It’s a familiar scene: A farmer sits beside his child as they look out over the fields. ‘One day this will all be yours,’ he says. Then the farmer meets with his trusted advisor to create a comprehensive succession plan that is regularly revisited and discussed openly with his child over the next 20 years.
If that last part doesn’t sound familiar, it’s because it’s not. In fact, only 29 percent of U.S. farms had a succession plan in 2013, according to Agricultural Resource Management Survey (ARMS) data. This is especially concerning when you consider that farmers over 55 years old own nearly 80 percent of all owner-operated farms in the U.S., based on a 2016 USDA study.
Succession planning provides the best possible chance for a seamless transition maintaining a farm’s viability and vision. So why have over two-thirds of farmers not taken this step?
To start, it’s an emotional subject for all parties involved and for many different reasons. No farmer likes to think of a time when he or she won’t be around to tend the fields. No sibling want to have the awkward conversation about who deserves to take over the farm. No in-law wants to come across as demanding answers when trying to plan for the future. In a nutshell, it’s easy to put off such a difficult conversations.
That brings up the next reason succession planning isnít happening on a majority of farms: procrastination. Now, farmers are not procrastinators. It goes against their nature. However, there is a never-ending list of jobs to be done on a farm. Thereís always another shelf to put up or implement repair to do. A difficult and emotional conversation can seem like it can wait until after harvest, until after winter, until after planting.
If those reasons hit home, know that there are people that can help. Neil Burwash, CPA, CMA, CFP and Business Coach with the AGRI-TREND network is passionate about helping farmers set themselves up for success with legacy plans. “We deal with the people and structure side of succession planning. We look at what transfer process will be fair for stakeholders and equitable for the farm, and then we help facilitate that transfer,” Burwash says. Business Coaches provide valuable objectivity during succession planning, regardless of the family dynamic, situation, or dreaded conversation that arises.
Burwash instills legacy planning best practices with his clients. One of the most important of which is to start as soon as possible. A 2015 Farmers Weekly survey of 700 farms showed that 74 percent of successors believe the absence of a succession plan threatens the farm business. A comprehensive plan done in advance allows proper time to appraise the farm’s assets, groom the successor on farm operations, complete all necessary legal paperwork, and adequately save for retirement. Plus, you never want to be caught without a plan in the event of a crisis.
Another best practice? Start early but adapt regularly. Life changes fast. Succession plans provide a long-term view of how things will transition, but “should act as a moving roadmap you revisit often because life circumstances change and you have to be flexible,” Burwash advises. “A succession plan you made 10 years ago and haven’t looked at since isn’t doing any good, either,” he adds. Meet regularly with stakeholders to gauge progress and stay on track with the goals.
Finally, don’t underestimate the importance of communication. We’ve hinted at it throughout this article, because it impacts all stages of succession planning. This is an emotional subject prone to missteps, so try to be as proactive as possible with communicating. For example, Burwash suggests setting an agenda for meetings to stay productive and on topic, taking detailed meeting notes to prevent miscommunication, and defining roles early to keep everyone in the loop on expectations and goals.
The busy harvest time isn’t an excuse for putting off succession planning — there will always be another thing to do on the farm. The first step of starting the conversation is usually the hardest one to take. But, by taking that first step, you’re well on your way to creating a lasting legacy that supports many generations to come.
Be the farmer who can look out at the fields and tell his child, ‘One day this will all be yours. Now let me tell you the plan for how.’
For more information on succession planning contact firstname.lastname@example.org.