farming question

Someone I know wants to row crop farm with me. It"s my land and my equipment. Never done this before. How do you work out the seed and fertilizer and profit. We will split the labor. Any info greatly appreciated.

Proably be easier to just hire him and pay him a wage. You will have 90% the risk. if it goes bad he will walk away and leave hanging.

I agree with craigco. If things go well, the profit will be difficult to manage, if things go bad, the debt or loss will be difficult to share. Hiring him is the best policy as you then have control of the issues and though it might seem "dominant"" and is, it is your land and equipment. Jim

I just recently got out of a partnership which began much as you describe, only I was on other end. A lot of this depends on circumstance, I'm going to assume that you are older and a younger person is interested in farming with you. The first thing you must consider is your end result, where do you see the partnership going and are you willing to commit yourself to such an arrangement? Once you begin you must maintain your commitment, you must think of your partners livelihood in addition to your own. Where will they be if and when you decide to retire. If you are not willing to work with them in a transition allowing them to take over the operation down the road the you may as well give up the idea of a partnership now and hire them as labor only. That said I have heard of an arrangement where a man and his grandson farm together. The man has 1/3 of liabilities and profits, grandson has 1/3 of liabilities and profits and equipment has 1/3 of liabilities and profits. The equipment is considered the 3rd partner and is managed by mutual agreement. Obviously this only worked because the man was willing to split his equipment and it's equity at the onset of the partnership.

Typically one side brings the land, the other side brings the equipment and labor, and the crop and variable expenses are split something like 60% to the renter, 40% to the land owner.

Since you are providing all the land, all the equipment, and half the labor....

Seems this wont divide up so well? The other person doesn't have anything invested in this, no risk. Can walk away any time.... That's a tough way to have a partnership.

How big a plot are we talking? If its 5 acres, not such a big deal. If this is 160 acres or something, it gets to be real money, real numbers, have to think about the risks then!

Paul

What ever you do, get it in WRITING. Then have it noterized! good luck.

Don't do it! Cash rents are high now. Rowcrop agreements only benifit the rowcropper,not the owner.If you furnish the ground,equipment and half the labor you might as well farm it yourself.

You have everything to loose he has nothing to loose.Not a good situation for you.Someone else using your equipment is almost always a looser for the owner of the equipment.

The reason I am looking at this kind of deal is because my off farm job has kept me away from home over the past 2 years and nothing has been touched. I want the land farmed again but cannot by myself due to time restraints.

Land represents (at least) 50% of the value in the equation. Equipment cost/depreciation, typically can represent 10 to 15%. Input cost (ie, seed, chemicals, fert, fuel etc) (at minimum) can represent 15% to 20%. Maybe more, maybe less, all depends on your buying strength. That leaves 15% to 20% labor/potential profit.

Those are all "ballpark" numbers and can swing wildly up or down, depending on a number of factors.

That said, with you owning land and equipment, providing half the labor, and assuming everything goes as planned, and your partner is trustworthy, If it were me, I'd let him handle the cost of ALL the inputs, his half of the labor, and in turn he gets no more than 1/5th the profits. (again, assuming there is a profit) If there is a 2nd year of partnership, use actuals as numbers for basis of next years agreement.

By his absorbing ALL the input cost, he assumes his share of the risk of actual loss should that be the case. You already have a sizable investment. Time for the partner to pony up and put his $$$ on the line too. I'd also have (on paper) terms of agreement as far as tax liability, etc. Partnerships are a slippery slope under the best of conditions.

That being the case, I'd opt for cash rent ONLY and let someone else handle ALL the responsibilities.

who gets the sub money?

He has NOTHING as far as Equipment..?

hat real "EXPERIENCE" does he REALLY have..??

How does he OPERATE someone else's Equipment..??

Seldom does someone operate "Your" equipment as carefully as "YOU" operate your Own...
My experience anyway..(Ever Lend a piece out, then look it over when it returns??)....!!! Repairs are most always required before you can use it yourself...
Cash-renting sounds like a good idea, for now..

Ron..

Sell the equipment and rent the ground.

So, you won't be contributing "half" the labor. In fact, the partner will probably provide 90-100% of the labor.

"Partner" pays for seed, fertilizer, fuel.
"Partner" pays rent on land AND equipment.
"Partner" pays for maintenance and repairs on equipment.
"Partner" keeps whatever is left as profit.

The variable here is the rent. You can be generous and cut him a deal on the rent. You could make it an agreement where you get a % of profit.

oh you can do it plant it in soybeans or wheat not much labor hire it harvested and you come out way ahead, unless you have a very large farm, I did that myself hired it cut and hauled didnt work very many days at all.you should be able to do at least 200 acre alone.But if your farming 1000-10000 acre you need some help.good luck

Well thank you for all the input alot to consider. Will update which way I went.