1. Philip E. Harris University of Wisconsin- Madison/Extension Beginning Farm Business Arrangements

2. Testing Stagep. 1 Employer-employee arrangements Operating agreements

3. Employer-Employee Agreementpp. 1-3 Compensation: Cash Wage and income share Incentives Bonus payments Fringe benefits Commodities

4. Operating Agreementsp. 3 Beginning operator May furnish some personal property such as livestock or machinery May provide some management as well as labor

5. Operating Agreementsp. 3 Agreements should cover topics such as: Job responsibilities Contributions of assets Distributions of income Method of settling disputes Dissolution of the agreement

6. Joint Operating Agreement p. 4 Operators are sole proprietors Each contributes assets, management and labor Income is shared based on inputs Each pays expenses of their assets Operating expenses are split

7. Joint Operating Agreement pp. 4-5 Complete inventory should be taken at the beginning Sale triggers recognition of gain Could be transferred by gift Could allocate income to pay for inventory Could repay at end of agreement

8. Enterprise Agreements pp. 5-6 Beginning operator’s income is all from one enterprise Labor for other enterprises may be a source of conflict

9. Total Farm Operating Agreementsp. 6 All income and operating expenses are split Beginning operator acquires more assets over time

10. Leasing Considerationsp. 7 Allows effective use of limited capital Short or long term Land, buildings, machinery or livestock

11. Real estate leasesp. 7 Leases for more than a year must be in writing 90 days notice is required to terminate a year-to-year agricultural lease

12. Real estate leasesp. 7 Cash leases Crop share leases Livestock share leases

13. Farm building leasesp. 8 Leasing from builder or bank –An alternative to financing Leasing from a neighbor –Be careful about cost of repairs

14. Livestock leasesp. 8 From leasing company From retiring farmer –Advantages for retiring farmer –Advantages for beginning farmer

15. Questions?