Basic Legal Structures for a Family Farm

For any family farm there are a number of options for setting up a legal structure. It can range from sole proprietorship to a corporation. In between there is partnership and joint venture. What makes sense for your farm business depends on the maturity of the business, the players and the tax planning opportunities.

Tracy Hanson, lawyer at Walsh LLP in Calgary, Alberta explains the basic legal structures for a family farm. Watch the video to learn more abotu family farm legal structures!

This workshop was funded in part by the Agriculture & Food Council of Alberta

For further information on legal organizational structures please refer to the following:

Legal Organizational Structure by Agricultural Marketing Resource Center

 

 

Incorporated Farms and the Benefits of an Unanimous Shareholder Agreement

We hope D-Day will never come, but divorce, death and default can ruin any business if you’re not prepared with a solid unanimous shareholder agreement.

As with any business, there needs to be a plan for when certain events happen on your farm operation. If your farm is incorporated, it is prudent to also have a unanimous shareholder agreement in place. A unanimous shareholder agreement is intended to be the back-stop for the relationship between shareholders. In 99% of cases the agreement is never referred to but it sure is important to have when a problem arises.

Watch Tracy Hanson, Calgary lawyer, explain the benefits of having a unanimous shareholder agreement for incorporated farm operations.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

 

The Benefits and Risks of Different Legal Structures for Your Family Farm

If you’ve ever wanted a simple explanation of the basic legal structures for a family farm, look no further. In under 5 minutes, Tracy Hanson, lawyer at Walsh LLP in Calgary, expertly explains and discusses the benefits and risks of sole proprietorships, partnerships, and corporations for a farm business.

Sole Proprietorship

This is when a person owes the farm business and controlles the assets. All of the income and expenses remain with the individual. From a risk perspective, if there are financial problems with the farm business, this will affect the assets that the individual owns.
Partnership 

A partnership is a separate entity for all purposes but income tax. A partnership is a relationship that exists between two or more people. The risk associated with a partnership is that the partners are liable for the partnership debts. The benefit of a partnership can come from the perspective of some tax and succession planning.
Incorporation 

Incorporating your farm business provides the greatest amount of risk protection. With incorporation, the assets are separate from ownership of the farm business. The incorporated farm is a separate entity, which carries on the business and carries the business risk. As a shareholder of the business, you are not liable for the debts of the company itself. However, from a financial perspective, financial institutions will require a personal guarantee by the shareholder so it doesn’t necessarily move financial risk away from the shareholders.

The best structure for your  farm business depends on what stage the business is at and succession planning.
For further information on legal organizational structures and the benefits and risks associated with them, please refer to the following:

Legal Organizational Structure by Agricultural Marketing Resource Center

So You Want to be a Farmer? (p.17-19) by Canadian Farm Business Management Council

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

Re-Thinking the Future of Agriculture

Vik Maraj, of Unstoppable Conversations, discusses how to improve the future of agriculture by letting go of the past.

Farmers can’t get out of their view about what limits them in fulfilling their future ambitions. Often they think that they are “on their own.” This view has been passed down by previous farm generations, however the limitations of generations past, no longer reflects the reality of today. In the past, farmers truly where on their own, left to battle it out each year for the hope a good yield, come harvest time. But today, farmers need to realize they are not on their own and to be able to re-imagine a new future of agriculture they must start reaching out to other farmers, organizations and networks.

The future of agriculture cannot improve by referencing the past; it requires us to bring forth a future that is entirely new.

 

 

Why You Need a Capital Budget Plan for Your Business

If you’ve ever had to phone your banker from the auction mart about an un-planned capital purchase, you probably could use a capital budget plan.

Another component of financial risk is understanding your capital budget(i.e. what items in an ideal world do you think you need in the next 12 months?). This information is helpful for your banker, as it helps him/her plan for your farm’s future.

You need to have and understand your capital budget plan. Not only will it help you make good with your banker but it will also help to take the emotions of decision making in relation to the market place.

Watch Reg Shandro explain why you need a capital budget plan.

This workshop was funded in part by the Agriculture & Food Council of Alberta


Why you need a capital budget plan for your farm business

Why You Need to Develop a Farm Marketing Plan

Marketing is an essential part of any successful farm business. Whether you’re selling a commodity or a retail product your marketing strategy starts with putting together a marketing plan.

A marketing plan helps you keep out emotions when you’re making decisions in your farm business. You need a plan so that you don’t get caught up in hype, and a farm marketing plan will go along way to ensuring you stay the steady course.

Watch Reg Shandro explain why it’s important to have a farm marketing plan on your farm business operation.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

Take the first step in developing a farm marketing plan

 

Wrapping Up the 5 Pillars of Risk Management

Reg Shandro wraps up the ‘5 Pillars of Risk Management’.

It’s important to note that there has to be a balance between the different pillars of risk. However, you must also remember that with the 5 different pillars, the lowest common denominator risk will be the limiting factor on your farm operation. For example, if you have the best production in North America but you have an extremely poor marketing plan, then there is a major risk to the profitability of your farm operation.

So, it is critical to identify the 5 areas of risk on your farming operation and see if you can bring up the level of all 5 pillars to help mitigate risk and improve your farm operation.

One way to think about all of this is, rather than thinking about how much money you can make, think about how much money you stand to lose.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

5 Human Resource Components Putting Your Farm at Risk

This video accompanies the “Introduction to Human Resource Riskvideo for the human resource pillar in the “5 Pillars of Risk Management” series. Watch Reg Shandro explain the sources of human resource risk and what you can do to minimize them on your farm operation.
5 Sources of Human Resource Risk on Your Farm Operation

Communication: The lack of effective communication in your farm business is a huge hurdle to formalize. If you don’t communicate properly, your perspectives aren’t going to be shared.

2. Conflict management: This is a sensitive point for farm families, but if you don’t seek out the necessary professionals or tools required to minimize conflict, you’re going to have a major issue.

3. Time management: Studies show that if you work more than 3000 hours a year, eventually something will crack. Make sure you are managing your time on, and off of farm, properly!

4. Take time off for holidays: each family member should take 2 weeks of per year!

5. A formal human resources plan: You need to have a formal HR plan that is implemented and reviewed. The reason for this is it makes goal setting a lot easier, and stats show that if you have goals written down you will make 9 times the wealth, compared with people who don’t.

For further notes, please refer to the following resources:

1. Effective Communication: barriers and strategies

2. Conflict Resolution Skills

3. Time Management by Penn State University

4. How to Manage Your Time Effectively by Kent University

5. 6 Rules to work less and get more accomplished

6. Personal Goal Setting: Planning to Live Life Your Way

7. How to Set Goals for Your Company and Improve the Bottom Line
This workshop was funded in part by the Agriculture & Food Council of Alberta

 

 

Managing Your Human Resource Risk

When you’re in a farm operation there are a number of different risks and in order to be successful as a farmer you need to understand:

1. What the risks are;

2. The potential for problems with the risks;

3. How to alleviate the risks to an acceptable leve

To understand the whole picture you need to educate yourself and then consult professionals to help you out.

‘Human Resources Risk’ is one of the ‘5 Pillars of Risk Management’, as explained by expert Reg Shandro.  In farm families the complexities of managing human resources can be risky business!

For further resources, please read the information below or in the “download” section on the right of your screen:

Conflict Resolution Skills
This workshop was funded in part by the Agriculture & Food Council of Alberta

 

Risk and Return in Agriculture: An Intro to Risk Management

In essence, risk management means that the higher the risk, the higher return. However, in reality, risk managment in agriculture is somewhat different.

Watch Reg Shandro introduce the concept of risk management in yourfarm business.

What is risk management in agriculture?

The agriculture industry is unique with a different set of risks and rewards compared to other industries.  If you want to be successful you must know how to manage the risk to maximize your returns.

This workshop was funded in part by the Agriculture & Food Council of Alberta