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Set goals that include ‘wants, needs, fears’ to ensure successful farm transfer

By Brett Olson, Renewing the Countryside

The steadily climbing average age of the American farmer combined with high prices of farmland—mostly driven up by institutional investors—makes it increasingly difficult to transfer farm assets into the hands of an heir or beginning farmer in an affordable manner.

“But it worked out just fine a generation ago,” you say. “Why can’t a farmer just pass it on to a son or daughter?”

Well, a lot of things have changed in the last 50 years. For one, it is likely that the primary farmer, at 70 years old, is no longer working with the kids on the farm. Farms have needed less and less labor in the last 50 years as technology has made many farm chores more efficient. And the “kids” now may be dentists or produce buyers in town or in a big city far away, who have no intention of coming back to farm in their 40s.

Even though sons or daughters may have little or no interest in returning to actually farm the land, they may have a desire to keep the family legacy of land ownership. The various ways to accomplish that have been discussed ad nauseam. Gifting, trusts, and even a simple sale of the farmland to the heirs will all accomplish preserving a family legacy connected to that farmland. “Preserving the bloodline” is a real and visceral urge for many people, but I would argue that it may be at the peril of the farmer’s larger goals.

Here are a few things I’ve gleaned from other farm transitions coaches, farmers and beginning farmers over the last five years. From working directly with families trying to find reasonable ways forward to learning from John Baker of the International Farm Transition Network, many of the same themes keep coming up, which I’ve covered here.

Setting Goals
The first step in developing a truly successful farm transition strategy is to think about, write down and discuss your goals. Make sure they take into account your wants, needs, and even your fears. Then talk to your family about them.

Some farmers have indicated they only want to talk to certain family members about their plans, but this could easily cause confusion and hard feelings later on if everyone feels they heard something different. Farming is a business; treat it like one. Schedule a “board meeting” and treat the discussion as a business planning session. If you need a facilitator to ease tensions, look to your clergy, banker, or other nonprofit coaches to help make these meetings go a little smoother.

Back to the wants, needs, and fears. The “wants” list is often the easiest list to make. Consider what you want to happen with the farm—not necessarily after you are gone, but in the near future or midterm. Do you want to stay on the farm as long as possible, even to your last breath? Do you want your daughter to take over the operation, even if it means she must uproot her family to move back to the farm? Do you want to find an aspiring, landless farmer to co-farm with for a few years until you feel the newbie has a handle on it? Maybe you want to see a neighbor take over. Or, maybe you haven’t yet spent the time to sketch out an idea of a new farmer who will be able to continue your vision for the farm into the next generation.

To help with this process, I like the exercise of writing a Christmas letter from the future. Let your imagination roam without over-thinking, and write down what you would like your life and the farmland’s future to look like after you retire or after you are no longer the primary operator. Have other family members write their own letters and compare. NO JUDGING—this is just part of the process.

Next you need to make a list of the things you “need” to happen. This step is not quite as much freewheeling fun as the “wants” step, but acts as an important counterbalance. Like Maslow’s hierarchy of needs you might recall from psychology 101, the basic needs include food and shelter. You will need these, but you may also have other needs that are not so basic—like having family nearby, knowing that the farmland is being sustainably stewarded into the future, or paying off some farm loans or other requirements that are specific to your situation. Write them down and be prepared to discuss them with your family.

Finally—the hardest part—acknowledge your fears. Are you afraid you won’t have enough money to live comfortably after the transition? Will the new farmer be able to make a go of it? Is all your hard work going to be lost with the next generation?
From your wants, needs and fears you can start to see a clearer picture of what the goals are for the farm and farmland. Now you are at the crux of the issue: what are your final, broad goals and hopes for the farm?

Goals can span the spectrum—from getting out of farming with the most personal economic gain possible or keeping the farmland in the family at all costs to preserving a legacy of stewardship and community well-being. Is it possible to have all three? Possibly. But, often a farmland owner must juggle many complementary and contradictory priorities in order to accomplish his or her ultimate goal. After all, it might be best for your community if a member of your extended family would take on the farm, move to the community and bring new students into the school system, join community organizations, fill the pews, support regional economics, and continue to farm the land in sustainable ways. Or perhaps it’s a new farmer outside the family. Maybe it’s creating a family trust that rents the land out to a neighbor.

You need to decide how to achieve your goals in a way that honors the work you and your family have put into the land, while also making the best choice for your home community. This article can’t answer that big question—you will have to make these decisions within the context of your own family, community, and support networks.

Can your goals be accomplished with the current cost of farmland and infrastructure? Maybe, maybe not. But, adding more farmland into family trusts can drive up the cost of farmland. Trusts take farmland out of the marketplace and drive up the cost of surrounding farmland. If trust-protected land grows too large, it turns rural America into a landscape of absentee landowners renting land to the neighborhood’s larger farmers. While these farmers respect the land, I would argue that it is nowhere near the respect a farmer has for his or her own place.

If your goal is to continue a legacy of good stewardship, find a way to get ownership into the hands of an heir or a well-suited stranger who will walk the farm on a daily basis, love the land, invest in the community, and help fulfill your family’s long-term goals. See the box below for resources to help with your farmland transition.

Farm Transfer Planning

Renewing the Countryside and SFA-MN:
farmtransitions.org

Land Stewardship Project:
landstewardshipproject.org/morefarmers/farmtransitiontools/farmtransitionstoolkit

Practical Farmers of Iowa:
practicalfarmers.org/member-priorities/farm-transfer/

University of Minnesota:
www.extension.umn.edu/agriculture/business/farm-transfer-estate-planning

 

 

Brett Olson is the co-founder and creative director of Renewing the Countryside, which partnered with SFA-Minnesota to create the farm transition website, www.farmtransition.org.

From the January | February 2016 Issue

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