Temporary Stewards: Succession
Temporary Stewards: Succession
Our daughters will be 5th generation farmers.
For us, that doesn't mean that every generation before them has been able to make a lifetime or full time living at farming. Like many farm families, our story of succession is unique.
My husband's Great Great Grandfather Henry moved to Montana and through his lifetime of hard work and smart thinking, he ended up owning and farming a whole township of land, which is 20,480 acres! That's a lot of adjoining land! Through the years, that land has been divided, some of it sold, and some who wanted to farm for a living to carry on the heritage were unable to.
Truth be told, the odds were stacked against us farming! The land that we have a part of, that was a piece of Henry's original land is now CRP and pasture land. Daddy has run cows on that land since he was just out of college, but he also dreamt of farming. We were able to begin farming because of an opportunity from second cousins on Daddy O's grandfather's side of the family! We are so grateful for this opportunity. We realize that many don't have an opportunity like we were offered. We also want to be good stewards of what we've been offered and pass on to our daughters the farming opportunities that were extended to us.
But, how do you actually do that?
How do you pass on the farm while respecting each party involved?
The answer to those questions was addressed during one of the sessions at the Young and Beginning Producers Conference put on by Northwest Farm Credit Service. We attended this conference in Spokane, at the beginning of February! Kevin Spafford, who has made it his career to learn about and help families through the succession process, shared so much valuable information.
One of the most eye opening statistics shared was that:
When transferring the family agricultural business from the:
1st to 2nd generation, there is a failure rate of 70%!
2nd to 3rd generation, there is a 90% failure rate!!
3rd to 4th generation, a 96% failure rate!!
Those statistics are so saddening. I know that families in agriculture value passing on tradition, heritage and agricultural lifestyle.
But, with statistics like those above, there is something is going wrong.
Mr. Spafford, stated that succession planning cannot start early enough, the needs and motivators for each party involved need to be specified, and sometimes there needs to be a neutral facilitator during discussions. He also stated that succession planning goes smoothly when there is a core belief that:
As a parent myself, I am determined to teach and raise my girls with the mindset that they will eventually be stewards and will need to work together for the good of the whole. I have heard many accounts where families end up in the situation where the farm, when ready to transfer, is not "big enough" to support all of those who want to farm. This scenario can and does lead to hurt feelings and "bad blood" between family members.
When there is no plan for succession from the beginning, children grow up without hearing about those plans and have no expectations but their own surrounding the passing on of the farm or ranch. It is a parent's responsibility to set those expectations, encourage and pass on the agricultural heritage and lifestyle, in a way that doesn't pit siblings and extended family against each other.
Other points discussed that really made an impact on me were these:
Don't leave succession to chance
Don't overlook unforeseen circumstances, like death, divorce or disability in your succession planning
Keep family and business decisions separate
Have a written family employment policy
Even though it might be uncomfortable, talk openly about succession
Spend the time to understand the needs and desires of all parties
Passion can make or break the future of your operation
Ultimately, succession planning must be:
"Based on Clearly defined objectives, Mutual respect, Clear communication, Shared commitment, and Action!"
Has your family spoken about succession?
What have your experiences been around this topic?
Do you have a plan in writing?
I hope that this information has helped you and will encourage you to at least start the discussion with your family.
Love to you and yours,
If you'd like to read my synopsis of the full Young and Beginning Producers Conference, you can do so here!