Farming and Law: How One Sticky Lawyer Manages to Do Both

John Reed [00:00:00] I think we generally have a romanticized view of farming in this country. Not that it's easy or unsophisticated by any means, but that farming only involves planting crops, raising livestock, harvesting fields, getting your crops or animals to market, and making your kids do their chores before and after school. The seasons change, but the process repeats, right? 

[00:00:25] Hardly. 

[00:00:26] Ninety-six percent of U.S. farms are family owned and 75 percent are multi-generational, but they employ people who are not relatives. They contract with other businesses, they manage complex assets, investments, and debts, and they deal with government regulations that often hinder, not help.

[00:00:42] Yes, there are large agricultural conglomerates in the industry, but the day-to-day operation of an individual or family-owned farm poses a similar range of business and legal challenges and risks. There are any number of attorneys they can call for legal advice on specific aspects of farming. But wouldn't you want a lawyer, a sticky lawyer, who not only talks the talk, but also walks the walk and farms the farm?

[00:01:06] Joining me today is John Schwartz, the farm lawyer. No joke. His web address is thefarmlawyer.com. But that's not spin. He truly is a farmer who practices law while running a family farm in Cass County, Indiana, where he raises corn, wheat, and soybeans. He's active with his children's 4 H livestock projects and experiences the same successes and struggles as the clients he counsels.

[00:01:30] I'm excited to talk with John and learn a lot more. 

[00:01:33] John, I'm honored to have you here. Welcome to the podcast. 

John Schwarz [00:01:36] Thank you for having me. 

John Reed [00:01:37] My first question is what does an average day look like for you? I know that changes from season to season, but how do you balance the demands of your two professions and your other job as a father?

John Schwarz [00:01:49] It's a little easier with being a row crop farmer. You're going to have some busy times of the year, naturally spring planting season, fall harvest season. I would like to say there was a downtime with farming now, but there really isn't. During the winter months, you're repairing machinery, kind of getting an idea on what you're going to plant the next year, so on and so forth. 

[00:02:09] I'm not a livestock farmer. You know, I don't have 80 head of cattle running around out there. We have what I'll call 4 H animals and pets as far as, quote, livestock. 

[00:02:20] So, it’s not always easy, but I got some really good help here at the law office. That makes a big difference. Those times where I need to be out of here to do spring planting, fall harvest, I'm able to do that. So, like anybody else, you try to find balance and maybe I'm still trying to find balance fully at the end of the day. 

John Reed [00:02:40] Is it a scheduling challenge? Do you say X number of hours per day or per week are going to be in the law office and then there's the demands of the farm and the number of hours that takes? 

John Schwarz [00:02:50] As an attorney, a lot of other people run your life and your schedule: judges, the court schedule, the needs of the clients. And so, I try to do the lawyering during the day and sometimes on the weekends, too. And then separate that from the farming to where it's weekends and evenings. That way the farm's not cutting into what I have to do at the law office. 

[00:03:15] You know, let's face it. A certain part of a day after a guy's been in an office for nine, ten, maybe eleven hours, you want to go home and do something different. I find the farming is kind of therapeutic because you're out there. It's just, it's a change of pace of being in the office. And the busy season, like I have no idea when I'll be planting next year. So, I pick a week and I just tell the office staff, block me out for that week. And if it works where I'm going to be planting, great. If not, then we'll move some things around when we get there in case that week's wet or the weather hasn't changed yet, and so on and so forth. So, I try to keep them separate. I try not to take half days unless I have to and that way, I just like get done what I have here at the office, go home, then work on the farm.

John Reed [00:03:59] Describe farm law for us and amongst the things that that entails, maybe it would be easier to say what you do and what you don't do. 

John Schwarz [00:04:08] Yeah, I would say farm agriculture law, I would say there's some areas that I do that are very specific to farms. One of those areas would be issues that arise with farmers with the USDA Farm Service Agency.

[00:04:25] The Farm Service Agency is a subset of the USDA. They administer the program payments, the various programs the farmers enroll in. And if you're going to receive government money through those programs, you have to, in a sense, follow the rules, especially when it comes to wetlands. 

[00:04:45] If you're a farmer, you cannot go out and tile a wetland, convert a wetland. You will be ineligible for government payments, government programs. And so, to me, I think that's a very specific area that I would call ag law, even though it's dealing with wetlands. 

[00:05:01] The USDA and the Farm Service Agency, it's just a whole different set of rules. And so, I call that ag law. Grain contracts, I mean, pretty much every grain elevator that a farmer sells to is going to have that farmer enter into a grain contract.

[00:05:18] Those are very specific rules. Most of the time, coming from the National Grain and Feed Association, which is a trade group out of Washington, D. C. Elevators join that trade group and that way their contracts, any disputes, it's the rules of the NGFA, and the arbitration if there's a dispute, that govern those contract disputes.

[00:05:40] And so I think that's an area I would call ag law. You start getting into areas such as like estate planning, contracts, real estate. You know, a lot of what I do, it's regular law just in a farm setting. But farming is such a unique business that I find that, yeah, it may be estate planning, let's say, let's just use estate planning, but it's totally different than what you would be doing for a nonfarmer. Or, you know, contracts. The contracts are going to cover everything from solar leases to grain growing agreements to cash rents. I mean, on and on and on. 

[00:06:25] And so I, I usually tell people, yes, there's several areas that I do that I call ag law. Most of what I do is regular law but in a farm setting. 

John Reed [00:06:35] And who are your clients? Exclusively farmers? Are they also companies that are in the industry? How do you define your client roster? 

John Schwarz [00:06:46] Ninety-five percent of my clients are farmers. I made the decision a long time ago that, in my mind, you either represent the farmer side of the fence, or you represent the business side of the fence. And I went with the farm side of the fence for the farmers. There are some businesses that are clients of mine, but by and large, 95 percent of my people are, just like me, family farmers. 

John Reed [00:07:16] Is the decision to have that 95 percent focus on farmers, is that credibility? Is that just clarity in your mind as to who you're representing? Would it be detrimental to your practice if your farmer clients knew that you were also working with other players that may have different interests?

John Schwarz [00:07:36] It could, you know, I mean, I really don't want to be on the side of, because I do a lot of litigation. And I don't want to be on a side of basically suing another farmer if I can avoid that. I want to be known as, you know, like you said earlier, you know, the farm lawyer, I want to be the lawyer for farmers. 

[00:07:55] We've had a tremendous amount of consolidation in the ag business over the last couple of years. Who would have thought that Monsanto would be bought out? The consolidation is not good for the American farmer. I don't care what anybody says. And I want to represent the family farms. 

[00:08:14] There's still around two million farmers in this country, family farms, and I want to see that number stay strong. And I've just never, like I said, I just decided to pick the two horses I could ride and felt like trying to straddle both of them wasn't going to be a good idea or easily done. 

[00:08:32] So I just picked the farm side and a lot of it's just because I know what I go through on my farm. I've been in lawsuits with my farm before. You farm long enough nowadays; I tell guys, you're going to have a lawsuit at some point. It's just the cost of doing business. And I think with me, not only going through what the client's going through but also with the farm knowledge, I think that's extremely helpful and reassuring to a client.

John Reed [00:08:56] In the introduction, I referenced statistics about family-owned, multigenerational farms. Did you grow up in a farming family and which generation are you? 

John Schwarz [00:09:05] I'm third. I'm a third-generation farmer. 

John Reed [00:09:08] Tell us about growing up on the family farm, what you learned, and transitioning to what your career path was, if it wasn't going to be farming at first.

John Schwarz [00:09:17] My dad's originally from Germany. They immigrated over to New Jersey because some other family was there. They had a vegetable farm out in New Jersey. And then my dad came to Indiana to be an engineering student because the engineering schools were too expensive out East. 

[00:09:33] He met my mom, nice Italian gal from Fort Wayne, Indiana. And they had a farm up in, quote, the country as they called it. And so, my dad, he was an engineer at International Harvester in Fort Wayne, designing the trucks. And there was a farmer that was retiring, and Dad kind of befriended him and ended up buying his equipment and just started farming. 

[00:09:55] I have clients that are six, seven generational farms. My dad started out with nothing and was able to build it up from there. Dad was always an engineer. That farm wasn't big enough to support his family. So, Dad would go be an engineer, and the term is a flashlight farmer. You come home at night; you farm by the flashlight. 

[00:10:14] And growing up, I don't know, it looked like a good gig to me. I mean, I liked how things worked and, I liked farming. And so, I went to engineering school and I graduated with an engineering degree. 

[00:10:27] My first job, I lasted a year because the stock market tanked in 2000. And I was working for an automotive company, automotive industry’s up and down. So I was out of a job, laid off in 2000, went to another place. September 11th rolled around 2001. I was out of a job there. And finally, I said, told myself, "Self, I watched my dad go through about 16 jobs over his career. Not getting fired, just laid off. You know, just moving around and all that. And I wanted something a little bit more stable.

[00:11:01] I ended up meeting a patent attorney who basically said I should go to law school because patent attorneys are in demand. He's like, "Do you like to argue?" “Yeah, kind of. About as much as anybody.” "Do you like how things work?" “Yeah. "Well, be a patent attorney, John. Go get a law degree. Team that up with your mechanical engineering degree. You can make three, four, five hundred thousand dollars a year." And thought, okay. 

[00:11:25] So I went to law school. I left my engineering job, and I did some patent work. I did an internship between the first semester and second semester of law school for a couple weeks. I came away from the conclusion that if you liked reading your dishwasher manual, you'd love patent law. So, I was like, there's no way I can do this. I can't sit and read just boring stuff all day long. Sorry. 

[00:11:50] So I go back to the second semester. And I was going to Valparaiso at the time. And I ended up finishing high enough in the class that I was able to go to Indiana University. It was a higher ranked law school and I had always wanted to go there. So, I transferred there. 

[00:12:06] And it's kind of one of those aha moments in life. I'm sitting there one day and one of my classmates - and they all knew I was a farmer. They come up and they're like, "Hey, John, you been down the career center lately?" I'm like,”No.” They're like, "They've got this posting for a summer job. It's some ag farm. I don't know what it is it goes by. I saw a farm and thought of you." Okay, well, I better get my rear end down there and take a look because I don't have any job for the summer. 

[00:12:28] Well, it was Indiana Farm Bureau, and they were looking for a legal intern to basically work alongside their ag policy department. And also at that time, they were experiencing a high level of ag tourism starting out. This was 2003. And before, people weren't coming out to farms. You know, the general public didn't come out en masse to somebody's farm. Now they're being invited and paying to come out on people's farms for you-pick pumpkin patches. I saw a cow renting operation where you could rent a cow and you supposedly got that milk from that specific cow number six, seven, five, you know, whatever.

John Reed [00:13:06] Go play baseball on the farm. Thank you, Kevin Costner. 

John Schwarz [00:13:10] Yeah, exactly. All these things, you know. So as an insurance company, you can imagine. Whoa. Okay. So, I got to go all around the state and see different farms and all that. And the common response I got was, "You're a law student. How do you know so much about farming?" I've been farming a hell of a lot longer than I've been a law student. And I could see at that point that there was a need. I could see you needed somebody that could speak the language of farmers. 

[00:13:37] Most people don't like attorneys, farmers like attorneys even less for various reasons. They'll use attorneys much more now, but people see the attorneys on the TV and the billboards, and they think that's what everybody does. That's when I decided, you know what? I'm going to make a run at this ag law. 

[00:13:54] And I was at a law firm that it took me a year to convince them that ag law was a viable option. So, I lasted about six years working for other people before I said, “Enough. I'm starting my own law practice.”

[00:14:11] Because I could see where it was going to go. And that's what I did in 2011. I opened my own practice and never looked back. 

John Reed [00:14:16] You were assisting your dad and helping your dad on the farm throughout college and law school as well. I mean, you didn't stop farming. 

John Schwarz [00:14:26] No. 

John Reed [00:14:26] That first job out of law school, what kind of law firm was that? And what were you doing that you had to convince them that ag law was something they could also add to the mix? 

John Schwarz [00:14:35] It was, I won't call it a bigger firm. It was about 20 attorneys. It was based out of a larger city, and I worked out in one of their satellite offices. They mostly did municipal law, you know, government work.

[00:14:46] And, it was in my home area. So, a lot of the farmers knew me and started calling for me with different issues and that. And I talk to the powers that be and they're like, “Well, you know, we don't know about ag law, and we don't know if it'd be viable and blah, blah, and the firm's never done that.”

[00:15:02] And so I finally harassed them enough. They let me have a seminar. I'll never forget this. So, I have this seminar, free seminar for farmers, and I bet a hundred people come out. Now, the firm in Fort Wayne would have a Medicaid seminar, and if they got like eight people, that was a big deal. So, I had a hundred come out, and they were just like, “Oh my gosh, we can't believe this.”

[00:15:22] When you're in a bigger firm, I remember I changed my name on my email. Okay. I changed my - what do you call it? - signature block. John Schwartz, attorney at law, farm ag law, and this. Oh, that was a huge deal. That got a call from the main office that I had changed my signature block to include ag law. And they actually had the computer guy make sure all of ours were the exact same and locked out where you could never change that again. 

[00:15:46] So I'm thinking to myself, “Yeah, I'm betting these guys won't let me advertise and do the things that I want to do after that.” So, you want to be able to control your own destiny, and that's when I said, you know, I'm just going to, I'm just going to go out on my own, and that's what I did. 

John Reed [00:16:00] There's a pattern that I see personally, outside of the practice as well. And it's not universal. It's certainly true for me. We see our parents. And how they work, their work environment, whether that's nine to five in an office in a cubicle or calling their own shots as a business owner. And again, a pattern. We tend to gravitate towards that. It's what we know. It makes sense. It's where we grew up. 

[00:16:25] I would imagine you as a business owner, owner of two businesses, probably your worst day as a business owner is better than your best day as somebody else's employee. Is that true? 

John Schwarz [00:16:36] I would say so. Bill Parcells said one time, "If they're going to make you cook the meal, they ought to let you pick out the groceries at least." That always stuck with me. He said that when he was coaching the Patriots.

[00:16:49] And I always felt like, these firms also want a set number of billable hours. They put a billable hour requirement on you as a young associate. They put a dollar amount requirement on you as an associate. And I didn't go to law school and want to do ag law to have like a billable hour goal. You know, I wanted to help people.

[00:17:07] And the bigger firms, in my opinion, I think it's money driven. And if they want these expectations from you, well, they ought to let you pick out the groceries, right? And how are you going to advertise? 

[00:17:19] One of the things I did was I started writing in some farm magazines. I'd gotten farm magazines from a kid. And I'm kind of on the cusp of that generation where I mean, I can do everything on the computer, but when it comes to farm magazines, I just like the feel of a farm magazine. I like the glossiness. I like flipping through the pages. I like the pictures. And, you know, the average age of the farmer is 64 in this country, so there's still a lot of people that read these farm magazines. And I always noticed I never saw anything legal in here. Nothing. You can put all sorts of articles about cover crop and this and that. And so, one of the things I started doing, I just said, "Hey, can I submit some articles?" And that's what really I think helped get me started was just putting some articles out there.

[00:18:03] And I still do it today. I write for several farm magazines. And if people call me, great; if they don't, that's fine too, because I think I'm doing a service to the farm community. You know, if some, if one person reads my article and it makes a difference, it saves the farm. That's worth it to me. 

John Reed [00:18:19] I can tell you from experience that you are above average when it comes to thinking about promoting your practice, marketing your practice. And when you tell stories about signature block issues and seeing the need to contribute articles where there are none, in particular publications, that's pretty forward-thinking. Do you fancy yourself as having kind of a marketing mindset? Or was it kind of epiphanies along the way that, “Hey, this seems to make sense, I should do this?”

John Schwarz [00:18:46] Marketing has always fascinated me. Because it's like how do you get people to do things, to get an understanding of what you're doing, what you're selling, so on and so forth? I've always been fascinated by that. 

[00:18:59] But I think I'm also, I just got a part of my mind that does that. Like the articles, doing the seminars, doing the things that I do. I enjoy that. I enjoy saying, what can I do to get my message out there? Because at the end of the day, an informed clientele is a better clientele for everybody. And so, I think the more good information you can get out there, especially farmers reading farm magazines, the better that's going to help farm communities and help the farm profession as a whole. 

John Reed [00:19:30] We generate a lot of content for our clients. When you're coming up with ideas for articles, what's the impetus? What's the spark of creativity for the topics that you write on? 

John Schwarz [00:19:39] Well, I tell people that every stupid thing you could do on your farm over the years, that you would need an attorney, or would get you into something, we did.

[00:19:49] Wetland violation, been there. Grain storage issue with the FSA, been there. Boundary dispute with adjoining property owner, been there. Okay, I could keep going. And I'll throw my dad under the bus a little bit. Love Dad, but my dad's full German, okay? And so, there's an old adage, you can always tell a German, but you can't tell him much.

[00:20:07] Okay. That's my dad. All right. And I can say that because I'm half German, but I mean, it's just, there's an inherent stubbornness and that got us in some situations over the years. And so, a lot of times I just write about my experience because I can talk about it. 

[00:20:23] And those experiences, and which I still have too, right? I mean, I'd like to think I'm not doing stupid things anymore, but I'm seeing things on my farm. For instance, if there's a government program coming out or if I'm seeing that something else has happened on the farm, I'll write about that. But also, in the law too. 

[00:20:43] So I'm getting that material. I've got two streams that are putting that material in. I want people to be able to protect themselves too. And so, I harp a lot on getting the farm set up with the right structure and using LLCs and those things. So, I'd like to think multiple sources. At the end of the day that I guess I would boil down to what I see on my farm, what I see in the law practice, and what I see just in general. 

John Reed [00:21:05] Going to Valparaiso and then Indiana for law school. Are they known for having agricultural law curriculum, and did you take advantage of those? 

John Schwarz [00:21:15] None whatsoever. The only class I took at Indiana University was water law. And that dealt with all the cases out west. But I'll never forget, Professor Fishman told me, he said, "You know, John, you're smart for taking this class." And I said, "Why?" He said, "Because you'll be doing water law in Indiana in the years to come when water gets more of an issue." And it's starting to get there.

John Reed [00:21:39] Go Professor Fishman for being so prescient. 

John Schwarz [00:21:41] Yeah, he was right dead on. At the time I thought, we're in the Great Lakes region. We don't have any water problems, you know? It's starting.

John Reed [00:21:48] Your father, a businessman, and by the way, I feel like we're going to have to apologize to all IP attorneys and all Germans by the time we get to the end of this episode, but...

John Schwarz [00:21:56] I'm not done offending people. 

John Reed [00:21:59] We may add to the list. We'll see. We'll see. 

[00:22:02] Your father, obviously a businessman by owning a farm. Did he encounter the issues that your clients are facing? I know he did. Did you assist him with those things? Did you have that kind of first-hand, before-you-thought-you-would-be-a-lawyer experience? 

John Schwarz [00:22:19] The one wetland violation that we had, yes. I remember helping him. I was in high school. That wasn't really our fault. I call it a violation, but what had happened is there was a county ditch that went through a farm. One of our farms. And every so many years they have to come in and dip out this ditch because it goes through a muck ground that's very fluffy and the critters dig in the ditch banks and it fills in the ditch.

[00:22:45] Well, the county supposedly, even though they collect a ditch tax in Indiana, didn't have enough money to dip that ditch out. So, the ditch was not working, and it backed up. We had a clay tile that was going into that ditch, and it backed up the water in that tile and it blew it up. The pressure got enough where it blew it up. That made about a two-acre area that you just couldn't farm. 

[00:23:07] The USDA has a rule that says if you don't farm something, Indiana is almost all wetland, okay? So just about everything you farm is what's called a prior converted wetland. Yes, it was wetland long ago, but now it's been converted. If you don't farm it, it's considered being abandoned; it can revert back to a wetland.

[00:23:25] Well, this thing with the county went on for years and years. Finally, they got enough funds and were able to dip the creek. And then, we go to put a new tile in it. Oh, no, you can't do that, says USDA. That's a wetland. Well, wait a minute, we farmed it five or six years ago, you know. 

[00:23:40] It didn't dawn on me at the time, I was just too young, but that's the first kind of legal issue as a non-attorney I helped out on, and I learned a lot, you know, just from that process. Going to the FSA, there's a, FSA in about every county in every state. You go there, there's a local board you go in front of, and then if you don't get what, you know, what you're seeking there, you go to the state level, and then you go to the national level. So, there's quite a few appeal processes in the Farm Service Agency world, but yeah, that was my first experience. And then, you know, when I became an attorney after that, then obviously it was a lot more helpful to deal with some of the issues that we were having.

John Reed [00:24:16] And when did you become your own farm owner? 

John Schwarz [00:24:19] Age 19. I had just graduated high school, was going to college, and we had farmed for some people for a long time, and they had a - it wasn't a lot of acres, 24 acres. They had moved from Chicago to the country. It was a family home, and they were having some health issues and were going to move back to Chicago, and they wanted to know if I wanted to buy the farm. And they were kind enough to sell it to me on a land contract. Because, you know, a 19-year-old kid, you're not going to walk down to the bank and get a loan. And so, we did it over a 10-year land contract. 

John Reed [00:24:48] And how has your farm or your business grown since you were 19?

John Schwarz [00:24:53] Well, it's actually shrank. When I came back from law school, we farmed about 530 acres. We took the farm to 4,000 acres in a short amount of time. And getting help, like anywhere now, you know, it's hard to get help; the labor market, it's been hard on a farm for a long time. Before the last couple of years when we've had this labor shortage, we've been experiencing it in the farm communities for a long time. And especially up in the area that I was in, it's close to Elkhart County, Indiana, the trailer capital of the world. And guys there can go in the trailer factories and make $80,000 a year and be home by noon because a lot of the Amish work there and they want to be home early, so they start really early. You can come work for me on a farm and make, let's say $40,000 and sometimes be out till midnight. 

[00:25:44] And so labor was always tough. My dad was getting older. My dad was getting into farm accidents. I had no doubt my dad was going to get killed out in a farm accident. I had to make a choice. You know, when something happened to Dad, was I going to quit lawyering? Or was I going to downsize farming? Or what was I going to do? 

[00:26:04] Some neighbors of ours that we are really in tight with, we kind of teamed up with them. They started farming the ground. And we downsized. 

[00:26:14] My wife's county is where I'm at now is about two hours from my home county. I actually moved down to her county, bought a couple hundred acres, and I farm that now. So, I've actually downsized because I just couldn't do it all. I couldn't do it all. And when my parents are gone, I have no family left because my dad being from Germany, and I have no family up in the county that I grew up in. Where my wife, down here in Cass County, Indiana, which is an hour straight up from Indianapolis, a lot more family members. When it comes to having children, it's nice to have a village for sure. 

[00:26:49] And I don't miss farming 4,000 acres. When you start farming a certain amount of acres, I don't think you're really a farmer anymore. You're a people manager. You know, this fall, I ran a combine. It's the first time I ran a combine in probably six, seven years because the hired men up north, I called up north where my home was, they always ran it. 

[00:27:07] I'm giving you a long answer to a short question, but I've actually downsized. It'd be so I could focus more on the office because I felt that's where I really needed to be. 

John Reed [00:27:16] That was not in any way long-winded. I appreciate the education. The one thing you mentioned in that story is the topic of labor. And it's something you didn't mention before in ag law. How involved are you in employment law issues and maybe even immigration issues with the clients that you counsel? 

John Schwarz [00:27:32] None. Those are two what I would call... I use the term specialized areas in my opinion, employment law, labor law. I don't do labor law, employment law, workers comp, probably other areas that I'm, I don't necessarily do bankruptcy.

[00:27:46] You can only cover so much, and ag law cuts such a wide swath. You know, these aren't narrow businesses. These are businesses are going to have environmental and labor and contracts. I mean, it just goes on and on. And, years ago I said, I better pick the areas I want to do and what I'm good at. And if someone calls me with a labor law or immigration issue. Hey, guess what? I've got friends that are attorneys that do that stuff. I'll give you their contact information. 

John Reed [00:28:20] You've stayed in your lane. 

John Schwarz [00:28:21] Yes. 

John Reed [00:28:22] What do you think most people get wrong about the business of operating a farm? You know, I talked in my intro about this romanticized view or maybe an uninformed view that most people have about farming. Educate us. What are the things that we, non-farmers, get wrong? 

John Schwarz [00:28:38] It's interesting you said what you said, because I say that all the time. We tend to romanticize farming. You know, well, here's this pretty field, and you got the nice cows out there, and everything. 

[00:28:49] No, it's damn hard work. It's risky as hell. I mean, anytime you're putting your livelihood at stake on the weather... There's always a joke, is it a mental condition or a disease, you know? And the farmers, we always joke about that, and people always say it's the biggest form of gambling out there because most time a farmer puts way more money in a field than what he would go into the craps table in Vegas, right? Mother nature as the house can be pretty unforgiving. 

[00:29:16] So I think the risk, the risk, and the amount of capital that it takes. I think people have no idea. Farming is asset high, cash return low. Totally opposite of maybe a law office, a dentist's office, a doctor's office, professionals where you got a desk and a computer and some other stuff and that's it. 

[00:29:38] Farming - it's nothing for an average farmer to have, you know, four or five million in assets. It got a little bit better the last couple of years with the inflation and kind of the Ukraine war, grain prices went up. It was pretty tough from 2013 to about 2020. 

[00:29:56] Prices were in the doldrums, and I asked my lender at the time I said, “What do you see the return on investment for farming right now?” He said about 0.3 percent. Not three percent. 0.3 percent. A little better now, but it's very cyclical. Prices have been up for a couple of years now and more than likely we're going to be headed back down. So, I think people romanticize it, yes. And if they really looked at the risk that the farmer takes, I think they'd be shocked.

[00:30:25] I mean, a lot of times you're one bad year from biting the dust. You have a huge crop failure, especially if you don't have crop insurance, you're toast. I think that's what people really get wrong. 

John Reed [00:30:35] So similar question. What are the biggest or most significant business and legal issues facing farmers today?

John Schwarz [00:30:43] Well, I think number one, if you ask me, I would tell you that statistics show about 85 percent of farms are not set up as a legal entity. Okay, they're not an LLC, they're not a corporation, they're basically a sole proprietor. On the flip side of that, about 86 percent of non-farm businesses are set up.

[00:31:11] So why is it that 86 percent of non-farm businesses have a structure, have protection, minimize risk, minimize liability to the owners, and farmers are opposite? Good question. I'm 18 years into this job and I'm still trying to figure it out. 

[00:31:29] My biggest thing is, if there's any group of people that really despise paperwork, it's farmers. Two words will send a farmer running for the door, taxes and paperwork. And so, you have so many farms out there that they're one semi-truck away, accident away. They're one spilling fertilizer into a ditch and it goes into a pond and kills fish or, you know, a lake. They're one bad thing away from losing everything.

[00:32:00] These lawsuits we see now, you know, it used to be had a million dollars in liability coverage. Now you're okay. Now you can't afford enough insurance. There's $10, 15 million lawsuits against farms. If I'm just John Schwarz, the farmer out there. Hey, I'm John Schwartz, the farmer. And I get sued and all my personal assets are at stake. I can lose everything. 

[00:32:24] And I wish it was getting better. I know more farms are getting set up as LLCs. And I think a lot of it, too, is people look at it as a corporate farm. What's a corporate farm? If me and my wife set up a corporation to run our family farm or operate as, am I a corporate farm? I don't think so. But it's got a really bad stigmatism to it, that name. I think a lot of farmers, you know, felt like, well, if I set up an LLC, I'm going to be, you know, I'm a corporate farm. So, I see that a lot. There's way too much risks that the farmers could get rid of and they're not. 

[00:32:58] And number two, the succession planning. Supposedly, well over half the farms in this country do not have a succession plan. And that stems from people don't like to talk about dying, people don't want to give up control, they're all hung up on what's fair. Okay, I got John farming, and we've got two other kids. They don't farm. What's fair, how much should he get, and all that? And the taxes and the ramifications from that will just, I mean, it'll destroy a farm. 

John Reed [00:33:26] Does the graying of the industry impact that as well? That there's nobody to pass the farm to? There's nobody that's interested within the family, at least? 

John Schwarz [00:33:33] Yeah, that is part of it. The USDA came out and said in this decade, 500,000 of the two million farmers were going to be gone, either dead or retired. But don't worry, there were 380,000 people that were going to step in and take over those farms. Well, that's batting well over, I mean, you're probably 60, 70 percent. I can't tell you in my experience with probably over a thousand ag clients if I see that. But who am I to argue with the USDA? I think if half the farms out there have somebody to take over, that's a strong number.

[00:34:06] What I would like to see is, I would like to see, and I started talking to clients, "Hey, you don't have a family member, but how would you feel if you got a non-family member to take over?" "Well, what do you mean?" "Well, you're not the farm and the farm's not you" is why I tell clients, you know?

[00:34:25] And at the end of the day, you've worked, and you've built this farm up. Do you want to see that farm continue? Well, nobody's ever told me no. And is it okay if that's a non-family member? And people are kind of warming up to that. 

[00:34:40] I'd like to see Congress change some laws where, if my three boys don't want to farm, and I want to bring a non-relative farmer in, well, maybe if I sell him my land, I don't have to pay capital gains. Maybe if I sell him my machinery, I don't have to pay a depreciation recapture. Maybe we can value it different, so on and so forth. 

[00:35:00] I'm aware of two groups in the country that kind of do a matchmaking. Where someone trying to get— wanting to get—out of farming kind of get in. But again taxes motivate people and so I'd really like to see Congress and, in all my spare time, I'm going to try to reach out to some of the senators out there and start broaching this idea of like, “Hey, why can't we change some tax laws to if you are going to bring this in, these non-farm people in, give the farmer a break. 

[00:35:27] I looked at my family farm in Germany. My dad had three second cousins that never married, and the person that is inheriting the farm is not a Schwarz. He's got a different last name, and I was thinking on that, and that's how this all started. I'm like, I could go see the farm in Germany today if I wanted to. Am I going to care that it's not a Schwarz running it? No. He's a distant family member, but at least he's still there, right? 

[00:35:52] And I thought, why can't that be replicated here? Why can't we really start looking at, okay, John Schwarz doesn't have sons or daughters to take over, but hey, there's Jimmy, the neighbor kid down the street. He doesn't have the assets or the capital to get into farming. He's going to need a break, so why don't we change some things where sure, I can sell to Jimmy, I don't pay capital gains, he can buy at a lower price, so on and so forth.

[00:36:14] That's the major, the biggest problem I really think is the lack of financial ability for people to break into farming.

John Reed [00:36:22] At the heart of any farming operation is the land. What impact is the cost of real estate, urban sprawl, and also wind and solar needs and expansion? How is that affecting farming? 

John Schwarz [00:36:38] Well, the last time I saw land prices go down in this country, of substance, was 1981. I'll never forget, my dad bought a farm for 1,000 an acre.

[00:36:51] The same farm you wouldn't take less than 10,000 an acre now. Jimmy Carter decided not to sell grain to the Russians, and then getting into the early 80s, things were bad, and then the price dropped, and I remember my dad saying, the farm, he bought it for a thousand, it was worth 700 an acre, it was 300 per acre underwater.

[00:37:08] After that, it's just been, you know, a meteoric rise. As of late, even, and I don't know how people buy at these prices. To speak candidly, the last farm I bought was 8,000 an acre and that was expensive. Well, now we're seeing 13, 14, 15 thousand dollars an acre ground here in Indiana. Sometimes it gets even crazy and gets into the 20s. You can't do it, especially at 8 percent interest. Good luck with the higher interest rates now. So yeah, it's a huge problem. 

[00:37:37] I mean, the solar farms coming in and leasing, you know, there's less ground for farming as the more solar takes. So that plays a role.

[00:37:45] Like I said, the interest rates, the cost, I mean, it just goes on and on. It's like the imperfect storm right now. It really is. I mean, if there's ever a time in all my life I can think of, this is the most difficult to buy any ground. 

John Reed [00:37:58] John, I am grateful for the insights that you've offered and for sharing your story, actually your many stories, with us.

[00:38:05] I appreciate what you do as a lawyer and a farmer, and I thank you for taking the time for what is no doubt a busy day for you, so thanks for being here. 

John Schwarz [00:38:13] I appreciate you having me on. I enjoy this job a lot. I do. I enjoy helping people. And I got a list of farms that I've saved. I keep a list.

[00:38:21] It's nice to be able some days when I have a bad day or a tough case, I get that list out and I look at it. And I always think, you know what, did I make a difference? And I hope when I'm dead and gone, there's at least one person out there that says, you know what, John was a good guy, a good attorney, saved our farm.

[00:38:37] I feel really blessed that I'm in two professions with the heavy overlap that there is. You know, being a farmer makes me a better attorney. And I think being an attorney makes me a better farmer. And the fact that I'm pretty uniquely situated to help people, and that makes me feel good.

John Reed [00:38:53] Well, again, thank you for being here. 

John Schwarz [00:38:55] Thanks for having me. 

John Reed [00:38:56] Hey listeners, I encourage you to visit StickyLawyers.com to learn more about John and his two professions and better understand the business of farming. You'll learn a lot more about the things we discussed today, and I'd even say that it's required reading, given where we are with farming in this country.

[00:39:12] Whether you're a first-time listener or a repeat stickler, a long-time Sticky Lawyers fan, I have a request. Please go to wherever you get your podcasts, Spotify, Apple, YouTube, and click the follow button. That way you'll be sure to get new episodes, but it's also a digital pat on the back for the team at Rain BDM who work tirelessly, behind the scenes, to put this all together. Compared to them, I have the easy job. 

[00:39:36] Until next time, I'm John Reed, and you've been listening to Sticky Lawyers.