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

Ontario farmland prices cool down after years of double-digit jumps

Though the recent year-over-year increases in farm prices are levelling off in southwestern Ontario, good land remains too pricey for many people with dreams of becoming an owner. "Anything like 100 acres, you're just not going to find it for under $5 million," said Crispin Colvin, a farmer and area director of the Ontario Federation of Agriculture for Lambton and Middlesex counties. "There isn't really any cheap location to get into farming." A report released this week by Farm Credit Canada, a Crown corporation that provides financing to the agriculture industry, said the average price of a farm in the southwestern Ontario region rose by 3.2 per cent in 2024, reaching an average per-acre price of $33,700. That rate of increase is down considerably from recent years, which have seen double-digit increases in average farm prices: 2021: 22.2 per cent. 2022: 19.4 per cent. 2023: 0.7 per cent. Colvin said he's seen prices well above what's laid out in the Farm Credit Canada repo

Ontario building set to stop smoking days after fire

A large agricultural storage building was destroyed in a fire today in Ontario, Oregon, that threatened nearby businesses and fuel storage facilities. Ontario Fire and Rescue (OFR) responded to the structure fire at 152 SE 9th Avenue, finding the approximately 25,000-square-foot building engulfed with flames visible through the roof in multiple locations. According to OFR, the fire threatened Murakami Produce to the south and a Farmers Supply COOP bulk fuel storage facility to the east while also spreading through vegetation to the west. "Rescue 1 established a water supply and started a defensive attack on the south end of the building to protect exposures," OFR stated. Firefighters used three nearby hydrants to flow master streams, successfully containing the blaze to the building of origin and protecting neighboring structures. No injuries to civilians or firefighters were reported. The response included five engines, two ladder trucks, one water tender, two brush trucks, thre

How one agricultural society is taking inspiration from the 1800s to keep its fair relevant

It would cost about $80,000 to bring in the calibre of carnival rides that would rival Rockton World’s Fair or the Norfolk County Fair. It’s money the Burford Agricultural Society just doesn’t have. It operates on a “shoestring budget” from fundraising, Brant County grants, and donations from the community, society president Chris Howell said. After its longtime midway provider retired from the business several years ago, the society has struggled to set itself apart from the nearby fairs that also run over Thanksgiving weekend. But the event is “so much more than just the midway,” Howell told The Spectator. It’s “a celebration of farming, agriculture and rural life in Ontario.” When the Burford Fair started in 1860, it was a way for the farming community to gather to celebrate the end of harvest and see “who could grow the biggest pumpkin, who (had) the best horse,” he said. It’s that spirit the society wants to bring back.

Ontario Agri-Food Discovery Centre holds AGM

As it continues its journey towards an eventual opening, the Ontario Agri-Food Discovery Centre welcomed guest speaker Kerry-Leigh Burchill, director general of the Ottawa-based Canada Agriculture and Food Museum, to its annual general meeting to shed some light on what the group in Listowel can do to be successful. As Burchill explained to attendees at the Thursday morning meeting, the agriculture industry is one that is very dynamic and ever-changing, meaning the Discovery Centre will have to continuously invest in lifelong education for its team. “That you’re putting together a Discovery Centre intuitively expects that it is dynamic, but we really need to make sure that we continually support our staff and our volunteers to make sure that they are aware of those stories and can answer questions from the public because I can guarantee that the questions from the public are becoming more complex as they have access to more and more information and, oftentimes, misinformation,” Burch

How a trade war could boost small-scale farming in southwestern Ontario

A southwestern Ontario farmer hopes the ongoing U.S.-Canada trade war encourages the country to look inward to keep itself fed, while making itself more resilient in the face of future crises. It's a hope shared by some farmers with smaller operations, as they search for upsides in a situation that could have dire consequences for the Canadian economy — and agribusiness on a larger scale. "I think it's really important that we know how to supply ourselves," said Chris DeVries, the owner of Common Ground Farm in St. Thomas, who believes "we could 100 per cent produce all the food we need." The former engineer grows a wide range of vegetables year-round in a combination of fields, greenhouses and hoop houses, taking his harvest to farmers' markets in London and Kitchener. Common Ground also runs a delivery service in London and St. Thomas. A number of industries across Canada have already started cutting back as tariff threats from U.S. President Donald Trump — and a resulting lack o

More…

Badges | Report an Issue | Terms of Service