Fitting into an established family farm is a tight squeeze for most young farmers.
So, to keep from putting the pinch on the farms they grew up on, two young farmers used an innovative program to squeeze out farms of their own in these tough economic times.
Dave Hommel, Eldora, IA, and Eric O'Connell, Afton, IA, were attending Iowa State University (ISU) when they took a farm succession program called AgLink, affiliated with the National Farm Transition Network (NFTN), headquartered at ISU.
NFTN is an umbrella effort for various state and local programs throughout the U.S. that links farmers who have no heirs with beginning farmers looking to enter production agriculture.
While Hommel and O'Connell each had a family farm to go back to, they wanted to make sure the transition would be smooth. Both saw the NFTN program as a way to accomplish that.
“I had always planned on coming back to farm,” O'Connell says. “The program helped out with the different issues we would face when I did come back. The process was really beneficial for all of us.”
The lack of a clear entrance strategy for beginning farmers and a clear exit strategy for established farmers are some of the biggest problems when a new partnership starts, says John Baker, NFTN coordinator. “You can't just buy another tractor,” he notes. “There's so much more that needs to take place.”
There are several phases that farms, and farmers, go through when a younger party is brought into the equation, Baker points out. “We encourage that they start out as an employer/employee relationship to find out if it's going to work. It's a testing phase,” he says.
If that phase is successful, there should be what Baker calls a commitment stage.
“During the commitment stage, you're going to see a transfer of some of the management. Then, during the commitment stage, you look at transferring some of the assets,” Baker says.
The Hommels are following Baker's advice with a 15-year succession plan.
“Dad's the boss for five years. The next five years we're equal partners, and then the next five years I'm the boss,” Hommel explains. “Instead of me coming home and saying, ‘Okay, Dad, I want to drive tractor for the next 35 years,’ we sat down and figured out what skills we each have to contribute to the operation.”
Hommel went through the AgLink program during his last two years at ISU and graduated in 1998. His first year farming, he and his father, Tim, had a machinery- and labor-sharing arrangement. Hommel also bought 24 gilts for their shared hog operation and rented 160 acres.
By year two, the Hommels had a formalized partnership and a new identity: H & H Farms. Each partner is paid a salary, and Dave is working to equalize the equity in the partnership by paying his father for half of the farm's machinery.
O'Connell's entrance into production agriculture was far more up in the air when he graduated from college in 1998. He knew that his future in farming depended on finding available land.
“I put some ads in the paper, stating ‘young farmer looking for ground,’ and got a pretty good response,” O'Connell says. “I was lucky. I was able to start farming right away.”
He had planned to work off farm either part or full time, depending on the amount of land he rented. But aside from a few jobs roofing and detasseling, farming has been his primary occupation. O'Connell now rents 570 acres and has a machinery-sharing arrangement with his father, Bill.
The O'Connell families keep most of their assets separate. They own machinery together and do farm work as a partnership, but each has their own cow-calf operation and they rent ground separately.
“Things change. It's a work in progress,” says O'Connell. “There's no magic formula. As we got more ground, we changed things accordingly.”
Blending Eric and his wife, Jennifer, into the family business changed dynamics that had been in place for nearly three decades. Communication was one of the toughest obstacles to overcome, agree Eric's father, Bill, and his mother, Nancy.
“It was quite a change for Nancy and me,” says Bill. “We've been farming for almost 30 years. Once Eric came back, Nancy was kind of left out of the circle. She still helps, but not nearly as much. We had to adjust to that and keep her involved.”
That type of on-going communication is what makes things work for both families. The O'Connells hold what they call a “roundtable” meeting whenever something needs working out. The Hommels schedule in monthly meetings.
“It's almost like being married,” says Hommel. “You keep the other person in the loop. That's quite a change and a real struggle at first for two guys who are fairly independent.”
But both families wouldn't have it any other way.
“I've been around the farm my whole life and love it,” Eric O'Connell says. “I felt comfortable with my situation, and with my dad, that I could jump in and get going.”
For more information on NFTN visit: www.extension.iastate.edu/Pages/bfc/national/homepage.html.