# Bought the family farm - now what?



## aussiehaynovice

Hi folks - I'm new to the site, but am now spending many hours reading and learning from everyone here.

I'd appreciate your advice.

My wife & I recently bought her great-grand parent's 200 acre farm in Central NY back into the family. It was a really big step for us - it's the first home we've bought and we live in San Francisco for our jobs, and can't move without leaving them. It may not make sense "on paper" - but we knew it may never come on the market again.

We're interested in setting up a small hay operation to help with the mortgage payments. Neither of us are farmers, though we have some in the family. Also I'm an aussie for what that's worth.

We've got 35-45 tillable acres right now. The guy who owned it before us didn't live there, and let local farmers use it for free. Mostly they did hay, Brome or Orchard grass. (There's probably 20 acres that used to be hay-fields, that aren't used now.)

We knew the soil would be rough, and did soil tests. Some fields need 10 tonnes of lime p/a and 50-80 lbs N. Some need 3-4 tonnes lime p/a.

We talked to some local famers. Most do round bales up there - it's big dairy country. They also said square bales are tough because it's hard to get enough dry days, and good labour is hard to find.

We might be nuts, but here's the inspiration. We're paid well, but now we pay rent and a mortgage so every little helps. I've heard it could help with taxes from our jobs. My mother-in-law is a horse trainer down south - she'd pay for nice northern square bales, and figure out shipping. And if we could make this really work - e.g. great square bales off 65 acres sold for a premium to horse-trainers down south - it could become a nice semi-retirement job for my father-in-law who'd love it.

The thought was to start small and just see. Probably with 5-10 acres, giving the soil what it needs. Ideally we'd love to do square bales, with round-bales as the fall-back. But we'd still be in San Francisco, and we'd have to just set things up with local farmers to get it done. So there's lots of questions.

1. Is it even possible for us to make this work, if we're not there all the time?

2. It is possible to swap from square-baling to round-baling for a cutting, if the weather's not good enough for square? (If they have both pieces of equipment)

3. Is share-cropping the way to go? How else could we make it work?

I'd love whatever 2 cents you can throw my way because collecting those might be a better way of making money than this crazy hay plan.


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## Lewis Ranch

I think the best bet would be to lease it out, I can't see how it would be feasible for someone to manage a hay stand from across the country. Just my 2 cents


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## 8350HiTech

Lewis Ranch said:


> I think the best bet would be to lease it out, I can't see how it would be feasible for someone to manage a hay stand from across the country. Just my 2 cents


I agree. Even better, if a lease agreement could be reached with a tenant that they would agree to do the liming in exchange for a guaranteed number of years. After that term is up, revisit the idea.


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## aussiehaynovice

Thanks - that's a great suggestion. What's the biggest thing you think would make trying to do it ourselves not work? Not to question the advice but to learn from it.


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## somedevildawg

aussiehaynovice said:


> Thanks - that's a great suggestion. What's the biggest thing you think would make trying to do it ourselves not work? Not to question the advice but to learn from it.


2k miles?


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## somedevildawg

Welcome to haytalk Aussie, I agree, lease it.....


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## aussiehaynovice

What's a good lease length so the farmers have enough time to get the soil to where they want it? I figure if it's just a year, there's not a big incentive.


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## somedevildawg

aussiehaynovice said:


> What's a good lease length so the farmers have enough time to get the soil to where they want it? I figure if it's just a year, there's not a big incentive.


Try to find someone willing to do a five year lease.....I never do a one year lease, and with ground under repair, I wouldn't want to lease it for any less.....and may balk at any fee for the first year. Just depends on the ground.....after a couple of years perhaps you can work out something with squares and Florida, it looks purty easy, but it's a tough way to make a living, and you have a ton of learning to do, no one better to learn from than a man leasing your fields.


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## Tim/South

aussiehaynovice said:


> Thanks - that's a great suggestion. What's the biggest thing you think would make trying to do it ourselves not work? Not to question the advice but to learn from it.


Welcome to HayTalk.

Hay is a very hands on business. There is not a lot of profit in hay on a small scale. Getting the ground right is going to cost some coins. It is also going to take time for lime to work into the soil.

A big part of making hay is not just owning the land, owning equipment, paying to fertilize and lime. The biggest challenge is knowing how to make good hay.

Being so far away, you are going to be dependant on the honesty of who ever makes the hay. I suppose every business has it's shysters.

I have several free lease fields I cut for hay. All had seen neglect and the cost to rejuvenate was an eye opener to the owners. Since I have long term free leases I am not afraid to spend some money. I am on my 4th year on one place and may make money for the first time this next summer.

One thing you do not want to do is allow someone to cut the property just to keep it cleaned up. They need to put some nutrients back.

I doubt there is going to be much return on the property until there comes a time when you can manage it yourself and experience what is involved.


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## aussiehaynovice

Thanks dawg and everyone. These two cents are so valuable - keep em coming!


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## somedevildawg

What else does the land consist of.....40 acres tillable and 160 acres of what? Any buildings, barns, etc.....just to give you some idea of the costs associated with haymaking in the south, much different from your locale, I spend about $600 per acre per year to produce about 8-10 tons of forage per acre per year....now figure in fuel costs, rent, equipment, insurance, labor, irrigation (if applicable, and I wish it was on every acre) now figure about 160-220 per ton for the end product.....easy math, not gonna be buying any G3's anytime soon, but if my grandchildren don't piss away the land when I'm dead and gone, perhaps they'll be able to buy an old piper cub.....


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## aussiehaynovice

We've got probably 75 acres of woodland, and then the rest is by the creek that used to be pasture land when it was a dairy farm in the family. We've seen photos where some of that was hay fields after it went out of the family, but the locals say it's pretty muddy. Yeah we've got a place there - the main reason we got it, and a 7 bay barn with a hay loft.


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## somedevildawg

I assume you have family in the area? According to what I've read on here, the land prices in NY are fairly high. I would lease the tillable land and fix up the house and barn (if it's useable for hay storage) and hunt the other 75 acres bordering that crick {purty sure it's a crick (like a crick in your neck) there and not a creek  } once you get a bit of knowledge under your belt, you'll know better what to do with the land. How far from retirement? Trout in the......stream? Could do a double whammy and fish and hunt! Talk with extension officers in that area whenever you get back there (face to face) and get some input from them, there may be some programs available to you, never know . Biggest thing is to set up a corporation (after consultation with CPA) to help with those taxes, you'll have plenty of losses


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## PaMike

Keep in mind that just because you get a farmer to sign a 5 year lease doesn't mean the farmer is going to improve the ground like he should! Might want to take that into consideration. You need some way of insuring farmer improves the land...


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## RockmartGA

aussiehaynovice said:


> 1. Is it even possible for us to make this work, if we're not there all the time?
> 
> 2. It is possible to swap from square-baling to round-baling for a cutting, if the weather's not good enough for square? (If they have both pieces of equipment)
> 
> 3. Is share-cropping the way to go? How else could we make it work?


1. Count me in among the respondents who think it is probably best to lease the property until you can move on site. Amount of lease depends on a lot of factors with the prevailing market rates a determining factor (around my area, most landowners feel lucky if they can get enough rent to pay the property taxes). Also, what about renting the house?

2. Yes, it is possible to utilize both round and square baling methods on same cutting.

3. By sharecropping, I am assuming you mean that you would provide some inputs (such as fertilizer, lime) and the custom baler would cut, rake, bale and take his portion, leaving you the remainder to sell. Yes, that is an option. Once again, the distance factor would come into play. I would say that it is difficult to market and sell hay from 3000 miles away.

One other option would be to research mushroom hay. I have no experience in it, but it is my understanding that mushroom hay is a lesser quality hay and may be more forgiving for the novice. As others on here can attest, there is definately a learning curve to making quality hay.


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## gradyjohn

I agree with the lease idea. Long term lease with the stipulations of improving in exchange of dollars. At best you maybe get enough to cover the taxes on the property. You should ask around and find someone that would abide by the terms of the lease. This is a 5 to 10 year project. It didn't go downhill over night and you can't rebuild it in a day. You are considered an absentee owner which puts you at the fate of the locals. The lease would have to be beneficial beneficial to both parties. Good Luck and welcome to Hay Talk. There are some great people here.


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## aussiehaynovice

Thanks for all the advice so far. Leasing sounds like it could be the way to go, but I'm still trying to wrap my head around share-cropping, and haven't quite figured out why it's not such a good option (sorry I'm a bit slow - I'm aussies afterall)

If we paid for lime & fertilizer and did a 1/3 (us) 2/3 (farmer) split, is that a decent proposition? I crunched some basic numbers and it seems fair.

I guess the thing I couldn't figure out is why this wouldn't work if we're not there all the time. I figured the farmer will just tackle the fields same as any other, cause they want to get the highest yield - but that's an ass-umption on something I know nothing about. I suppose we could be taken for a ride.

What I'm thinking is we could get our 1/3 loaded into the barn, and then we can sell it ourselves through family networks. Obviously the risk is not selling it and being out of pocket...


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## Lewis Ranch

It might sound good on paper but nothing in the farming/hay world runs like it does on paper.


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## gradyjohn

aussiehaynovice said:


> Thanks for all the advice so far. Leasing sounds like it could be the way to go, but I'm still trying to wrap my head around share-cropping, and haven't quite figured out why it's not such a good option (sorry I'm a bit slow - I'm aussies afterall)
> 
> If we paid for lime & fertilizer and did a 1/3 (us) 2/3 (farmer) split, is that a decent proposition? I crunched some basic numbers and it seems fair.
> 
> I guess the thing I couldn't figure out is why this wouldn't work if we're not there all the time. I figured the farmer will just tackle the fields same as any other, cause they want to get the highest yield - but that's an ass-umption on something I know nothing about. I suppose we could be taken for a ride.
> 
> What I'm thinking is we could get our 1/3 loaded into the barn, and then we can sell it ourselves through family networks. Obviously the risk is not selling it and being out of pocket...


Here is a true story. While traveling west Texas I had a distributor in Lubbock. Two of the guys that worked for him got another rep to go into the pig business. The bought 3 pigs. Time went on and finally the rep asked him about the pigs. Oh! We forgot to tell you, yours died.


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## swmnhay

gradyjohn said:


> Here is a true story. While traveling west Texas I had a distributor in Lubbock. Two of the guys that worked for him got another rep to go into the pig business. The bought 3 pigs. Time went on and finally the rep asked him about the pigs. Oh! We forgot to tell you, yours died.


Another true story.A neighbor of mine sold 50% of a cow herd to another neighbor that was located in pasture A.He also had cows in pasture B.When weaned the calves were comingled.Pasure A had a 12.5% death loss on the calves.And 5% on the cows.Pasture B had 0% death loss.No records of any deads or was ever mentioned until settlement time.


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## Tim/South

If the land owner pays for the lime and fertilizer then I believe he should get half the hay. The one field I have done on shares was that way.

A good deal is only good if it is good for both parties.


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## NDVA HAYMAN

You should definately get 1/2 the hay but you should not expect them to put it in the barn. That would be extra. Just my .02. Mike


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## 8350HiTech

NDVA HAYMAN said:


> You should definately get 1/2 the hay but you should not expect them to put it in the barn. That would be extra. Just my .02. Mike


Around here where farmers rent land for money that would be right. But if the farm in question is currently leased for free (and if that is indicative of the market in the area) is adding the fertility going to make the owners' portion of the hay crop half?


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## hillside hay

With those high acid soils seems your property may be close to mine. I have very similar soil tests when I take on new leases. Plus side is some awesome blueberry production on these acidic wet hills. Send me a pm next time you are in the area. We'll have coffee and the aforementioned blueberry pie always on at the house.


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## somedevildawg

hillside hay said:


> With those high acid soils seems your property may be close to mine. I have very similar soil tests when I take on new leases. Plus side is some awesome blueberry production on these acidic wet hills. Send me a pm next time you are in the area. We'll have coffee and the aforementioned blueberry pie always on at the house.


Heck, I believe i would take him up on some of that blueberry pie! A la mode and I'm in......


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## hillside hay

Yep, Ma makes a pretty tasty pie. Soon as milk falls to 15 and under fill the barn back up with Jerseys and get some al a mode going in the crankin' tub.


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## Thorim

When I was 10 we moved to the country and had a house on a acre of land and a additional 13 acres behind the home acre, kinda a squat tee if you will.

The land was share cropped out when we got it and we continued with that arrangement 1/3 to us 2/3 to the farmer we technically contributed nothing but

the land the farmer did everything else..... turned out the farmer had 5 sons, 2 daughters. 4 of the boys were close to my age and we became like brothers

So I learned a bit about row crops, hay, and dairy farming.....Point is if your going to pay for fertilizer and lime you should get at least half....in my humble opinion...


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## aussiehaynovice

Pie and a coffee sounds great. And thanks for the advice on the cropshare split everyone. I think it's time to have some conversations with people around town and see who might be up for it.


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## BrangusFeeder

I'm not a tax pro, but if you have a by the book CPA, you may look into your tax strategy more first and pre-determine what is actually a deductible farm expense. Can one actually expect to deduct the cost of air travel to your farm and claim a farm loss? What about the cost to go back to Cali? If you are renting in Cali and homestead the farm house, it's not the farm's fault you chose to travel away from it for a non-farm pursuit. If you have two houses one will get taxed higher and insuring a "weekend" house is a lot more expensive than an occupied home.

Your actual farm loss to offset job income tax paid may be less than the cost of your increased personal non-deductible expenses to get back and forth to your farm and maintain two personal residences. It's expensive to buy two sets of groceries and utilities and commute.

I worked in Dallas and travel some with the job some too and had an apartment before inheriting my family land 110 miles away. I still have that apartment and split my time between the two working remotely from the job at the farm some too. My (current) CPA does not allow me to deduct the mileage to and from the farm to my job or the cost of the apartment anywhere and only deduct half the ranch household expenses because that is also a residence while I'm there. So my farm may or may not have a loss that is large enough to also offset my increased personal expenses as well.

If anyone knows how I can deduct the apartment and commute to my job off the farm, Please let me know and I'll put in a transfer to the San Diego office.


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