At a recent winter seminar, one participant asked, “Are you aware of a hotline for 70+ -year-old farmers who are addicted to farming? Help me! I’m farming and I can’t quit!” Although delivered in a lighthearted, humorous manner, this question was actually quite serious. In addition to being a real issue for many farmers, it is also applicable to the economic times facing many farm businesses.
To answer this question, I am not aware of any hotlines for a farming addiction, but one can take several steps to answer it on his or her own. First and regardless of age, one should start by reviewing goals…business and personal, long-term and short. Where is your passion? What creates your desire to farm and how does that connect with the family and personal lives? In other words, ask what it is that makes farming feel addictive.
It is especially important to be honest and forthcoming in your analysis. For example, if retiring from farming means leaving behind one’s passion for life, that is a significant element and must be addressed before any change is made. Most of us can point to a situation where an individual retired or sold the business only to get bored with the golf course and then started pursuing another opportunity. In the worst of cases, a retired individual cannot reclaim their lost passion through another career or endeavor, which can quickly become a serious problem.
Next, any farmer who feels addicted to the business must assess the elements applying pressure for a change. If the business is doing well and the family is content to continue, there may be no reason to pursue an exit no matter how many birthdays have come and gone. However, many businesses are experiencing significant financial stress in today’s economic environment. If the pressure to leave is financially driven, one must ask how much money is being lost in the farming business. Additionally, is this just one bad year or is this financial difficulty part of a string of bad years? Continuing to lose money simply to keep farming is no longer truly farming. In this type of situation, farming has become a hobby that requires one to be independently wealthy, or else completely broke.
Another approach is to divide current losses into the equity on the balance sheet, which in most cases today is land equity. For example, if a 70-year-old farming addict was losing $50,000 per year and had $500,000 in equity, he would burn through all his net worth by the age of 80.
Continuing to farm without a profit may have severe consequences for not just you, but your family, your workers and any entity connected with the business as well. Like any addiction, your choices will impact those around you. How will pouring all your equity into a struggling business impact your spouse, partner, children or grandchildren? It is worth considering that in a scenario of financial difficulty, an addiction to farming may simply be a resistance to inevitable change.
Finally, reaching out for guidance and counsel is the first important step to improvement. Perhaps there is no hotline to call, but lenders, financial advisors, consultants and peers are good resources to use. For someone who is motivated to stay in business, there are workable solutions. Perhaps this older farmer could partner with a younger individual or join forces with an existing entity to create a booming partnership.
In summary, farming is a unique and wonderful business. It is not hard to see why some individuals may struggle to leave it behind. Yes, addictions are laden with emotions and can be tough to break. However, they can also be an excuse. If you love what you are doing, then get creative and find ways to make it sustainable and profitable for the years to come. Otherwise, it may be time for some difficult decisions.
Originally published February 2017
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.