The Value of Off-Farm Income

Sunday, October 16, 2022

Finding balance in the farm family budget

By Colleen Halpenny

Whether you call it moonlighting, a side gig, or bonafide employment, many producers are known for more than their farm. They take on extra work to make ends meet, working off-farm while the farming operations are run by other family members.

Regardless of lifestyle or job sector, feeling the pinch of increasing living costs, how are farmers making ends meet? We spoke with those in the industry to find out why, and how, they are turning to outside income to support their needs.

A recent press release from Statistics Canada reviewing the total income of farm families for 2019 highlighted that being a self-employed business owner did not exclude farmers from the need to increase income.

In fact, the release noted that employment income was by far the most important component of off-farm income, representing about two-thirds of off-farm income in both unincorporated and incorporated sectors.

Off-farm income accounted for 64.4 per cent of the total income of farm families in 2019, up from 62.9 per cent in 2018.

Tyler McCann, managing director with Canadian Agri-Food Policy Institute who also operates a beef and goat farm in Bristol, Que., says that "while my wife and I both grew up on farms, we've started ours from scratch. Those initial investments in land, equipment, livestock, and all other things is quite significant. We couldn't have started without off-farm income contributing to the business."

McCann says that "you must think about it personally and professionally. Is it sustainable? But for many producers, it's the only option. A business in the traditional sense should be worth what it can cash flow to pay for itself and get a living out of it. Unfortunately, for some farms, that's not the case. The finances don't always fall that way."

Emily Stockdale, a registered nurse who also runs a dairy farm alongside her husband in Norwood, acknowledges that "some families can make it work having everyone at home full-time.

"We've decided that my income pays for everything we need personally. There's a bit more flexibility that way. The farm income needs to go straight to expenses, and, depending on the month, it can be tighter than others. Cash for living expenses is the toughest thing to pull out of the farm monthly."

For others, like Clinton Monchuk, earning money off-farm is a way to mitigate risk.

"There's no guarantee with Mother Nature or costs of inputs, and you're limited on how fast you can grow. This avenue is a buffer, allowing us to grow the business equity," he states.

Monchuk is a grain and egg farmer in Lanigan, Sask. and also executive director of Farm and Food Care Saskatchewan.

"The drought of 2021 was a bad year for many producers," he says. "For some, if there previously wasn't a cushion to rely on or these stable secondary positions, they could be feeling the pinch now."

"One of the realities that exist, and obviously the stats back it up, is that the small and mid-sized farms in all industries are disappearing. Rural communities are changing and everyone should remember there are consequences to this," cautions McCann.

"The benefit to having the commitment of those who work off-farm contribute to their more moderate-sized operations is the reality of their success. It would be so beneficial to the agriculture community if there was more space made where (even small) businesses can succeed without needing supplementation. For now, that reality often does not exist."

And for many it's not just about the take-home pay, but about the added extras with an off-farm position.

"Initially I was full-time mostly because of the benefits, which we don't get on the farm," says Stockdale. "Full-time worked for us because it was a set rotation. We knew I'd work four shifts, then be off for five. It also gave us the freedom to plan around that for farm tours and socialization. Unfortunately, with full-time, there's a significant decrease in pay, but the flexibility worked for us."

Terry Redden, a cash crop farmer from Harrowsmith, says, "I run 550 acres, my partner is full-time off-farm, and I still do some custom work and have a snowplow and sanding business during the winter.

"You do all the extra, not so much for the money, but because you love this lifestyle. You love the farm. It's been great to share this lifestyle with my kids, even on the days that are long and balancing it all seems tough.

"Helping fellow farmers make a good crop while also being able to offset my own seed, fertilizer, fuel, and repair costs is a big motivator to putting in those extra hours. It's also a driver in some of the choices we make when it comes to equipment. Last year we bought a large square baler to do not only our own straw but also other custom work and meet the market demand for squares versus round bales," Redden notes.

"If you're going to be away from the farm, you need to know that those who are at home are still able to meet the day-to-day objectives. Your time away can't be detrimental to the overall success of the business just to simply supplement income," cautions Monchuk.

"My brother and I can make my job with Farm and Food Care work because he's at the farm full-time. Until we grow to a position where it doesn't make sense for some of my time to be away, we're finding the best balance. And with my job I can keep flexible hours; not every secondary position can offer that balance."

Stacey Holman, a partner with Holman Farming Group in Luseland, Sask., always had the long-term goal of going back to the farm with her husband Dan, but circumstances made that lifestyle change happen on an accelerated timeline.

"I'm trained as a small-animal veterinarian and had thoroughly enjoyed working. When Dan and I had completed school and entered the workforce, we were each driving the better part of an hour in opposite directions each morning – with Dan still heading to the farm to help any time he could.

"Those first few years we didn't see each other much. As more land became available closer to his parents' farm, Dan's income went toward those investments, and my income paid student loans and our lifestyle needs. Then the farm began to grow, and everything else that came along with it. Renting more land, having kids, increasing equipment inventory – it all takes up your time.

"Still working part-time, I was struggling to find help looking after the kids on those night emergency calls. Many times when Dan would be out late planting or harvesting, the kids needed to come along with me.

"In 2012, a hailstorm wiped out a lot of our crops, we were expecting our third child, and ultimately, we'd reached our limit on trying to balance it all. I needed a change. So, we made the decision that I wouldn't go back to work," reflects Holman.

"The farm had grown large enough to make room for me to be involved daily. I now run the combine, help manage the books, and all the logistics that come with four children's schedules."

Statistics Canada's reporting also reflects an aging farming population. The increase in average off-farm income reflected growth in most of its major components. Pension income (+5.7 per cent) rose the most from 2018, followed by investment income (+2.1 per cent) and total other income (+1.7 per cent).

Monchuk remembers that "we grew up on a dairy farm, which definitely keeps you more tied to the barn on a daily basis. Our mom was a nurse, and then the workload had increased to the point where she stopped in order to be home full-time. We were younger at the time, so I don't recall the ins and outs of it, but they made it work whatever those logistics were. And they were very happy being able to work alongside each other."

And timing can be important.

"We were lucky recipients six years ago for the discounted layer quota and are continually looking for ways to expand and be a part of that industry," comments Monchuk.

McCann recognizes that if land was more affordable, their reality might have been different. "But with prices as they are, and our desire to still expand, my income can support those growth opportunities. Pandemic life has drastically shifted views on off-farm incomes, and how the balance can work. I'm lucky to be able to work from home and know that those days I need to be off-farm, my wife and my parents, who are close-by, can step in and deal with anything that may arise."

"Land prices were quite a bit lower than they are now. I think those just entering the industry have a lot harder start to their venture than we did," remarks Holman. "But sticking to your goals and having the confidence to find somewhat outside-the-box ways to achieve them will always be most rewarding."

Efficiency is key. "The goal is to make high-quality milk as cheaply as possible. We've recently started to incorporate some cash cropping into our income. Luckily we have the acreage available to achieve this.

"I recently switched from full-time to casual employment for no work commitments and a pay increase. I'll be doing my best to keep my hours as regular as I can so that I'm able to be home more with my husband and son while banking more for each hour I'm away," she explains.

Monchuk advises, "It's expensive if you want to buy real estate or a franchise, and a farm is no different. It's all about your passion and drive. Having that ability to slowly get in through grants or incentive programs, while having that off-farm income, ensures no income needs to be pulled from the business in those early years. This allows you to grow equity, expand the farm, and get to where your goals are faster in a more stable environment."

"Farming is a tough battle," Redden says. "There's no best way to do it. It's a tricky balance. In what other industry would someone work so hard doing other tasks to keep their passion and career alive? But we all keep coming back year after year.

"It's a lifestyle you can't give up." BF