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Farm
Ownership Structures |
 The backbone of Ontario agriculture has
been the family farm, traditionally owned and operated
by one family. The single proprietor farm is being replaced
by partnerships and family owned corporations where
siblings frequently find themselves working together.
Initially these ownership structures
work successfully and things go smoothly for the first
few years. But the odds are stacked against true long-term
success. Most people farm because they like being their
own bosses, making their own decisions, and not having
to take orders from anyone. In other words, they like
to be in control. This personality style may find it
difficult to work in a close business relationship with
another like-minded individual.
There are many farm situations that look
idyllic from the end of the lane. When you get up close,
you see individuals who feel trapped with no other options
than to stay where they are.
The following scenario highlights some
of the problems that are encountered when siblings decide
to operate their farm business inside a corporation
and attempt to keep everything as equal as possible.
Robert, Bryce and Felix are three brothers
who had started cash-crop farming together 17 years
ago. Robert and his wife Sue live on the home farm,
while Bryce and Felix, with their respective wives,
live on two of the other seven farms. All assets with
the exception of the three farms where the families
live are owned inside one corporation. Each family draws
equal wages. The brothers have kept everything equal
right down to buying cars and pickup trucks of the same
value.
Each spring an acre of sweet corn is
planted at Robert and Sue’s place. Sue and Robert
were on holidays in July and got home the day before
a large family reunion. Sue planned to harvest 15 to
20 dozen cobs of corn for this event. When she got to
the field she found that someone had already been there
harvesting corn. She asked Robert if he knew who had
taken the sweet corn. It turned out Felix and his wife
had a corn roast for a group of their friends the night
before Sue and Robert got home. Sue was livid that her
brother-in-law went into the patch and took the sweet
corn. Her comment, “how dare he go into my patch
and take my corn without my permission? Does nobody
have any consideration for what is mine? “ Upon
questioning, Sue admitted that the corporation paid
her and Robert rent for that acre of land and had paid
for the seed as well.
The issue at the core of the conflict
stemmed from the fact that neither brother owned nor
controlled anything that was actually 100 percent their
own. Sue’s comment that, “my husband and I
don’t own anything – we just own a third of
everything” puts the issue into sharp focus. Owning
shares for many people does not give the same degree
of satisfaction that comes from tangible ownership of
a specific piece of machinery or a barn full livestock.
With the demise of the single-family
farm operation, farm families will need to be innovative
and creative as they go about designing ownership structures
that can be successful in the long term.
For starters, each individual needs to
look at their long-term goals. Is pride of individual
ownership and being your own boss two important reasons
why you want to farm? Can you be happy as a farmer and
share ownership with a partner? Can your spouse be happy
working with your siblings? How you answer these questions
can be pivotal for your success. Having your blood pressure
rocket skyward over a few dozen cobs of corn makes no
sense. Farming is stressful enough without having to
go through an emotional roller coaster ride every time
a trivial decision gets made such as who gets to pick
the sweet corn.
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