Young farmers avoid interest-bearing debt to buy family farm

Young farmers looking to enjoy the farming lifestyle on the farm they grew up on should avoid taking on interest-bearing debt to do so. Many are being conned into doing so by advisers consultants and counsellors. Those advisers are either oblivious to the incredible risks of farm foreclosure and sale that this poses, or are earning so much in fees that their scruples are ignored.

Recognise the risk

Interest rates could double or treble. I have rescued farmers paying up to 24% interest on big loans. Farmers don’t get rich that way.

Time to say " No thank you"

When I bought into the family farm the proposition of doing so with a ban k loan was put to me. I simply explained that I could never afford that or earn enough out of the farm to cover the interest and repay the loan. If they wanted to sell the farm to me it would have to be done differently. The vendor wanted me to have it and we came up with a very good plan that benefitted his family rather than enriching the bank.  

Fragile finances

Family farm finances are the most fragile in the country, constantly at the whim of the weather, commodity prices and government policy. Introducing substantial interest-bearing debt into that can be a monumental disaster.

Find another way

As every farmers know, if you can’t do something one way it is important to think up another way to do it. In my professional guise I have assisted a number of farm families in sheep cattle and wine to manage it. It has worked well for all generations concerned. Don’t be taken down by the bank or a consultant working along with it.