The family farm isn't dead after all. A recent Economic Research Service report indicates that 98% of farms in the U.S. are family farms. But the way we transition responsibilities, accountabilities and equity growth opportunities from the current generation to the next needs some reviving.
In my opinion we aren't short of young people involved in production agriculture. But how we develop them into new leaders will determine if we have the talent to carry family farming into the next several decades.
I visit many farms where young people haven't developed the skills to take over and grow the business to new levels.
Economist David Kohl refers to this as “old wealth-new leadership” opportunities to capitalize on.
We've put together a series of questions key players in operations can address and answer. They are:
What are your goals and dreams regarding the transition of your operation over the next five-year and 10-year period?
Do you want to phase out entirely or continue to be a part of the operation?
Which of the following responsibilities do you want to transition?
- Day-to-day operations
- Employee supervision
- Agronomic management
- Animal husbandry
- Equipment management
- Financial management
- Marketing management
- Landlord relations
- Supplier relations
- Customer relations
Is transitioning ownership one of your goals? If so, how and when?
Training New Leadership
What are your needs from the business?
- Equity out of the business
- Income stream for retirement
- Income stream for other ventures
- Heritage — keep the business going with your trademark
Which tasks, responsibilities and accountabilities can be transferred first? Last?
These are questions that need to be addressed and documented by all parties, both senior and junior stakeholders in the business.
Often we think transition planning involves entity structure, wills, gifting, deeding of property, life estates and so on. It may, but you can do a lot of transition work by defining responsibilities and accountabilities, then outline who's in charge of what, who keeps who informed on what and what needs input or approval from the senior members before moving forward with the decision.
All of these tasks can easily be listed and addressed and, more importantly, they can be modified quarterly or semi-annually as needs change and the new leadership develops.
Another key in transitioning responsibilities and accountabilities is determining the developmental needs for each key player in your new leadership team.
There are some great executive programs for agricultural producers to attend. One is The Executive Program for Agricultural Producers (TEPAP). This was developed and is administered by Danny Klinefelter of Texas A&M University. I've been involved with the program for several years and am impressed by the talent in attendance and what they can gain, not only from the faculty but also from other attendees. For information, check http://tepap.tamu.edu/.
Other great seminars are Purdue University's Top Farmer Crop Workshop (www.agecon.purdue.edu/topfarmer) in July and the Top Producer Farmer Seminar in Chicago in January. These programs are some of the best training available for employees and future owners that are or will be a part of your leadership team.
I often have farmers tell me, “Yes, but if I train them they may leave.” The best response to that I can think of is Zig Zigler's comment: “The only thing worse than training them and having them leave is not training them and having them stay.”
To offset that risk, another technique is to pay an employee's cost to attend these and have an agreed upon reimbursement if they leave within a specified time.
Moe Russell is president of Russell Consulting Group, Panora, IA. Russell provides risk management advice to clients in 24 states. For more risk management tips, check his Web site (www.russellconsultinggroup.net) or call toll-free 877-333-6135.