Planning for the future generations of agriculture

WORLAND – An interactive presentation during WESTI Ag Days Feb. 12 in Worland included surveys and information on how to speak with family members about continuing land and farm operations.

Caleb Carter of the University of Wyoming extension began the presentation “Ag Legacy” discussing statistics of small business owners.

Carter started the presentation discussing statistics of small business owners. According to him, 70 percent of small business owners had no plan of succession of business. He also said that 70 percent of family-owned farms don’t make it past their second generation and that 90 percent don’t make it past their third generation.

The need for a succession plan for successfully transferring a business to the next generation is vital. Without planning or deciding to avoid the issue almost always leads to failure. Despite this, less than 40 percent of agricultural businesses have a succession plan.

Though it seems obvious that developing a plan is a big step toward transferring management and business ownership, many farm owners and managers will often overlook or do nothing about succession according to a UW extension office newsletter.

Some possible reasons for this include control, fear and the inability to choose. Business owners more often than not find are self-reluctant to give up control. Facing the reality that others may run their business just as well, or ever better than they can is threatening. According to the newsletter, Business owners may also fear retiring. The idea of having to leave their working lifestyles for a less productive one can be scary for them. Succession planning makes those owners realize and think about the end of their careers and lives, leading them to realize their feelings of fear and regret.

When it comes to inheritance, it is hard for people to choose among their children and discourages their planning. It comes time for them to reflect on difference and needing to choose between business values and family values.

Owning a farm or ranch comes with unique difference compared to other occupations. Owners find they can develop an emotional attachment to their land and not want to give it up. Land has often been passed down from generation to generation. The idea of having to divide or sell the land is not often considered due to the attachment, according to the newsletter.

Plenty of full-time farmers have a difficult time facing retirement and the plans to do so. They never expect to fully retire from farming due to their around the clock work ethic and personal drive. Many farmers have been farming their entire lives and find the slowdown difficult to bear.

Ag Legacy as a program works to help prevent that sort of thing from happening. Carter and Extension Educator John Hewlett discussed wanting to help transfer management skills through thought process and communication.

In many cases, many farmers don’t have a source of retirement income. It often prevents agricultural managers from retiring. Farmers spend their career investing in agricultural assets and end up with very few resources to invest in retirement plans.

Another large reasoning for the avoidance of succession planning has to do with perspectives and the next generation. A source of conflict between founders and next generation managers include different perspectives about topics such as the direction of the business, gender roles and generational priorities and values.

The next generation is typically seen as being made up of children of the founding generations, or anyone in the family younger than the founder. The perspective and issues for the next generation seem to vary depending on the relationship to the founder. Sons are traditionally inheritors of management or leadership roles in the family while daughters usually assume roles that have to do with responsibility and management. This can result in possible friction with fathers. In-laws, multi-family businesses and non-family members may also face some challenges.

Resources Carter provided can be found on the programs website at aglegacy.org. The website also features newsletters, webinars, handouts and more.

Important components in creating an agriculture legacy included values and life lessons, personal possessions of emotional value, instructions and wishes to be fulfilled and financial assets and real estate.

According to Hewlett, there are many obstacles standing in the way of families creating a legacy. Families often face issues such as not knowing where to start, finding out who wants to take over and how, or just finding the time to sit down and discuss this. Attempts to open the conversation about transition of ownership or management of the operation may lead to fights and rifts among family members.

Families become uncomfortable discussing topics such as inheritance.

When looking at the components of a legacy, values and life lessons were seen as the most highly valued out of the other four components. Sharing values and life lessons can include things such as family traditions, stories, ethics and religious beliefs.