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Getting to the dream

A real-life story of making a non-family farm transition work, including all the time, the effort, the talking and the satisfaction

“It was so simple,” Bob McCoubrey says. Instead of putting funds in investments, he’d set up a mortgage to help the Thurstons buy the farm. But it didn’t stay simple for long.

About 15 years ago, Bob and Sharon McCoubrey were facing a dilemma. Bob’s body was telling him it was time to give up his orchard and vegetable farm in British Columbia’s Okanagan. It was time for the next phase of their lives, but past experience had left a bitter taste in their mouths.

“We were reluctant to put the farm on the market with realtors,” Bob says. “Over the years we had done that, with the idea of doing other things, and we were never happy. They treated it as a commodity, and it felt like we were being violated every time.”

It meant they’d hit a roadblock. There still weren’t any family members interested in farming. So how could the couple ever find someone to take the farm on and have some respect for its legacy?

Then, in 2005, Bob met Molly Thurston on a project they were both working on to establish community gardens in the area. As they worked, they realized they shared a lot of values about farming and life, and McCoubrey began thinking Molly and her husband, Matt, might be the very people he had been looking for.

“In the back of my mind I knew I needed to develop a relationship with these people,” McCoubrey says. “It was serendipitous, rather than me actively going out and pursuing them.”

Detours along the way

Molly Thurston had grown up in Kelowna and had no farming background, but her interest in agriculture began to grow at age 14 when she worked on a family-owned market garden operation in the Okanagan.

Matt got hooked when helping out at a friend’s dairy farm near Oshawa, Ont., where he grew up, which was enough to attract him to the University of Guelph’s agriculture program after high school.

Molly eventually ended up at Guelph too, which is where she met Matt, although she had originally enrolled in kinesiology at Simon Fraser University.

“I was also on the cross-country team, and as we travelled all over the Pacific Northwest, I’d forever be looking out the window at the farms,” she says. “A team-mate said, ‘Why are you studying for pre-med when you seem to be so drawn to what’s happening in all the fields?’”

After graduating in 2004, Molly and Matt took seasonal jobs in the canola seed business in southern Alberta and after harvest went to Britain for the winter with the WWOOF program (Willing Workers on Organic Farms). They spent time on an organic dairy farm in Cornwall, England, sheep and goat farms in Wales, and a croft on the Isle of Eigg off the coast of Scotland. The experience intensified their desire to have a farm of their own one day, something they had already explored a couple of times.

“Matt and I started looking in university, and discussed a variety of opportunities. We went to New Liskeard in Northern Ontario to meet with some farmers who were, at that time, looking to transition to some younger farmers, but it wasn’t the right fit for us,” Molly says.

Part of the draw to go to Lethbridge after graduation was that Molly’s cousins were transitioning into farming with the family there, where her grandparents also owned some land, but that turned out not to be a viable option for them either.

“When we came back to the Okanagan, it was certainly in our minds to farm, but we were also looking to start our professional careers,” Molly says. Matt worked as a vineyard manager, while Molly was hired by a major fruit co-op.

“Bob had mentioned he’d like to pursue some of his own projects, and was interested in potentially leasing the orchard and doing some mentoring, and we thought there was no better way to learn the business than to dive in and get hands-on,” Molly says.

In 2007, the couple leased the orchard and moved into a small house on the property with the idea of trying it out, and maybe talking with the McCoubreys about a longer-term plan to purchase the farm.

“There was an incredible amount of risk for Bob and Sharon,” Molly says. “It was important that we had a good business plan, and that we knew what our numbers needed to look like.” photo: Supplied

Hmmmm… second thoughts

After a year, though, both parties began to have second thoughts about the arrangement. The Thurstons were burned out between working the orchard and running back and forth to full-time jobs in Kelowna, and Bob McCoubrey was having a hard time sitting back and watching the young couple do things differently than he would have done them. So Bob went back to operating the farm himself and the Thurstons bought a house in Kelowna and gave up on the idea of farming for a while to concentrate on their careers.

“We bought a house in town, and had a normal life for a year, but by the end of summer 2007, we really missed farming, and I started to have some conversations with a friend of mine about going into business with her and her partner to do an orchard and market garden together,” Molly says. “But we just kept hitting roadblocks in terms of making it work.”

When she ran into Bob one day, he offered to rent a few acres of vacant land at the bottom of his orchard.

“I really liked how that sounded,” Molly says, and after discussing it with Matt they started growing a small market garden at the McCoubrey farm, as a sideline business.

Over the next couple of years, Bob began to entertain the possibilities of transitioning the farm to Molly and Matt.

“My wife and I had been thinking that we would sell the farm and buy a house in the same market, which meant we would need most of the proceeds to buy a house. Any difference, we planned to invest to fund our retirement,” Bob says. “But I don’t like a lot of risk, so I probably would have gone for term deposits, and at the time they were paying between four and five per cent. Then I had the idea that we could invest in a mortgage to Matt and Molly instead. Once I said it, it was so simple, but it took a year or two of thinking about it to come to terms with the idea.”

As they had been co-farming together over the past couple of years, the two couples had come to know each other well, and had developed a lot of trust between them, which was vital if the transition was going to work.

The Thurstons still lived in Kelowna, and Matt now had a full-time job with Farm Credit Canada, while Molly still worked with Tree Fruits, and was also completing her master’s degree, which led her to site some research trials on the McCoubrey farm.

“With me doing a lot of data collection on the farm, that led us to start seriously discussing the idea of a transition, and purchasing the farm from Bob and Sharon,” Molly says.

By this time, Bob had come to terms with the fact that the Thurstons were going to do things differently.

“When I started farming, I bought this place, but I rented land from other orchardists. One of them would come out every morning when I’d go up to his place, and have some tasks to do, and he would tell me how I should do it, then I would do it my way,” Bob says. “He explained to me how tough it was for him, even though he was happy with the way I ran his property. So, I understood that was going to happen, and when I thought we were going to sell it, I was happy with the idea, so I bit my tongue. In the final analysis, there was nothing they were doing that was outrageous.”

Structuring the deal

The actual transition agreement, which was completed in 2010, was complicated, and had to be carefully structured to meet the needs of both parties.

The couple agreed on a fair market value of $1 million for the farm, which would allow the McCoubreys to purchase a house and stay in the community. The Thurstons were able to secure a mortgage with Farm Credit Canada to pay 30 per cent of the price down. The McCoubreys then took the remaining 70 per cent as a second mortgage at four per cent interest, which was one per cent over the rate offered for a term deposit at the time. After four years, the Thurstons would pay back half of the 70 per cent mortgage, and at the end of 10 years they would pay the remaining balance.

Initially, the McCoubreys planned to stay on in the main house on the property for four years, and the Thurstons would continue to live in their house in Kelowna, and just pay the interest on the second mortgage over that time.

“We were basically paying rent to them in the amount of the second mortgage, which was beneficial to their cash-flow situation because then all they had to do was service the 30 per cent payments,” Bob recalls.

What neither party expected was, the day after signing the deal, the McCoubreys found their dream home and decided to buy it with the 30 per cent down payment, with the intent to either rent it out, or fix it up over the next four years.

“Over the next three or four months, we got to really like the place, and Matt and Molly were still running the orchard from 15 kms away, and getting tired of the drive, so we met one day and said let’s see if we can figure out a way to make it work for us to move off the property,” Bob says. “They sold their house, and we renovated the new house and moved into it seven months after we made the original deal.”

As they built up a track record of successful crop years on their operation, the Thurstons were eventually able to refinance the remainder of the mortgage with Farm Credit Canada and paid off Bob and Sharon in 2017, four years earlier than agreed.

Lessons learned

So, what have they all learned through the process, and what advice would they give to anyone else considering a non-traditional form of farm transition?

From the viewpoint of the seller, Bob and Sharon say it’s important to think outside the box, be open to ideas, and be willing to put the time in to build trust.

Ideally, if both parties can arrange to spend some time working together before even considering the idea of transitioning the farm, that’s the best way to develop a relationship that can move on to the next level, especially when it involves a finance option with the current owners.

“It was really important for us to spend those two or three years getting to know each other and developing the trust,” Bob says.

But there was another key too.

“We were fortunate that Bob and Sharon are good communicators because a lot of the conversations that we had were difficult,” Molly says. “It’s uncomfortable when you discuss what would happen if one of you died, one of us died, we got divorced, or your children wanted to come back in.”

Communicating was also important because it helped everyone see the strength of their shared values.

Without the McCoubreys’ willingness to think outside the box, the Thurstons admit that they would likely not have ended up farming in the Okanagan.

“We would have had to go farther afield, look for more affordable land,” Molly says. “We were young in our careers and didn’t have a lot of dollars to put for a down payment. Without Bob and Sharon’s generosity, and the ability to be creative in the financing, I don’t believe we could have purchased orchard land here and made a go of it.”

More than just land

The Thurstons know how much more they bought from the McCoubreys than just a piece of land.

“We didn’t just buy land, we bought a business and we have inherited a lot of Bob and Sharon’s customers,” Molly says. And there was something else too, she adds. “They fully mentored us.”

If others are seeking to work with a farm owner and find a creative way to fulfill their dream of farming, Bob says they must be willing to make connections and put themselves out there.

“They need to get to know some farmers,” he says. “It’s like volunteering, which puts you into a network of people that will open opportunities for you that will be beneficial. The same is true of working. If Molly and Matt had just stayed in their jobs and said, ‘We can’t afford anything,’ nothing would have happened, but by getting out there and talking to people, they found an opportunity to rent a property that eventually they were able to buy.”

From the purchaser’s viewpoint, it’s important to have a good business plan, Molly says, and also important to have a solid understanding of the numbers and finances of the farm.

Set expectations from the get-go

“There was an incredible amount of risk for Bob and Sharon, so it was important that we had a good business plan, and that we knew what our numbers needed to look like so that we could have clear goals financially, as well as production yield goals, and that we were clear on timelines for the deliverables,” Molly says.

Also, she adds, it’s essential to find a way to bring the business and the human parts of the transition together.

“You need to take the time for the relationship to build, and be clear on what the implications are in this type of non-traditional deal,” she says. “We set out clear payment schedules that had clear numbers attached to them so that there was never any doubt of who was getting what. We used lawyers to make sure that the agreement was fair and equitable for both parties because we valued fairness. and making sure that everyone was taken care of.”

They were all careful to ensure expectations were defined from the start, which meant getting the land properly valued.

“We wanted to pay Bob and Sharon a fair price for their property, and they required a fair price in order to be able to move on … it’s unrealistic to expect that because you’ve worked on the land for so many years, you’re entitled to a deal,” Molly says. “That never entered into the conversation … We looked at it as they had worked their entire lives on this land, and were ready for that next phase of retirement and were entitled to a good living.”

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