What’s fair when everyone contributes to the farm differently?

Two things are needed to run a business: time and money. Family partners may be contributing labour, management, financing, or all of these. To find balance and harmony, you need to have conversations that ensure all contributions are valued in a way everyone pro-actively agrees to.

I see situations where one sibling works on the farm full time and the other works on the farm part time. The on-farm sibling reaps the benefits of the farming lifestyle, while the other off-farm sibling has comparatively significant disposable income. Each benefit has value, and that value may be viewed differently by different people.

Or, a younger producer might not yet be at a management level with the farm but is learning new skills and contributing in meaningful ways. What is the value of those things? It’s important to communicate about this and find agreement on this or resentment can begin to creep in.

A good way to find balance in such cases is to track gains over time. As a family, set expectations for future gains. Decide together what’s possible financially. Think about how much cash flow is needed to sustain retirement or to add on other assets in the future.

Ensure there is clarity around decisions. Know how many full-time or part-time employees the operation can afford to help ensure expectations are realistic. If the business doesn’t have the capacity to employ all children full time, can the part-time individual(s) convert their sweat equity into future ownership?

Valerie Panko
Business Advisor, FCC
Regina, SK

I think one of the most effective ways to ensure things feel fair and balanced is to put governance processes in place.

Governance is the process you use to avoid relationship breakdown. It allows you to design your own set of rules around how contributions are valued, recorded, tracked and compensated for.

Without governance, the word ‘fair’ may not hold much meaning, as fairness is what you design it to be. Everyone needs to be involved in deciding what is fair together.

For example, someone may contribute through dollars instead of hours, and fairness will depend on the policies you set (through governance) around how that contribution is measured and valued. If you’re measuring to determine equity of compensation, what is fair needs to be pre-defined and agreed upon.

When setting up a governance process, there are four main areas to begin with: decision-making, communication, conflict resolution and compensation.