Is it Time for Your Farm to Get A Second Job?
Off-farm income adds more than money to the farm in today's tough commodity environment.
During tight times, a second job can mean a lot more to farm families than just more cash in your wallet. Off-farm income can do wonders for relieving the stress of limited cash flows, help you develop a better relationship with your lenders, and open the opportunity for benefits like health insurance that might otherwise be very costly for your farm business to cover.
As commodity prices continue to languish, farmers are keeping a close eye on the farm’s financials, and an even closer relationship with their lenders. In 2017, there’s no doubt that loan officers are going to continue to look closely at cash liquidity on farm balance sheets. They will be expecting farms to have a healthy amount of cash on hand as markets stay low, to cover expenses as they arise and stay viable throughout the season. An off-farm job can not only increase that cash figure- it also shows your loan officer that you are serious about your farm operation and making sure you can pay your bills and manage your finances effectively. The less strain you can put on your farm check book during a farm economic downturn, the better.
Another advantage of an off-farm income is personal stress relief. When your income comes exclusively from the farm, it can cause a lot of strain on a farm's bottom line, and more importantly, a lot of personal stress for farmers and their families. With off-farm income, you can direct a portion of your cost of living such as groceries, daycare, a mortgage, or vehicle payment to that income. This frees up cash for farm expenditures and takes some of the anxiety out of opening bills every month. Though sometimes off-farm income adds other stresses (long commutes, balancing time between the farm and work, etc.), it’s worth a conversation about whether off-farm income is a good fit for your farm, even if only for a short period of time. We factor in my off-farm income to reduce the cost of living expenses that add stress to our farm’s finances. It helps create liquidity in our cash flow, and although it can be demanding to manage at times, having all of our bills paid and having a good meeting with our lender also takes the pressure off of our family both financially and mentally.
Beyond the monetary advantages for you and your farm, off-farm income often gives farm families access to benefits such as health insurance, dental insurance, and life insurance. Health insurance costs continue to be an issue for farm families, with the average farm family paying many thousands of dollars a month for premiums and out-of-pocket expenses. When considering an off-farm job, evaluate the expenses you typically pay for benefits versus what a future employer may cover. One of the main reasons I continue to work off-farm, is to carry health insurance for my family. By greatly reducing what we pay per month through an off-farm employer’s group health insurance plan, we can remove that strain from our farm account.
To make off-farm income work with your current operation, you or your partner may need to look for part-time or seasonal work that doesn't interfere with your current operation. It may involve picking up a shift milking at a local dairy so you can spend afternoons at your farm, or it may be working at a retail store during the holiday season or finding a job in sales where you can set your own hours. Remote work is also a real option for farm families. You can make it work. It may not always be easy, but it can be done.
Off-farm income may be a necessary part of your farm's financials for the next few years. In the end, you will thank yourself, your lender will thank you, and your farm checkbook will thank you too. With a little less stress on the numbers, it will make breathing during the busy seasons of the farm a little easier.
The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members.