By Harry Brook
Farming and ranching are not for the faint of heart. So many things crucial to your success are beyond your ability to affect. That includes weather, markets and disasters. However, there is one task that is often overlooked or put off that has a direct bearing on the long-term success of your farm operation. Succession planning.
Most agricultural producers wish to see their farm operation continued into the future. There is a certain pride associated with having a Century farm award and it is natural to hope the upcoming generations will continue with the traditions established by their forefathers. However, there is some work needed to achieve the transition without undue strife or conflict developing.
It’s not just the physical assets that need to be transferred to the next generation. It also involves a process to transfer the knowledge, skills, management and labour that makes a farm operation a success. The approach of treating your children as labourers and saying, “They can make the decisions when I’m dead” is setting the farm up for failure. As with any complex business, a coherent and planned process, set out with the agreement of all parties involved, will have a much better chance of keeping the farm viable for the next generation.
Each family farm is unique and a cookie cutter approach does not work for everyone. It takes time and significant effort to get a plan thrashed out and in place. Time is also needed for everyone to say what they want and plan the process to get there.
Communications is the key to having this transition go smoothly. Clear communications helps define the objectives and goals, who is to be the successor, and allows the individuals involved to state their desires. The result of communications is to obtain consensus on the major objectives and goals. Part of communications is what cash flow is needed by the involved parties and where will that come from.
If you break down the farm transition into several steps, it is easier to get to where you want to go. The first step is collecting and analyze information. Understanding where the farm is financially is important in figuring out how to achieve the goals. The next step is to generate options. There is more than one way to achieve your goals. Legal, taxation and ownership options are looked at here. Next, make some preliminary decisions about the direction the plan will take. What comes first? The fourth step is to design, develop, write and review the plan. This is another good opportunity to make the plan concrete. All people involved need to feel comfortable with the decisions. The written plan can also deal with contingencies and changes.
Finally, the last step is to implement the plan and to monitor it. The plan must be practical and straightforward to put into action. All who are involved should get a copy of the plan. If things are not working out the plan may have to be reviewed and changes made, but it does provide a structure and timetable for moving forward.
Rarely will a farm family have all the expertise to handle all the steps themselves. On occasion, it can be beneficial to have an expert hired to help along in some of the steps.
Flagstaff county is holding a contest with a draw on November 15th for a consultation with a succession planner worth $1,500. If you are ready to start or are already on the journey to farm transition, please enter by emailing email@example.com and provide your name, phone, and confirm you are a Flagstaff county resident, are an agricultural producer, and are 18 year old or older. Plan for success in the future by working on a succession plan.
For more information, click HERE.
Harry Brook is Flagstaff County’s Agricultural Fieldman. He can be reached via email at: firstname.lastname@example.org or by phone at: 780-384-4138.