Ryan and his farming partner use infinite banking, a strategy involving whole-life insurance policies, to create flexible capital for their farm and give their daughters genuine choices about their future. Land in Alberta costs half a million to over a million dollars per quarter section, and banks rarely lend to newcomers, making private capital sources essential for young farmers.
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Wanting to raise your daughters to have choices but not obligations. Can you expand on that, what that means to you?
They shouldn't be expected to have to just work hard to make everything work. If they have some options and there's a little bit more capital in their control, would make farming much more enjoyable for them. I think those days where working harder than the next is kind of over, you know, you can't just work hard. You have to have things in place to keep the farm a farm and intact. There has to be more options available to us as a family to give our girls.
Wanting to raise your daughters to have choices but not obligations. Can you expand on that? Just share with our listeners what that means to you.
No, it's just we don't, um, you know, with the farm and the future transition planning, things that'll change, you know, things that are out of our control, they shouldn't be expected to have to just work hard, you know. to make everything work. If they have some options and there's a little bit more capital in their control, would make farming much more enjoyable for them and not have to just, like I say, work hard every day. Because I think those days where working harder than the next is kind of over a little bit. You know, you can't just work hard, you have to have You know, things in place. And also that, you know, we have 2 girls. Um, we don't know if either one of them want to farm or one of them want to farm. And then to keep the farm a farm and intact, there has to be more, um, options available to us as a family to give our girls if one should not want to farm and one does, you know. And that's where this tied in. greatly with our expectations and what we want to see going forward and how we want to set things up.
Absolutely love that. That's a sharp example of thinking long range.
Yep.
Thinking long range.
I'm sure being around the— I mean, you don't sit around a water cooler when you're farming too much, but, you know, every once in a while you stop in the field and you pass somebody on the road and you do a wave as 2 tractors go by. And you do find a coffee shop where 2 farmers get together. I'm curious, I'm sure you guys have heard a lot of stories about people who've had family transitions where sometimes a farm goes smoothly to the next generation. And I'm sure you've had some stories where you've heard that they don't always work out that way. So I would imagine some of that has influenced your decision about wanting to make sure you're set up in a different format. Is there some stories like that that have come across your guys' desk where you're just like, you know, we need to be looking at this a little bit differently?
Pretty much everybody in our inner circles. Um, like both me and Ryan, our fathers are still calling the shots on their farms. They're past retirement age now. Um, nothing was in place, so they're just gonna keep farming. They don't want to really make a plan, and that's frustrating on our part. We, we're thinking about the next, next generation now, right? Our girls past our parents and It's frustrating, and we need to make sure that we are set up that we are not tied to our operation, our farm, in the future because we don't think we can afford to retire. And we don't want to expect our girls to pay us to retire either. That's another flip side in the egg industry, right, is, oh well, my kids have to pay me to retire, or there's so many different scenarios. We don't want to put our girls in that situation. And If we start now, we won't be in that position. We will be well set up for them and for our future.
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What are some of the biggest financial challenges that, you know, that young farmers face that maybe other people never see?
Well, the sheer dollar value to get into it. If you're looking at just buying a quarter of land to start farming, that I would say in Alberta is anywhere from, what, half a million to a million plus for a quarter in Alberta. So that's a big price tag. And starting out, banks, they, they're very leery with young people and those big dollar values. So it's hard.
Yeah, more, more than once, um, you know, we've been told from a bank that they'll match our capital on hand, you know, um, so that growth is very slow, right? If they're not going to, um, be willing to take a little bit of the risk to help somebody out, then, you know, our access to capital is low when you are starting out because everything is risk essentially in the farming, you know.
100%. And I'm curious, why Dan? Like, did you feel that, that he understood, you know, maybe farming because he actually lived it?
Yes, most definitely.
Yeah, that connected well with that. But that's his background. And he, you know, he knows what we're talking about.
He's like a very trustworthy fella.
That is very true. Yeah, he's, he's just, just a great, great teammate. And I'm honestly just— I have so many great questions. So how has the adoption of this process changed the way that you both make decisions together financially?
Well, I'm in charge of most of it. He doesn't really know the online stuff. So it's been a good learning curve for me. It's been an easy learning curve for me, which is also very beneficial because when he needs to learn, I am very capable of telling him where he needs to go to get there and get our business done. But yeah, I guess just talking about the infinite banking, we became much more comfortable talking about capital and the ways we need to operate our business. Our business has evolved so far in a year where we literally just like hit everything. You know, you don't talk about finances. That's Less scary topics to now where it's just head-on. We're facing things head-on and the financial discussions we have is not a scary thing. There is plans, there is options, there is so many things available and I don't know, well, it kind of excites us now to talk finances and—
And we have a little bit more appetite for risk with the The access to this type of capital over the bank, being that that payment's going to come due in 12 months or whatever it is, where this— there's some leniency as basically a backup plan to that. Okay, we needed to borrow that money, and then our CAF check that was supposed to be X number of dollars is now half, and there's not somebody saying, hey, okay, let's make that payment due today. You know, you knew it was coming. Whereas this, we can, you know, things happen and we can, maybe it goes 2 years that we can, so we can get that money paid back and that pressure is off of us. So that's helping our growth faster.
That's terrific. Gives you a lot more confidence in decisions, I would imagine, Ryan, when you can make that and you're like, you know what, we don't know, commodity prices just went, you know, you're listening to the radio in the tractor and you hear the news, you're just like, oh, that may not be good for selling meat this season. But you've got that extra piece of confidence. I can imagine that can make a big difference just going through the rest of your days because sometimes there's a big lag time from when you're in the middle of this part of your farming journey to when a check shows up. And in between there, you can go through a couple of news cycles and just be like, oh my God, the roller coaster is just going up and down here.
Yeah, no, that's exactly, that's exactly what I'm saying is that, that long time between when you borrow the capital to when you sell what's paying the borrowed money. There's a lot that can change in that interim, and it can be a big deal.
And it also provides opportunities, um, opportunities that arise, right? If we don't have that bill that is due and we can divert the cash flow to a different opportunity, that is huge for us. Like, for our situation, um, there was a group of use that came available on Facebook and we wanted to jump on it. But if we had a loan that was due with the borrowed money, we would have not been able to do it. But because we had the infinite banking in place, it was possible to divert stuff and change our plans and just keep going. So it was really— I think it's really important for opportunities that arise in the farming industry because you literally never know when they are coming up.
