Leave a Legacy: Transition Tips for Aspiring and Retiring Farmers

October 27, 2011 05:10 AM

Kevin SpaffordLast year, my farming partner and I attended your workshop in Columbus, Ohio. We’ve been working together for the past three years. Pat is in his mid-60s and wants to retire soon. I’m 35, and I want to become a full-time farmer. Our original intention was to work together until I am ready to buy his place. He is teaching me about farming, and I am giving him the opportunity to cut back.

Pat wants the farm to continue, and none of his daughters are interested in farming. We’re at a point where we have to make some definite decisions. I need to quit my off-farm job and work full-time on the farm, and Pat needs to move on. He has a new granddaughter, so he wants to travel to see her. We just don’t know what to do now. Can you help?

It sounds like the two of you have the foundation for a good working relationship. There’s obviously a lot of mutual benefit in working together to achieve your separate, yet complementary goals. Today we’re seeing more farm owners who want their property to continue as a productive farm; however, they don’t have a relative interested in being a farmer.

I suggest you and Pat review the following topics to make sure you’re in alignment as you plan for the future. Keep in mind that complete agreement is not necessarily the goal. Your aim should be good communication, clear understanding and common objectives for the farm. Do the two of you:

  • share common goals regarding the long-term disposition of the farm?
  • agree on a transition time line?
  • understand and agree on the terms for ownership transition?

Since I don’t know you, I must also ask: Are you capable of becoming a farmer and assuming a leadership role? There is a difference between working for someone and being self-employed. Like any other profession, farming requires the appropriate education and experience as well as the right temperament and attitude, especially when it comes to handling the cyclical nature of farming. Measuring these often subjective characteristics is hard, and you must be truthful with yourself.

I suggest you use the following questions to initiate a discussion:

  • Do you have the education and experience necessary to assume the roles and responsibilities of management and ownership?
  • Are you and Pat prepared to participate in the respective roles of protégé and mentor?
  • Does Pat have the ability and the time to mentor you?
  • Have the two of you shared your financial records, and does each feel that the other has the respective means, capital and cash flow to support a management/ownership transition?

In the end, much of the satisfaction in this kind of an arrangement will come from the financial outcome of the deal. When considering your long-term needs, ask:

  • Do you have the income and capital to cash-flow and farm through a growing season?
  • Does Pat have a retirement fund and cash flow to fund his retirement needs, given conservative expense and cost-of-living estimates?
  • Will he be dependent on note pay-ments, or rent or crop share income?

As you devise a transition plan, it should include dispute resolution, an exit strategy and financial distributions. Make sure you are both protected from divorce, dissolution, death and disability.

As the Farm Journal Legacy Project continues to grow, we’ll create a matchmaker program to pair retiring and aspiring farmers. The program will include formal introductions, education programs and professional development. You don’t have to do it alone. We’re here for you.

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