I'm in a reflective mood today. I was thinking of college and some of the farm management tours I went on. Having a trust fund to work with was certainly not common and also not expansive but certainly gave an edge to those who otherwise would not have an edge. Probably one of the more prolific funds had money to cover taxes and insurance on an approximately 300 acre farm. It also had a machinery replacement schedule for the basics such as manure spreader, baler, mower-conditioner, and small tractor on a few year rotation. Further, it had the ability to turn money back into the fund as a hedge against inflation. I was wondering just how isolated having trust fund money was for a farmer?
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In this case I don't think that it was big enough to live off of. Further, it had specific stipulations as to how the money could be used. I think it was setup by a grandfather or uncle so there was no bad feeling that dad was dictating the situation. There must have been discussion both ways as the farmer seemed happy about the arrangement and was meant to help launch a young farmer with a new wife when it happened. Most of the time we never saw the equipment the farmers had on these tours but reportedly this fellow had a fairly nice lineup. I remember one tour over by Arkport, NY where one fellow said on a couple year old IH 1486 in the shed where we talked to him at why buy one when you can use two? The other 1486 was back at the main farm. Of course that was part of the learning process as to figure out how certain operators managed money. Sometimes we knew the numbers but most of the time it was a farmer spouting his own philosophy.
I should further explain that this fellow with the trust fund only has access to a certain portion of the interest derived from the principle. The remainder was plowed back into a secondary fund as an inflation hedge. This was back during the 1980's and it was figured inflation as far as equipment replacement was running close to 6 percent per year.
The fastest way to make a small fortune in farming is to start with a big one!
That said, I don't know of any trust fund farms in this area, but there is definately some old money out there. Some of this old money makes new money on a regular basis, some of it is slowly being drained down, and a lot of it probably disappeared in the '80s.
It is not that uncommon for outside money to be invested in farms, whether it be from someone actively earning it, or from trusts as you describe. Even if the trust just covered the real estate expenses and kept the "farm" going for the historical aspect, a tennant farmer could do quite well off the crops/livestock. One can make a profit on farming if you are not continually investing in real estate.
Here in the west, the Hutterites are at a big advantage not hving to buy the farm again every generation. The working age folk do have to support their elders, but they don't ever have to start from scratch again.
That said, I don't know of any trust fund farms in this area, but there is definately some old money out there. Some of this old money makes new money on a regular basis, some of it is slowly being drained down, and a lot of it probably disappeared in the '80s.
It is not that uncommon for outside money to be invested in farms, whether it be from someone actively earning it, or from trusts as you describe. Even if the trust just covered the real estate expenses and kept the "farm" going for the historical aspect, a tennant farmer could do quite well off the crops/livestock. One can make a profit on farming if you are not continually investing in real estate.
Here in the west, the Hutterites are at a big advantage not hving to buy the farm again every generation. The working age folk do have to support their elders, but they don't ever have to start from scratch again.
Very poor management will sink any operation. The smart way to use a gift such as an interest bearing trust is not to burn through the interest as fast as it comes available. With low interest rates the past several years it probably helped to build an inflation edge. Back then if you bought a New Holland 489 haybine for 4,500 dollars and took care of it well you could probably get 3,500 dollars on trade for the next one three years down the road and maybe boot 1,500 dollars. Beat the daylights out of the same machine and get 1,750 then you have to boot 3,250. The hedge grows when the boot drops from 3,250 down to 1,750 and will contribute down the road. Most trusts have limitations and a mismanaged trust will give out a lot sooner than one that is tapped sparingly.
glennster
Well-known Member
heres a link to the scully family trust. they own huge tracts of land. lots of interesting info on it. there are scully farms near mine.
scully farms
scully farms
Well you have done it now!! We used to call them trust fund hippies. There parents were wealthy and none to proud of the kids ways so they sent them off to remote places and to some "outdoor" college. My area got a lot of them in the 60-70's. Most turned out pretty good and are on social security now!!!
Really never heard of such a thing? I guess in 'rumor and envy' conversations, but not for real, must have been a couple but certainly not anything common?
A rail road trust just ended a few years ago, Hill from Minnesota set up a trust that lasted about 100 years, kept some operations running for all that time after his death.
Certainly not a common thing in ag in my back yard, anyhow.
Best operators seem to be those that get into ag when it is tough going, and can grow a bit into the good times, but have learned to manage well enough in hard times to understand what management is all about.
I would expect a trust fund would get eaten up very quickly in ag these days, if the heirs actually used it instead of good management.
Paul
A rail road trust just ended a few years ago, Hill from Minnesota set up a trust that lasted about 100 years, kept some operations running for all that time after his death.
Certainly not a common thing in ag in my back yard, anyhow.
Best operators seem to be those that get into ag when it is tough going, and can grow a bit into the good times, but have learned to manage well enough in hard times to understand what management is all about.
I would expect a trust fund would get eaten up very quickly in ag these days, if the heirs actually used it instead of good management.
Paul
We probably do not hear about it much as it most likely happens infrequently and those involved tend to be tight lipped and rightfully so. Hearing about somebody's good fortune tends to promote more envy and jealousy than respect and good will. Just how common they are in farming I do not know.
2002sliverado
Member
It is a whole lot easier to build and expand an "empire" when one has a plentiful "war chest" that was built up and accumulated by the prior generation, and one is able to start out with this at a young age with lots of energy, drive, and ambition.
K Effective
Well-known Member
While not technically a trust fund, the guy who started the seed corn company I worked for during college had worked for the Upjohn Farm outside Kalamazoo back when he was in college. He said all the field lanes were paved with asphalt, and you dared not repair anything on the equipment without angering the union mechanics waiting in the shop to work on nearly new tools.
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