When passing a farm torch to the next in line, there is no standard ritual or template to follow. In the years leading to handoff, and during the actual succession, each farm family ultimately stands alone, subject to the particular dynamic associated with their unique business setup.
However, during a panel at Top Producer Summit in Nashville, Tenn., on Feb. 14, three highly respected growers from Illinois, Iowa, and Oregon offered a string of succession factors for consideration.
Sweat Equity
Any step toward creating a succession plan must be pared with extensive deliberation, says Steve Henry, a fourth-generation corn and soybean grower from central Iowa and CEO of LongView Farms. Henry has served on the Iowa Soybean Association Board of Directors, Heart of Iowa Co-Op Board and is currently the president on the Farm Credit Services of America board.
“We were very intentional and had documents that spelled out that after so many years, the ownership would be this, and my wife, Lori, and I were wanting to get out of the way as fast as we can, because we think it’s best for our boys to be the leaders.”
Becky Berger is a farmer and CEO/owner of Berger International, a sixth-generation family business in the Willamette Valley of Oregon.
“I depend on consultants, and I have several. I may not always take their advice, but I appreciate it. One of them told me, ‘You need to start making a conscious decision to start stepping out of this business.’ I think too many people think you should just start taking more vacation time, but I’ve been making plans to be more conscious about that.”
“It’s not like I can step out tomorrow, but I’m trying to hire someone right now to step into an eventual CEO role—not a family member. My in-laws were black-and-white about that; your last name had to be Berger to run the farm, but I don’t believe in that.”
John Carroll is a vital part of Carroll Family Farms and manages sow farms in Illinois and Missouri. He lived in Brazil for 10 years where the family operation grew to include 25,000 acres of owned and leased row crop farmland, a cotton gin, and a business service which does consulting, accounting, and compliance work for other foreigners with investments in Brazil.
“If you are ready to step away, there needs to be a person named to be in charge, maybe someone in your organization, and maybe not making the decision, but at least someone setting up meetings and bringing in the outside resources that are needed—setting an agenda,” Carroll says. “If you don’t have that person, hire an outside facilitator, because you must have a person who keeps the ball rolling.”
“That outside facilitator person is not an estate tax attorney,” Carroll adds. “First, you come up with your transition, and only then you decide how to get your estate tax plan to fit in. Sometimes it’s just a trusted person, but it could be an attorney, accountant or consultant.”
When discussing the details of finances and succession, should in-laws be involved?
Carroll believes reality dictates in-laws automatically are involved—either openly or not. “If they currently are in the family, they have to be in the discussion. Here’s advice I got: ‘There will be more in-laws coming, and you might not like some of them. You can’t wait until you’ve met that person to come up with the rules to exclude that person.’ Therefore, there’s no better time than now to make your rule book and operating agreement that explain everything ahead of time so that when a new person arrives, things are already set.”
“In-laws are involved whether you invite them in or not,” Berger echoes. “We’ve decided in our family council that spouses are invited. It’s no longer mandatory for them to attend. They are invited and if they choose to come, great, and if they don’t, great.”
Beyond the Grave
What about setting up a trust? Exert control beyond the grave?
“All of us want what is best for our children and grandchildren,” Berger says. “They get to decide. It’s only land when you get down to it.”
“My dad is more interested in keeping land together and exerting control from the grave, but that’s not my personal opinion,” Carroll says.
“For me, land is why I farm,” Henry explains. “I like to own land and drive a combine—I’m pretty simple. I was a loan officer out of college and I saw what not planning does. I’m standing on the shoulders of a grandfather I never met, and my dad, who retired at 60, cold-turkey. We’re putting our ground in LLCs because that’s more the investment side and not operations in our world.”
Addressing the fair-versus-equal conundrum in farm succession for on-farm and off-farm children, Berger stresses the importance of clear communication and places weight on sweat equity. “Fair is not equal. A farming family makes so many sacrifices that impact lifestyle, children, and spouses, but non-farming families don’t make those sacrifices. I communicate to my kids that the one who sacrifices and farms and builds up the business gets more of the business. My kids are fine with that. Communication is the key so that nobody blames my farming son, and they know this is my choice and decision.”
See LongView Farms, Berger International, and Carroll Family Farms for more information on Henry, Berger, and Carroll.
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Read more coverage of the Top Producer Summit.
