-year averages by 8 and 6 points, respectively. Spring cereals are ahead of schedule, with most regions reporting progress that surpasses typical benchmarks. In the South, cereals are already heading out, while Central and North West areas are mostly at the boot stage. Broadleaf crops like canola, dry peas, lentils, and mustard are flowering earlier than normal across the board — a positive sign, but one that hinges on moisture availability through the critical reproductive stages. Surface moisture

Five Manitoba students awarded with scholarships from MCGA

Manitoba Canola Growers Association (MCGA) is proud to announce the recipients of the 2025 high school scholarship program, awarding five $1,000 scholarships to graduating students in Manitoba. This year’s recipients are heading into a variety of academic paths, from nursing to engineering, but all share a strong connection to rural life and caring for the land. Whether headed to large universities or faith-based institutions, each student expressed a passion for contributing to their communities and pride in their agricultural roots. The 2025 MCGA scholarship recipients are: Addison Bruce, Miami, MB: Bachelor of Science Sarah Krahn, Rivers, MB: Pre-Nursing, Bachelor of Science Addison Schmidt, Elm Creek, MB: Briercrest College and Seminary Makenna Sumner, Neepawa, MB: Bachelor of Science Trent Tomoniko, Franklin, MB: Bachelor of Science in Engineering “The talent and dedication we saw in this year’s applications were truly inspiring,” says Warren Ellis, Chair of MCGA. “These st

Crop Report for the Period July 1 to July 7, 2025

Growing conditions throughout Saskatchewan continue to vary. Rainfall and warm temperatures in some areas are allowing crops to progress nicely, while other areas continue to experience dry conditions which is stressing crops and leading to rapid development. There was less rainfall last week than the week prior, with the Hanley area receiving the most in the province with 44 millmetres (mm). The Serath area received the second highest rainfall with 33 mm, followed closely by the Lampman and Semans areas with 32 mm and 28 mm, respectively. Other areas received much needed rainfall, but producers are hoping for more in the coming weeks. Limited rainfall in many areas has caused soil moisture levels to drop since last week. Currently, provincial cropland topsoil moisture is 55 per cent adequate, 33 per cent short and 12 per cent very short. For hayland, topsoil moisture is 43 per cent adequate, 38 per cent short and 19 per cent very short. Finally, moisture levels in pasture topsoil is

Advancing monitoring and decision-making tools for wireworm in Alberta

Why is this research important for Alberta ag? Wireworm is a serious pest for many growers, particularly in the Prairies, where there are 3-4 dominant species. The damaging larvae live for several years in the soil, feed on multiple crops, and have patchy distributions. For these reasons, wireworm is difficult to monitor, and no economic thresholds are currently available. As new chemical seed treatments enter the marketplace, there is an obvious need for a decision-making framework for wireworm management to help producers with questions like if and when to invest in chemical seed treatments. Since wireworm is the primary reason that cereal seeds are treated with insecticides on the Prairies, the information gathered from this research can potentially reduce unnecessary pesticide use. This research will explore the possibility of using overhead imagery to detect wireworm damage patches, how damaged patches differ from undamaged areas, and methods and intensity of sampling needed to

More…

Badges | Report an Issue | Terms of Service