Editor’s note: The PRO-DAIRY section of the November 2009 edition of Eastern DairyBusiness deals with Farm Transfers. To read the four-part section, visit:
• Transferring a dairy…Getting started http://dairywebmall.com/dbcpress/?p=4769
• Information you need for farm transfers http://dairywebmall.com/dbcpress/?p=4771
• Take the financial pulse of your business http://dairywebmall.com/dbcpress/?p=4773
• Success isn’t guaranteed, but it is possible http://dairywebmall.com/dbcpress/?p=4775
As tough as it is to wade through the business transfer process, wise families start sooner rather than later
By Lee Telega
The transfer of family assets to the next generation is a sensitive and emotional subject. And when a family farm business is involved, decisions about asset transfer become complicated by the physical, operational and economic realities of farming.
Most Extension educators and farm business consultants have stories of farm families who delayed planning the transfer of their farm business for too long. These stories rarely have happy endings.
Delays severely reduce a family’s options on how assets are transferred. It also reduces the next generation’s readiness to take over the farm business. Many times a poorly planned transfer leads to feelings of resentment, rivalry, insecurity, inequity and unfairness that tarnish family relationships for years.
There is lots of research that says success in transferring a farm business is a function of the age of the younger, not the older, generation.
“The younger generation needs to take over when they are in their prime,” says Pat Firshkoff, an Oregon-based family business consultant. “Now they’re not in their prime in their early 20s, even though they sometimes think they might be. But by the time they’re in their late 30s and early 40s, they are ripe.”
A family’s reluctance to having the discussions about farm transfers isn’t the only obstacle. Often families don’t know where to start, the stages of the transfer process and who can help.
Developing a farm transfer plan is a huge task that takes many meetings, many decisions, many people and much time to accomplish. We hope the articles in this month’s The Manager by PRO-DAIRY will help families, whether they’re just starting to think about farm transfer or are along the road to developing a plan for the successful continuation of the farm business into the next generation. Good luck!
16 keys to success
These requirements for successful farming together and farm transfer arrangements stem from interviews with 46 New York dairy farm families. They were in the midst of or had completed their farm transfer arrangements. Check ones that apply to you.
1. Good communication
2. Good consultants
4. Decisions in writing
5. Willingness to compromise
6. Profitable business
7. Senior generation giving up some control
8. Agreements equitable to all parties
9. Gradual process, taking many years
10. A dissolution plan
11. Mutual respect
12. Keeping arrangements simple
13. Junior parties work off the farm for a while
14. Junior parties work on the farm for wages for a while
15. Junior parties who are competent to manage
16. Seniors provide management training for junior parties.
■ Lee Telega is a PRO-DAIRY educator who specializes in a range of areas including farm business and environmental management and policy. Reach him at 518.496.8686. Email: email@example.com
■ Pat Firshkoff founded the Family Business Program at Oregon State. To read e-clips on her presentations on farm transition planning see http://eclips.cornell.edu. Under EXPLORE, search Firshkoff. View Importance of Transition Planning, Problems in Equitable Distribution of Assets and Estate Planning Helps Equity Issues.