Selling farms sometimes calls for creative deals

ALBANY -- After four decades of farming, Kevin Carley was ready to pass along his dairy operation in central New York. And his son-in-law was eager to take charge.

But simply selling operating farms -- pricey pieces of land with barns and animals -- can be costly and complicated. So the pair structured a deal that phased in control to son-in-law Dan Dimon, leaving Carley as an employee.

"I just didn't want to give up, so we both had to do a trust thing where I just handed him the steering wheel and I said, 'OK, I'll ride shotgun,' " said Carley, 57, taking a break from work at the farm in Pompey.

The need to be innovative in selling farms to the next generation is becoming more urgent as farmland prices rise and farmers get older.

Some farmers have come up with different strategies to make sure the younger generation can continue to work the land.

"It is a concern, especially when you have less than 1 percent to the population producing the food for the whole country," said Edward Staehr, executive director of NY FarmNet, an Ithaca-based nonprofit that helps farmers with succession and other issues.

The number of farmers who are 65 or older grew by 22 percent nationwide in the five years ending in 2007, according to the latest federal statistics.

Based on the advancing age of farmers, the American Farmland Trust estimates that at least 230 million acres are likely to change hands in the next 20 years -- or roughly a quarter of all farmland.

At the same time, the price of farmland has been rising steadily around the nation. Staehr notes that even inexpensive farmland can run $1,000 an acre, with prime land going for many times that.

In central New York, Carley's family has been milking cows and growing crops on land they've owned since 1938. Dimon came from a construction background but took to farming and was interested in taking over Carley Farms. He said it would have been difficult to buy the $500,000 farm outright.

Dimon, 28, started in 2009 by buying about two dozen calves, building up some equity. Carley gave Dimon a 10-year, zero-interest loan for the rest of the herd. He paid cash made by selling the farm's crops to pay for the main part of the farm with the barn. He has a lifelong lease on the rest of the farm. He kept the name Carley Farms. The two generations work side by side milking 60 cows and growing crops.

"They wanted to see the farm succeed," Dimon said. "The logic behind it was a win-win."

Staehr, whose group begins a two-day conference on farm succession Sept. 24 in Syracuse, said that type of preplanning is necessary.

Dimon was groomed for the job and built up equity over time. He said other farmers help the next generation build equity in similar ways, with maybe every third calf going to the new generation.