From Legacy Moment (01.24.2014).
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Most landlords are committed to farming and are intensely interested in knowing that their farm will continue to be productive into the future. There is a lot of mutual benefit in establishing a long-term lease, a buy-sell agreement, an option to purchase and a funding mechanism for the purchase. This will prepare you, as well as the landlord and his progeny, for the future.
Your landlord wants:
- financial security and a monetary return from the land;
- good stewards who will care for the land as if it is their own; and
- satisfaction from a good working relationship with a farmer tenant.
- financial security and assurance that the land will be available at a fair price;
- well-cared-for land that will yield the best returns; and
- peace of mind that your base is safe and your operation can grow.
You and your landlords should act as a strategic alliance in your farming operation—with each partner fully committed to the health and welfare of the entire farm operation.
I recommend you start a conversation with each landlord regarding your concerns. Let each of them know you understand and care about their interests. Share your plans for the future and, yes, talk about your succession plans. Introduce the concept of succession to your landlords by using your own efforts as an example. Be mindful that your landlords are not nearly as interested in what you say as they are in what you're doing.
Building a business and achieving continuous growth are constant challenges. Landlords might expect more information about your operation. They will appreciate regular meetings to discuss your plans, support your efforts and celebrate your successes.
To achieve this level of communication, many farmers publish a newsletter to keep their landlords informed, invite them to drop by the farm and host an appreciation supper or BBQ after harvest.
The only way to address your concerns about the stability of your landlord relationships is by taking action. Don't wait for them to broach the subject; it could be too late. Use these questions to start the conversation:
1. Do you already have a succession plan in place?
2. If you do, does it keep your land in farming for the long term?
3. Do you want your farm to remain in agriculture?
4. Are you willing to discuss long-term options for your land and future opportunities to enhance your family's financial security?
5. Can we negotiate a buy-sell arrangement that would better stabilize my farming base and offer both of our families viable business options for the future?
News & Resources for You:
A buy-sell agreement is key to keeping the farm together. Learn how to craft one.
If you have a buy-sell agreement, it doesn't hurt to review it.
Be sure to sign up for an upcoming Legacy Project Workshop. We'll be making stops in Lansing, Mich.; Columbus, Ohio; and Syracuse, N.Y.