Family farms: communist havens in need of capitalism

KEMPTVILLE — Discounting Cuba, communism is only found in two places today: China and the family farm.

And that’s wrong, says Don Jonovic, of Family Business Management Services in Cleveland, Ohio, to a group of more than 100 farmers at Eastern Ontario Crop Day in Kemptville last month.

Advising business owners since 1973, Jonovic says family farms often seem like they took their motto from Karl Marx’s Communist Manifesto: From each according to ability; to each according to need.

It neglects the will, which decides if one’s ability will get off its butt.

Jonovic notes that family farms typically get mired in a socialistic approach to compensation where one lazy partner is rewarded the same as the hard-working visionary brother-n-law. But the one who builds wealth should be rewarded. That’s capitalism 101, he said.

He says families should sit down together and decide what their real purpose is in running the farm or what is at the heart of a decision. He cited the case of a father at loggerheads with his son, who wanted to spend $200,000 on new equipment. The father was looking after holding on to his retirement nest egg; the son was looking to expand the business for more profit. The conflict was really about taking risk, Jonovic said.

Many families turn down making plans because they believe plans never work. Plans seldom turn out as they were intended. That’s not their purpose. You use a plan to keep on track or to get you back on track, he said.

Farm finances are often too secretive. In the early survival years, a farmer keeps his financial performance to himself. And old practices don’t die. When the farm becomes profitable, he doesn’t want people to know he is making money.

Often a farm’s financial, insurance and legal advisors perform poorly because they do not know the farm. Most farmers use an accountant to get the taxes out of the way and to "screw the government," he said.

Farmers often don’t realize they are buying answers. "If advisors don’t know you, they cannot help you." If crop advisors performed the way financial advisors performed, they would be fired, he said.

Finally, avoid the semi-retirement scam. "Let the new generation do it," he said. Don’t go looking over their shoulders. Plan another career. Do something else with your time, he said.