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Non-Heir at the Helm

June 30, 2012
By: Rhonda Brooks, Farm Journal Seeds & Production Editor
 
 

An aspiring farmer can help create a legacy without the family ties

 

Dave and Deb Welsch are only in their mid-50s, but the Milford, Neb., couple already have a succession plan in place for their diversified grain and livestock operation, West Blue Farm. Even more unusual, they plan to build a future for their 98-year-old operation with a non-heir at the helm.

Their decision is one David Baker wishes other farmers would consider. "I have 550 young people who would love an opportunity, and only 20 older farmers willing," says Baker, a farm transition specialist with the Beginning Farmer Center at Iowa State University.

A variety of pros and cons come with transitioning the farm to a nonfamily member. But Kevin Spafford, Farm Journal succession planning expert, says the decision can be a winning option for all involved.

"The retiring farmer receives a fair return for a lifetime of work. For the aspiring farmer, it’s a foot in the door, an opportunity that may be impossible without the assistance of a retiring farmer," he explains.

There are potential downsides to working with a third party, though, says Neil Harl, Iowa State University emeritus economist.

"They lack the close family ties, so when the going gets difficult they are usually more inclined to bolt the operation, especially if other employment alternatives are available," he says.

Keep an open mind. Dave and Deb work with Steve and Shelley Lorenz, who are only a decade younger. "We thought we were looking for someone in their early 20s or 30s," Dave recalls. "I was 49 and Steve was 37 when they moved here from Minnesota. While we weren’t what each other was expecting, it’s worked out well." The average age of the aspiring farmers Baker works with is 37.

When on the lookout for a successor, develop a list of the four or five most important skills and traits you want and need in an incoming owner, advises Angela Gloy, Purdue University agricultural economist.


loan obligations map

On a national average, beginning farmer loan obligations increased by 4% for 2011 compared with 2010, as the U.S. promotes rural revitalization.


For the Welsch family, personal character was at the top of the list: "A lot of our highest priorities were nonfarm and nonfinancial related," Dave says. "We’re very family oriented, churchgoing and community minded. We wanted a couple with those same priorities, too."

Having common goals was also important. "We’d been certified organic since 1993, and we wanted someone who would be committed to what we’d developed during the past 20 years," Dave says.

Transition options. Your business plan should reflect the transition and current owner’s exit strategy. The Lorenzes joined the Welsches as employees with a 10-year transition plan. That timetable accelerated, however, based on a successful partnership and the addition of twin girls to the Lorenz family, which also includes two sons.

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FEATURED IN: Legacy Project - Legacy Project 2012 Report
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