You might call it a sort of succession plan in reverse. Young farmer Dustin Krahn isn’t related to Ken Wiebe, the established farmer who has found a way to help Dustin get a leg up. Meanwhile, though, Dustin is also helping Wiebe’s 22-year-old son, Zack, learn the ropes and get started in farming too.
Are you still following?
It’s a 10-year plan, with a time frame for Krahn to be working 1,000 acres with purchased land as a base for an independent farm operation on its way to becoming a bona fide commercial family farm.
The plan itself isn’t that complicated, and everyone involved seems to think it could be a template for other beginning farmers across the country. But they also agree it does take commitment, great teamwork, and perhaps a more than ordinary amount of faith.
In all, the 28-year-old Krahn and 53-year-old Wiebe farm 5,300 acres of rented and owned land in south-central Manitoba, with the land spread across a rectangle between highways 3 and 23 from Plum Coulee to Miami.
Krahn himself rents land all over the map, based on some reasoning that many other farmers will recognize. “It’s a 40-minute combine ride one way to some of our fields,” says Krahn. “Our area is very expensive to rent land in right now, and sometimes a 20-minute drive can bring it down to a price that you can afford to rent and make a decent dollar.”
But where he’s different is that Krahn doesn’t own any farm machinery, and he doesn’t get paid for the labour he contributes to the Wiebe farm.
To put it simply, Krahn rents all of his land — currently about 500 acres — and helps Wiebe farm the rest. In exchange, Krahn uses the machinery and infrastructure that Wiebe owns.
“There’s no way with my small acres that I can afford to have stuff like tractors etc., and Ken knows that, so I provide labour and maintain the machinery and so on, and we work my time into a dollar value every year that I contribute to the farm,” says Krahn. “We don’t ever exchange money. It works out really well for both of us.”
Each is responsible for their own crops, and each purchases his own seed and inputs, although they do co-ordinate their rotations to make it easier for seeding, spraying and harvest. Wiebe grows a lot of wheat and soybeans for seed production, while Krahn tends to grow more commercial crops.
Getting started on 200 acres
His father owned a small farm and a flax straw business which he sold when Krahn was 10, moving the family to nearby Winkler.
Krahn was always attracted to farming, however, and as a teen he began helping a friend who worked at a feedlot owned by Wiebe’s sister.
When Wiebe’s hired man quit, he phoned Krahn to see if he’d like to come and work for him.
Krahn had just been accepted into the ag diploma program at the University of Manitoba, but he started helping Wiebe nevertheless, working on weekends and learning how to harrow, drive grain trucks, spray and do other farm operations that he’d never done before. After graduating, Krahn got a job as an agricultural sales representative, but he still helped Wiebe whenever he could. Finally, eight years ago Wiebe asked Krahn if he’d like to farm full time.
“I laughed at him,” recalls Krahn. “I said I’m not going to the bank asking for $3 million to start farming. I’d be the laughing stock of southern Manitoba.”
But Wiebe had detected a passion for farming in Krahn, and told him that if he could find 200 acres of land to rent, Wiebe would make a deal to get him started in farming. “He put the ball in my court. If I really wanted to do this, all I had to do was find 200 acres,” says Krahn, “but finding 200 acres of land in southern Manitoba is not that easy. It’s one of the most competitive parts of Canada for land.”
Yet he did find that 200 acres, quite by chance when he was at a hockey game and overheard a bit of conversation in the stands behind him. “The guy was talking about quitting farming and maybe renting some land,” says Krahn. “At the intermission, I turned around and introduced myself and told him what I could afford to pay.”
Two months later the farmer phoned Krahn back and offered him all 300 acres of his farm to rent. He still farms that land today.
Relationships matter the most
“Because there’s no land between us, we don’t have to fight over which family member gets land or how things get divided up,” Krahn says. “We can just concentrate on farming the land the best way that we know.”
One of the earliest lessons Krahn learned is that good relationships are essential.
“When you’re a small farmer, every relationship has to be a good relationship,” Krahn says. “I need every acre I can get, so I want to keep the guys I rent from happy. The farmer I rented my first 200 acres from is like a mentor to me now. I still farm his whole farm to this day, and we go fishing together, and have built a great relationship.”
Keeping your lenders and suppliers on side is just as crucial, says Krahn, because sometimes you need them to work along with you. “My banker has done huge things for me. There was one time where we had some lease payments due and the grain cheque wasn’t here yet and when I called him he said, no big deal, we’ll wait for the grain cheque to come in,” he says. “That takes a huge load of pressure off your back. You don’t want to burn any bridges in this industry because every farmer talks, and especially with Twitter and social media now it doesn’t take long for every neighbour to know what you did.”
Still, it’s the business management side of farming that Krahn admits he often finds the most challenging. “The hardest part for me is managing the money, because here you find yourself at 21 and you have to suddenly manage a $400,000 cash flow and be able to stick to the budget and make sure that there’s dollars to last for 13 months and be able to pay unexpected expenses when they come up as well,” he says, but he quickly adds that cash advance programs have been invaluable at helping him out financially. “They’re awesome. They’re the best thing that any small farmer can ever have,” he says. “It was the cash advance programs that gave me my start.”
Succession plans now and later
With Wiebe’s son Zack coming into the family farm business after completing his agricultural diploma at the University of Manitoba, half the farm is going through succession planning and half isn’t. “Ken and Zack are dealing with succession planning, and I’ll be dealing with it 18 years from now,” says Krahn, who has already attended some succession planning meetings over the past two years because he believes you can never start too early.
“It’s smart to deal with it sooner than later,” Krahn says. “You should start working on it when your kids are six months old.”
Krahn and wife Ashton’s son, Kingston Crew, was 2-1/2 months old this past summer and already seems at home in the combine, so Krahn is hopeful there will be a second generation to take over, and part of his long-term plan is to have his own farm to hand down.
“My 10-year plan would be to farm 1,000 acres and purchase at least one parcel of land and start my own farm that I can hand down to my kids,” Krahn says. “Right now I can make it work where I am. I’m not saying that it’s going to work here in 10 years. I might have to move somewhere else where land is more affordable and I can start purchasing my own equipment. But for right now, my 10-year plan is to raise my family down here and farm as many acres as I can get my hands on.”
Wiebe, who is also a first-generation farmer who started out in 1981, knows Krahn’s plans and is right on board with them. “Ken has said right from Day 1 if there’s a piece of land that comes up for sale and you buy it, there’s no hard feelings,” Krahn says. “His biggest fear is that he’s holding me back from pushing my boundaries. He’s not, but he doesn’t want to feel responsible that I let something go because of my contribution to this farm. But I don’t think I’d buy any land without his advice anyway.”
Part of the family
Krahn isn’t part of the family but he has such a close relationship with the Wiebes, he’s become almost like a big brother to Ken’s kids and calls Ken’s dad Grandpa, just like everyone else. It’s the open communication and strong relationship that has made the “marriage” work, says Krahn. “If we didn’t get along, none of this would be possible,” he says. “Ken and I are both married to the farm and we couldn’t operate without Zack now. He’s only six years younger than me but he brings such energy and eagerness to the farm.”
It’s a complete contrast to many farm family situations where a son or daughter comes in and is resented by other members of the family or employees who have been around longer, and a big reason for that is that everyone feels their opinion counts, says Krahn.
Krahn knows many farmers who want to retire with no children who want to farm, so it’s feasible that other young people could have opportunities to make arrangements similar to Krahn’s if they can develop a relationship with someone in that situation, and be willing to learn.
That said, Krahn knows he lucked out. “I’m proud of how I came into this business,” he says. “I’ve been my own boss since I was 21 years old and there aren’t many industries where you can do that. As long as I can make a living for my family I wouldn’t change it for the world. I’m having far too much fun right now.”
This article was originally published as “Not related” in the October 2015 issue of Country Guide
Tips for your non-traditional farming agreement
Across Canada, a growing number of farmers who want a next generation to take over the family farm is looking outside the family to find it.
Through non-traditional farming arrangements, farmers who are approaching retirement can pass on their experience and knowledge so that young people who may have anywhere from some to no background in farming — but who definitely have a passion for it — can get started in the business.
Below are 10 tips from Jacqueline Gerrard, associate consultant with Backswath Management at Morden, Man., to help a non-traditional farming arrangement run smoothly.
1. Have an agreement: Clearly articulate the agreement between each party, making sure expectations are spelled out. The best time to do this is when things are going well because everything’s fine until it’s not. Get help from a lawyer, professional management consultant, or other trusted adviser to ensure you have a strong foundation upon which to build your vision and goals.
2. Develop a clear vision and goals: There could be a shared vision, but that doesn’t mean that each party can’t have different goals as long as they are compatible. Write it down because the vision creates a road map for everyone to follow. Be clear about what everyone wants from the arrangement and how that affects the whole farm.
3. Develop strategies: Always think strategically and assess whether the things you are doing or plan to do will enhance the farm’s competitiveness, make best use of resources, and keep everyone on track towards achieving the vision.
4. Review: Revisit the vision plan every year, even if the farming arrangement is working well. Review it to make sure it’s still within the scope of the original vision.
5. Flexibility: There needs to be enough flexibility within the arrangement so you can change or adapt the vision and goals as you go along to accommodate different needs or changing circumstances.
6. Management decisions: Although each party may make their own decisions about things like crop plans, operating credit lines and marketing, there will be many decisions to make together, potentially including land rental or equipment purchase. Everyone must understand how the whole farm functions and how it performs in terms of profits. They must also understand the utilization of each party’s assets and investments, whether those are in the form of time or money.
7. Financials: Set up the accounting system so each party uses the same ratios to track and measure liquidity and profitability. This will help ensure everyone understands how each component of the operation affects the whole. Talk to an accountant about any tax implications and for advice about how to structure the financials to allow for any “what if” scenarios down the road.
8. Put a number on it: Put a value on each contribution that everyone agrees is fair.
9. Contingency plan: What if things don’t work out? Perhaps part of the plan from Day 1 is to eventually separate out. Either way, a contingency plan is critical so each party can make that transition a smooth one.
10. Be prepared to rent: Renting is probably the only real option for farmers starting out without assets and financial backing. Renting land as opposed to owning it makes more sense from a cash flow standpoint because it’s not tying up capital that’s needed to operate the farm.