First, before we can talk about succession planning, we need to establish that the current generation wants someone to succeed them on the farm. From the Iowa State Surveys, 75% of farmers haven’t identified a successor no data on 25% who had identified them, if they had told the successor. Nearly 50% of farmers indicate that semi-retirement (withdrawal of some labor and management) is a close as they plan on getting to retirement. Another 30% plan to never stop providing labor and management to the farm.
If the farm operator never plans to quit really working, it makes it hard to plan to hand it off in life or death. Again, from Iowa State surveys, it appears that over 40% of farm operators are not talking to anyone regarding an exit plan of any type.
If you fall into this category of never planning to retire and not making any plans regarding transition, you are doing your family a disservice. It is leaving the next generation dazed and confused regarding the future when you do die.
Having the Conversation about succession planning.
Consider whether you are having a family conversation or a business conversation. Discussion about farm succession choices before the turkey is served or the grandson hits the football field are going to be muddled, confused and not yield the result that anybody intended. Consider having the business discussions some other place than the kitchen table. It will help define that in this discussion you are not relating to one another as family but as business operators.
Things that don’t seem to work.
Leaving a farm business equally to the farming heir and the off farm heir is a recipe for disaster. Farming heirs see the ground as an asset to be put into production, off farm heirs see the land as a long term investment made by the parents that they get to reap the benefits of the increase in the value of the land. Essentially, they see the ground no different than a stock portfolio and will make the decision on ownership based on that vantage point.
Nobody talks about the family apartment building or the family stock portfolio, but the term “family farm” is thrown around quite a lot. Romantic notions, childhood memories an all other sorts of things over lay “family farm.”
“We don’t see things as they are, we see them as we are”. Anas Nin. Everybody’s idea of what the family farm is varied and what “keeping the farm in the family” means vary different things to many different people. For example, is holding onto the farm and renting the ground out “keeping the farm in the family?” Does that change when this result will push the on farm heir off the farm as they can’t compete with higher rent prices?
