Family Farms Are More Successful

April 18, 2010 07:00 PM

The family farm that remains a cohesive unit through several generations has a competitive advantage, said Joe Kluender, agribusiness consultant for LarsonAllen, to attendees at the 2010 Top Producer Seminar. But remaining together can be difficult, especially when family dynamics come into play.

In the real-life example of two farm families depicted in the chart below, Kluender showed how one family basically had to regroup after every generation. Although the family remains successful, Kluender pointed to the lost opportunities that were incurred—as each generation transitioned to the next, the core family assets (land) had to be divided among the heirs.

The chart also shows how the farm could have grown had it stayed together, Kluender added. Each generation had impressive growth but was hindered by the regrouping that took place after every transition.

Farming operations that hold their core assets together through several generations have a huge competitive advantage.

"These operations are in a better position to buy land, invest in larger and more modern facilities and diversify because they have grown together,” Kluender explained.

Building a successful transition plan through several generations starts with a common goal. "If each generation has the goal of ensuring that the farm is there for future generations to farm, transition planning is much easier,” Kluender said.

Open communication is key. "Not everyone is going to get along,” he said. "A clear goal, however, facilitates communication between family members and between generations, avoiding many of the stumbling blocks to the transition process.”

Every family circle is different, Kluender added. "If everyone stays on the same page with the goal of growing the farming operation, the benefits throughout the generations can be substantial,” he said.

Top Producer, Spring 2010

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