Joe is the middle son in a successful farm family. He works with his father and older brother. He has an inactive younger brother who lives in another town. Recently, Joe’s son expressed interest in returning to the family farm. Since earning his degree in agriculture, he’s gained three years’ experience in off-farm employment.
When is the right time to make way for the next generation?
Though Joe and his brother have worked with their father forever, Dad still owns 100% of the operation and makes most of the farming decisions. The decision for Joe’s son to come home is based on the family implementing a succession plan, but they’ve never had a conversation about it.
Joe is hesitant to broach the subject for several reasons.
- His older brother has been working on the farm since high school. Dad insists he is entitled to fair treatment, though everyone knows he doesn’t work as hard as Joe.
- Dad was recently diagnosed with Alzheimer’s disease.
- Joe’s younger inactive brother advocates for inclusion.
- Dad remarried when Joe was a teenager, and Joe and his stepmother don’t get along.
- The older brother is remarried for the third time; his wife is a realtor.
Make it a priority. USDA estimates that 70% of farmland will change hands in the next 20 years, but many families do not have a next generation skilled in or willing to continue farming. If a family has not adequately planned for succession, the operation will likely go out of business, be
absorbed into ever-larger farms or be converted to non-farm uses.
Recently, National Public Radio broadcasted an interview with USDA Secretary Tom Vilsack. What he said should be a wake-up call for every farmer in America: "One thing we need to be concerned about in America is how many people are actually going to be able to farm and how we replace those who are retiring and those who pass away."
When Joe’s family came in for an initial consultation, we began with an explanation of succession planning and reviewed our process. Just as we were about to share a time line for the succession planning process, Becky, Joe’s wife, slapped her hand on the table and said, "I’ve been waiting 33 years for these boys to have this conversation." "These boys" are her 55-year-old husband, 53-year-old inactive brother-in-law, 57-year-old active brother-in-law and 83-year-old
Succession solutions. In the meetings that followed, we helped Joe’s family wrestle with the succession planning puzzle. We created solutions that addressed their goals and dreams. When all was said and done, Joe’s older brother wanted to retire. So we created a retirement package that satisfied his needs and compensated him for his commitment, yet did not unduly obligate the operation.
After some discussion, Joe’s younger brother accepted an undivided, minority interest in the land. The farm operation was secured with a long-term lease on the property, and the family has
completed a buy-sell agreement.
Dad is still as involved as much as it is practical, but ownership and farm management decisions are Joe’s responsibility.
Joe’s son is now actively involved in the operation, gaining experience and developing his leadership skills for the next generation of family ownership.
Joe’s situation is real—and that’s why Farm Journal remains committed to helping farm families leave a legacy. We have a host of resources at www.FarmJournalLegacyProject.com, and we’ll continue to adapt the program as more tools are developed.
As our exclusive partner in the Legacy Project, Pioneer Hi-Bred continues to support our efforts because they see value in providing succession planning resources to farmers.
The only thing missing is you. Are you ready to commit to saving your family farm?
- Mid-February 2011