How can generations bridge the gap to prepare for transition?
Intergenerational wealth expert,
Hockley Valley, Ont.
Silence can put a family farm in jeopardy.
It must be disconcerting to be in your seventies or eighties and not have a farm succession plan in place. However, conversations and family meetings will help you realize the best path forward, particularly with the rising generation.
Many farmers struggle to relinquish control. Some think that post succession, they must simply sit down on the couch and start watching afternoon TV. That’s simply not the case. This idea that one must stop farming after retirement is a misconception.
Farm operators often live with extraordinary financial risk for decades. It can be liberating for them to fully realize that they can continue to have employment income after they transition their farm ownership.
The senior generation can let go of the ownership, and truly start to engage the next generation and encourage them to risk their capital to purchase the family farm. This doesn’t have to be overnight, nor should it be. Successful farm operations share financial information with the next generation, teaching them about financing early and those conversations are held often. A perfect time to start is when the next generation is in their late teens.
Ideally, you want to bridge the gap incrementally, though. Attempting an overnight transition is ill-advised and seldom works well. Start with the most obvious area – the physical work. From there, if the rising generation is successful, gradually add additional responsibility to their job description. Even though you will have to adjust your plan as time unfolds, the reality is that getting ready for a farm transition can feel satisfying. A major burden will be lifted off the shoulders of the senior generation, who have often carried the stress of providing for their family for decades.
Instructor at the Werklund School of Agriculture & Technology,
Olds College, Olds, Alta.
It would be unrealistic for the outgoing generation to expect the incoming generation to do the same thing they did on the farm. It’s just not going to happen. The first thing both generations need to do is discuss where the similarities and differences lie. For younger farmers, there is commonly some fear, frustration and confusion about farm succession.
Many young people I know would like to take over the family farm, but grandma and grandpa are still farming, and they don’t know if the farm will go to an aunt, uncle or their parents. This ultimately drives young people to be confused. In this case, I encourage them to take action.
Too often, a transition happens when something happens to mom or dad and they’re physically unable to farm. That’s not a proactive solution. To get around the disillusionment of being an adult child with zero input into farming operations, you must cultivate options for yourself. They could be on-farm options or they could be off-farm options, value-added or otherwise.
Create your own experience and create your own life because taking over the farm may or may not work out. Farmland is expensive, and margins are tighter. Sometimes the only choice is to go out and create off-farm careers in addition to farming. If things don’t work out as planned, then there is less pressure on you and different avenues you can take.
It’s not bad for the next generation to look at other, more attractive options, especially if a situation becomes unhealthy and starts to tear at family unity.
I would say by the time somebody in the incoming generation is 30, they should have a plan in place, almost to the year, when the outgoing generation will hand over the operation. That doesn’t mean the outgoing generation won’t be involved in the farm anymore. It just means they don’t necessarily own the farm any longer.
Senior farmers are still able to greatly contribute to the next generation. Think of yourself as an in-house consultant with all the knowledge and experience to help those managing the farm.
It’s the only way forward. Build the life you want for yourself, and for the incoming generation, by creating and acting upon plans now. When life unfolds, both families will be ready.
Don’t wait for the farm. Yes, it may be a lifelong dream to run the family farm, but how long can you wait? Are you prepared to wait patiently until 40? 50? 55? Start a value-added business or find a related off-farm job. This way, you have ownership of something that integrates into the farm business when and if you do take over.
It’s OK to ask for answers. After all, if you want to run the farm one day, you’ll need to show initiative. Be proactive if your parents aren’t and ask to hold regular family meetings. Don’t expect all your questions to be answered overnight but know that this is a logical starting point.
From an AgriSuccess article by Trevor Bacque.
Dr. Tom Deans, intergenerational wealth expert, shares how to choose an executor and will and estate planning issues unique to farm owners.