Published Sep 26, 2011

Frantzen field day held; discussion of succession, energy, and purchasing a farm acreage

By Luke Gran

What does a beginning farmer need to do to get started with a small farm acreage? If you ask James Frantzen, of rural NE Iowa, near Elma, he may respond, “Plenty,” with a straight face and a serious gaze for a moment. Until a smile quickly breaks across his face vibrating from a hearty laugh from deep inside. “Enough to keep you out of trouble, anyways.”

James looked for years for a home nearby where his folks farm. In 2009, he purchased a property three miles up the road.”When I bought this place, it was a mess,” remembers James. “the previous owners kept nearly every kind of livestock except maybe a black bear.”

James had an enterprise already picked out to compliment the existing family farm – a winter pig farrowing house. James would raise newborn pigs and grow them until they can be weaned and then finished down the road at the Frantzen Farm of Tom and Irene Frantzen.

Slides of building improvements, earthwork, electrical trenching, and junk clearing gave a taste of what beginners can go through. Costs associated with these expenditures were tabulated and shared on how much one should budget for, but James shared a whole lot more advice than that.

On taxes, beginners need to be careful what expenses they have and what income they have in a given tax year. The lesson he learned by not working with his accountant from the start when he began making farm investments is as follows.

James spent his earned income from an off-farm job to make improvements to the farm, but didn’t have any farm income until the next tax year. “I couldn’t reduce my tax liability like a farmer is supposed to, because of a simple mistake of planning farm expenditures” cautions James.

He may have preferred, in hindsight, to take a small operating loan, and do all the work faster, showing farm income in the same year, then paying off the low-interest rate loan from a beginning farmer lender like the USDA Farm Service Agency.

When a beginning farmer is just getting started, a few thousand dollars saved makes a very sizable difference, especially in the first year of a business. “That is something that hit James pretty hard financially, we went in blind, and paid a high price,” reflected James’ father, Tom Frantzen.

Over the afternoon of visiting, and watching slides, participants in the field day could experience what the past 24 months must have been like for James.

“I called up a lot of favors these first years, a lot of friends were coming by with a skidloader and helping out, moving dirt, trees, whatever needed to be done,” said James. “That is probably the most important thing for beginners to do – rely on your friends and community to help you get on your feet, take help when its offered, return the favor whenever you can.”

Discussion turned intimate with the 20 field day attendees hanging on every word of the serious question about what to do about farm succesion.

“My wife Irene and I are the third couple to live on this farm, to care for this land, since the late 1800s when it was settled by the first european immigrant farmers,” said Tom. “We have a deep responsibility and care for this place, and we want to make sure our work started here continues into the future.”

“We care about diversity, about having pigs, and cattle and small grains and pasture along with corn and soybeans,” assures Irene, mother of James. “We don’t want to see it turned into one big cornfield like every other place you look it seems right now.

Their family has been working with a farm financial consultant for over a year to decide a course of action to take when life moves the farm management responsibility to the next generation.

“This is such a big decision for us, I’m so concerned that we are missing something,” admits Irene, “I feel like I need a second opinion.” Unfortunately, finding qualified farm succession consultants are very hard to come by it seems. And its a topic that many families do not openly discuss enough.

Finally, the day concluded with an assessment of farm energy use, and ways farmers can save money by reducing their energy use. PFI on-farm energy consultant Rich Schuler shared results of data that suggests big cost savings for James if he were to switch his energy source to LP away from electricity in the heat lamps for the farrowing house.

Energy can be saved at the farmhouse of Tom and Irene by burning corncobs weekly in a furnace. Their geothermal cooling/heating system is spending a lot of electricity in the winter to pull heat from the ground. Instead, they are exploring burning the surplus corn cobs harvested each fall.