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Ask an Expert: Wealth & Retirement Strategy

in 2020/Ask an Expert/Current Issue/Fall 2020/Marketing/Organic Community/Tools & Techniques

Planning In Your Thirties and Beyond

Karen Fenske

Developing a well-balanced financial strategy at each stage of life promotes peace of mind.  The wealth and retirement planning strategies outlined below are relevant for young farmers, whether you will own property or not. The need for supplemental income component has historically been a reality for many producers, and most likely will continue.

Planning for the future means looking at what you can do now, as well as what you’ll need later, and designing a “bridge” to get you there. As a Financial Coach, I help you work through a planning process to determine what your needs are now, and in the future, and what you’ll have to put in place to meet those needs.

Setting Your Goals

  • First, it’s important to define your goals and priorities. Some areas to explore include:
  • Manage your cash flow: Track your income & spending. With all the apps available today, this can be easy.
  • Build an emergency fund: Know your expenses and “pay yourself first” by automatically putting money into a reserve account that is at arm’s length.
  • Protect your family in case of deaths, disability or critical illness: Insurance is an important risk management component for all family sizes. If one of the adults becomes ill or passes away the family left behind can be cared for financially. In your thirties insurance is fairly cheap and quick to obtain.
  • Make space for travel, vacations, and leisure activities, (travel to see family, skiing, dirt biking, camping, etc.): What, when & how much? If you plan ahead, the tendency to splurge or put it on credit will be reduced. You can manage your expectations and maintain control.
  • Plan for major purchases, such as vehicles, real estate, livestock, etc: What, when & how much? If you plan then you may not splurge and end up in “bad debt”. You can manage your expectations and maintain control.
  • Own your own business: Create a business plan, even a vague one that will highlight income potential and costs.
  • Learn to invest wisely, staying ahead of the cost of living & reducing taxes: You may say I can’t save anything to invest for the future and I always say, “We can find $50 or $100 a month!” to get the habit started. Typically, the saving/investment tool depends on your tax bracket. It often makes sense to save in a TFSA investment where you gain a return on your deposit and the compound earnings grow for your retirement. If you are above a certain income level an RRSP helps reduce your current income tax payable. RRSPs are a “tax deferral program” so a tax refund may be triggered now, but when you go to pull it out later (in retirement) you will pay the tax. Reinvest the refund into the RRSP or TFSA.
  • Plan for your child’s education: If you have children, put aside money into an RESP. You can contribute as little as $25 a month, and the government will also contribute. The investment earns a return and the whole account grows. The funds may be used for trade, college, and university programs. Grandparents can arrange these too. It may not be a lot, but it will help!
  • Stay employable: Continuous learning is part of our culture. We never know when our source of income might change. What skills, courses, and experience will you need?
  • Ensure your money lasts through retirement: Learn about your Retirement Equation: Old Age Security, Canada Pension Plan, etc. Add to your retirement equation via “Supplemental Income.”
  • Preserve your estate: Ensure your loved ones are your beneficiaries in your will, etc.
  • Give to charity: This can satisfy personal values and reduce taxes.
  • Own your farm: What, when & how much?  All of the other pieces can be implemented whether this goal is realized or not. This is a whole other topic which will include succession and estate planning.

Review Reality and Add Peace of Mind

Once you’ve got a sense of your dream, it’s important to review reality—and add peace of mind. To do this, first you need to paint a picture. Review your current situation by pulling together all your financial documents, including bank accounts, insurance, debt, credit card statements, etc. I typically enter all the data into my financial planning software to create a whole financial picture and keep track. Explore your expenses: What does it cost to live? What do you need? Can things be changed, cut out, modified, delayed, achieved in steps, etc.? Also, explore your income sources.

As a farmer, this will likely include both your farm revenue and any supplemental income sources. What can you do off-farm to receive a paycheck, such as working part-time as a teacher, welder, nurse, instructor, snow removal tech, clerk, etc. This kind of employment will also add to your Canada Pension Plan (CPP) amount which pays out as early as 60 years old, and adds to your Employment Insurance (EI), which will help with medical leaves and periods of unemployment. You can arrange to contribute to EI even if you are self-employed. If you find employment with a hospital, school district, regional district, etc.  You may even be entitled to a pension at some point. All these pieces together with your Old Age Security at 65 and your retirement equation may surprise you. I typically provide the potential future value which helps clarify need and strategies.

If working off-farm is not an option, or costs more than you would earn, consider an on-farm opportunity such as doing bookkeeping for others, machine repair, website development, snow removal, breeding dogs or cats, etc. Ensure you are contributing to CPP for your retirement, and maybe EI, too.

Something to keep in mind with these “supplemental income” options is work-life balance. Look at your whole equation. Every situation is going to be a little bit different. Your resources, skills, capacity, energy level, likes, needs, etc. will impact what is optimum for you. It’s easy to stretch yourselves too thin and end up disheartened, cranky, depressed, or divorced because there hasn’t been enough time or energy. Money is important but so is enjoying life and living it together.

It’s also important to look at your on-farm income. Whether you’re running your own farm or working for another farmer will change the picture. If you’re self-employed, your cost of production should account for your time so that you’re paying yourself a wage that supports your lifestyle—and future goals. As an employee, your job title and description determine your role, and can be helpful in figuring out how you’ll be compensated. For example, an Operations Manager and farm hand will have different levels of responsibility, and thus compensation. If you’re working on a farm as part of a succession planning process, whether on the family farm or not, discussions around compensation can get trickier. Using a third-party coach to facilitate this discussion as part of the succession planning process may be helpful. As an employee the owner will contribute to EI & CPP—this isn’t as complicated as it sounds! QuickBooks is cheap and you can get it all done.

Understanding your income and expenses helps you know how much you will have to live on. You can then budget spending and short term and retirement savings, and create a “doable” budget just for you. Build a “zero-based” budget including income from all sources and living expenses, such as gas, groceries, clothing, insurance, and short term and retirement savings. Every situation is different so meet your family’s needs and don’t compare to others.

Evaluate, Adjust, and Enjoy!

Financial planning is an ever-evolving process, and doesn’t stop once you’ve got your budget in place. Evaluate on a monthly basis, at minimum, where your money is going. There are apps and bank programs to help keep track. You can adjust the budget for surprise costs, add extra to your savings, or pay off debt faster.

It is good practice, once or twice a year, to ask your family, “What great things did we do,” “What was new, different or better?”, “Did we have enough or too little?”, “Do we need to make changes & how?”, “What do we want to do this year and next?”

Cast a big picture of realistic potential income and how your family is going to spend it: who needs a bike, clothes, tools, what kind of trips, etc. You can start an envelope for the goal or assign a piece of your savings accounts or TFSA to that goal.

Each of you has your own unique money story that impacts how you save and spend. Choose transparency instead of denial, courage to ask for your needs to be met, respect that you are in this together, and above all, use sound financial planning to help you enjoy life!


Sustainable agriculture is Karen Fenske’s vocation. After providing strategic planning in BC agriculture, and working for COABC & BC4H, Karen transitioned into the financial planning industry to assist with succession and estate planning. Through her business, Fenske Financial Coaching, she facilitates the transition process and provides relevant, useful advice on a fee-for-service basis.

Featured image: Credit Michaela Parks.

Ask An Expert: Transitioning to Organic

in 2016/Ask an Expert/Fall 2016/Organic Standards
Kale with Water droplet

Rochelle Eisen, B.Sc.(Agr), P.Ag

We asked farmers transitioning to organic for burning questions they’ve been dying to ask. From paperwork to fence posts, standards junkie Rochelle Eisen has the answers they — and you — have been seeking!

Q: How much detail does my record keeping require for the inspector (crop seeding, planting, rotations, dates, etc…)?
A: The more detail the better as the inspector will try to establish if you had enough seed/transplants for the amount of the crop produced. Also, rotation plans, green manure seeding dates, and input use records are necessary to establish if good organic ag practices are in place. Sales records, crop seeding dates, and harvest dates are helpful with yield estimations, especially if plantings are staggered. Such detailed records help you to become a better farmer, as you have the necessary details at your ngertips to help you plan and identify your successes.

Q: If I need advice with paperwork can I ask my inspector?
A: Verification officers (VOs) cannot assist with paperwork except to explain the requirement/standard, as it would be considered consulting and giving you an advantage over other operators. Some certifiers offer workshops and others have someone who can answer your questions. Otherwise, provincial specialists are sometimes helpful. In the end it might be best to hire a consultant. Certifiers sometimes keep list of available consultants.

Q: Do I have to use all certified organic seed (and what if there is no organic option)?
A: Yes, organic seed is required. When you can’t find the variety you are looking for in the quantity and quality you need, you can use non-organic untreated seed. BUT (there always has to be a but, n’est ce pas?) you can’t play that card year in, year out for the same variety. Most certifiers will expect to you to explain what your plan is to help develop an organic source over the coming years, and this question will be asked annually. And just to round out this answer… as the most logical next question is “what does a commercial availability seed search look like?’ The answer is, most certifiers expect growers to contact three credible organic sources to establish the lack of supply. Such searches are to be repeated annually.

Q: Can I use saved seed, such as the garlic I saved from last year’s harvest?
A: Assuming the operation is organic or even in transition, the answer is an emphatic yes, as the seed was raised organically. This has to be tempered by the question: is it wise? It all depends on if you have clean and true to type seed. For example, garlic is one of those crops prone to seed borne diseases such as white rot. Saving your own seed if there is any level of infection may be your own undoing.

And as mentioned, transitional seed is acceptable too, as it was raised organically—it just comes from land that hasn’t met the 36 months from last prohibit substance requirement and can’t be sold as organic. See SIC Q113 for further insight:

“Does the requirement to use organic seed, tubers etc. (5.3) preclude the use of seed grown on transitional landwithin the same operation? (113) Answer: Seed grown on transitional land is acceptable as it meets the require- ment of 5.3 and as it has not been grown using prohibited substances or techniques.”

Q: I have had much discussion with other farmers, certified organic and those considering certification alike, about use and re-use of treated posts. Is a treated post that is already on your farm allowed to stay on your farm only if it remains in place, or is it acceptable to move and reuse posts within the farm as we change or rebuild fencing?
A: Good news—existing inventories can be used anywhere within your farm (see subclause 5.2.3 b of CAN/ CGSB-32.310). Be sure your certifier is aware of this existing inventory so there are no surprises when the VO does their site visit, or when your certifier reviews your Organic Plan and the VO report.

Q: What’s the difference between green manure, manure and compost?
A: Manure is animal waste. Green manures are plough down cover crops grown purposefully to build soil health. Compost can be made from animal or plant material and any combination thereof. Refer to the ‘compost’ definition (3.15 in CAN/CGSB 32.310) and the ‘compost feedstocks’, ‘compost from off-farm sources’ and the ‘compost produced on the farm’ listings in PSL Table 4.2 for complete details. Manure management requirements are outlined in 5.5 of CAN/CGSB 32.310.

Q: What’s the amount of time required between com- post application and harvest?
A: From a standards perspective, compost can be applied any time of the year, but compost containing animal waste or other risky feedstock that may contain human pathogens has to be effectively composted first. Otherwise, the material must be applied to the land 90 days before harvest when the crop doesn’t touch the soil. That would be the case with tree and cane fruits. 120 days is required pre harvest for any crops that commonly touch the soil (potatoes, lettuce, strawberries, etc…). Think about it this way—120 days is required unless the crop is obviously off the ground.

Q: What is required for mulching materials?
A: Plant materials from organic sources must be used as mulch but if organic sources are not available, then crop materials, such as straw and hay, that haven’t been treated with any prohibited substances for at least 60 days pre-harvest can be used as mulching material.

Q: Can I get animals I already own certified? (i.e. dairy cows)
A: Dairy herds and individual herd animals can be transitioned, but it takes 12 months of organic management before the milk collected can qualify as organic. None of the animals transitioned can ever qualify as organic meat animals. To qualify as organic meat, animals must have been born by an organic dam or the transitioning dam must be under organic management by the onset of the third gestation period.

Q: What’s the most appropriate way to label my transitional organic products?
A: Transitioning farms or “farms in conversion to organic” selling all their products within BC may identify their products as “transitional” or “in conversion to organics” or other similar language on all marketing materials including websites signs and labels. But they cannot refer to their operation or transitional products as “organic”, “organically grown”, “organically raised”, or “organically produced”. For products being shipped out of province the only acceptable phrases are “in transition” or “ transitional” or “in conversion”. The word “organic” cannot be included in any of these claims.

Q: What type of signage may farms in transition use?
A: A farming operation in transition or conversion is not “organic” and must not mislead consumers with false organic claims. For example, a transitioning farm, certified by a COABC regional CB, may not call itself “Joe’s Organic farm” or use the word “organic” “organically grown”, “organically raised”, “organically produced” or similar words, including abbreviations of, symbols for and phonetic renderings of those words, in any signage. The British Columbia Certified Organic Program allows “in transition/conversion to organic” claims on signs, labels, and other marketing tools to be used by transitioning operations. However, for operations shipping out of the province, this phrasing is not acceptable to the Canadian Organic Regime. Transitioning operations may not use either the provincial or national organic logos. Check with your CB if they have a transitional logo you can use.

Q: How should I market transitional organic products?
A: Label your products as transitional or in conversion and be sure to tell your story/journey to your customers. Some of the distributors, especially those who specialize in organics, may also be interested in your product if it fills a gap. Don’t hesitate to approach.

For more Organic Standards FAQs, visit COABC’s Grow Organic Toolkit.


Rochelle Eisen is a standards junkie who has been working in organics for close to 30 years, as well as with other certification systems. Like Einstein, she believes “What is right is not always popular and what is popular is not always right” and that assurance programs are a means to level the ecological playing field.

 

Passing on the Farm

in 2016/Fall 2016/Organic Community
Claremont Ranch Organics transition planning

Bob McCoubrey

A Succession Planning Story

After more than 35 years of growing tree fruits and vegetables on our small farm in Lake Country, it was time to think about retirement. Our joints were telling us to ease up on the physical work and our son and daughter had moved on to other towns and careers.

The idea of selling the property was a bit scary, as we had become attached to the land and the houses. The main house was just a year or two shy of its 100th birthday, and the “guest house” was one my father had built for a previous owner when my parents first moved to the area to take up farming, back in the late 1940’s. Both houses had heritage value for us.

The land had supported our family well over our time on the farm. Sharon and I had transitioned the land to certified organic status beginning in 1989, and we didn’t want to see new owners abandoning what we had achieved by going back to conventional farming methods. We were reluctant to list the property with a realtor, taking a chance on the intentions that new owners might have.

We didn’t want to see new owners abandoning what we had achieved by going back to conventional farming methods”

Our Okanagan location meant we could benefit from the overheated real estate market. Land prices were high. However, that meant many of the people who might share our values and plans for the land might not be able to afford the in ated prices. After a lifetime of living here, close to family and friends, we wanted to stay in the area, which would mean buying in that same overheated real estate market, leaving us unwilling to sell for a discounted price to encourage like-minded buyers.

As we struggled with what to do, we were fortunate to meet Molly Bannerman and Matt Thurston. Recent graduates in agriculture from the University of Guelph, and fresh from a year of WWOOFing and touring in the United Kingdom, they were about to get married and were thinking of settling down on an organic farm. It seemed like a perfect match. They both found good jobs related to farming, and we began a three to four year “dance” to see if we could put a deal together.

There was a period when they leased the farm and lived in the small house, followed by a few years with us running the farm again, while they moved in to town, only to come back to rent an acre to grow some vegetables. It became clear that we all wanted to make it work for Matt and Molly to acquire the farm.

The farm had all of the basic equipment needed to grow the crops we had been producing, and we had recently built a cold storage facility, which would make it easier for the Thurstons to grow, store, and sell their crops while continuing to work off farm. The biggest challenge was to find a way to finance the sale in a way that the cash flow could handle the debt servicing requirements.

The key turned out to be rethinking how we would invest for the future.”

A paradigm shift needed to happen in our minds about how to manage our needs and our assets. I had always thought we would sell the farm, buy a retirement property, invest the remainder of the proceeds, and live happily ever after. The key turned out to be rethinking how we would invest for the future.

Financial advisors told us to avoid high risk investments as we moved into retirement in an effort to keep our assets safe. That would mean lower but stable returns from nancial products such as term deposits. We wouldn’t be making a lot of money, but we could see that we would have all we needed to enjoy life.

As we looked for a solution, we recalled the help given to us by the seller, when we bought the farm back in 1973. After scraping together a down payment and borrowing the maximum available to us on a first mortgage from Farm Credit Canada, we still needed to find 20% of the purchase price. The seller took a second mortgage on the property, with payments of only the interest for a number of years to keep our cash flow requirements low while we got ourselves established.

The real estate market had changed in the 38 years since we started farming. Interest rates were much lower, but the principal amounts were significantly higher. The financing solution we needed would have to put even more importance on keeping the cash flow required to service the debt as low as possible. In the final agreement, we took 30% of the sale price in cash, financed through a first mortgage by the Thurstons. The remaining 70% was financed through a second mortgage that we hold, with payments of only the interest, at a rate slightly higher than what low risk investments would pay us, but lower than what a second mortgage would cost on the open market. After four years, half of the second mortgage was to be paid out, leaving 35% of the sale price in the second mortgage for the full 10-year term.

All we had to do was to decide to invest in the future of organic farming by trusting and investing in the next generation of organic farmers.”

Some would suggest that we were putting ourselves in a much higher risk position than we would experience by investing in penny stocks on the Vancouver Stock Market; however, we had come to know and trust the Thurstons, and thought the risk was acceptable. Our lawyer did his job well, pointing out all of the things that could go wrong, and suggesting contract wording that would protect everyone’s interests. But, being an organic farmer himself, he understood our desire to believe in our new partners in farming.

So in 2011, we moved our belongings to a quiet property where we enjoy a bit of gardening and watching the weather on the lake. The financing arrangement met all of our needs. We never looked back and have not regretted any of our decisions.

Five years into the agreement, the Thurstons are ahead of schedule with their payments, and the farm is thriving. The transitions — into retirement for us and into farming for Matt and Molly, have been smooth and painless. All we had to do was to decide to invest in the future of organic farming by trusting and investing in the next generation of organic farmers.


Bob McCoubrey is a retired organic orchardist in the Okanagan’s Lake Country. With his wife Sharon, he farmed eight acres for 38 years before turning his efforts to mentorship, writing, volunteering, and community building.

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