Alan Hojer has some advice on how to start the conversation with your parents about taking over management and ownership of the farm.
Hojer is a legacy consultant with Keep Farmers Farming, a division of First Dakota National Bank. He helps farmers and ranchers in South Dakota, Nebraska, Minnesota and Iowa with transition and succession planning.
Hojer’s No. 1 tip? Don’t go to your parents out of the blue and say, “Let’s talk about me taking over the farm.” Hojer says that might be the biggest mistake you can make because they won’t be ready for the conversation, Hojer says.
Instead, say: “It is time for me to make it easier on you. Let’s talk about how I can be a solution for the operation which includes assuming some of the debt.”
Hojer’s No. 2 tip is that accountability is the key. Until you have some of the farm’s debt, you don’t have any skin the game. If you want the responsibility for the farm, you need the accountability.
Advice for parents
Hojer has advice for parents, too. If you have the debt, you have the responsibility to facilitate the transfer of the farm to the next generation.
You shouldn’t put off talking about the future. You can’t say, “Let the kids figure it out after I’m dead.” That makes the transition a particular moment in time, Hojer says, which makes it less likely a farm will be able to stay in the family. Successful transition happens over a period of time.
Start talking and planning for the transition early, when you are in your 40s or 50s, Hojer advises.
The transition can be done at any age, but the longer you wait the more difficult it will be.
A good first step is for a family to sit down and talk about the farm’s history, Hojer says: how it started, who was involved and how they kept it together over the previous generations.
“We’re looking for the stories, the challenges, acts of collaboration, what worked and continues to work today, what worked but does not today, what needs to be reconciled to move forward,” he says.
Looking back often creates a vision of the future. There may be several examples in the farm past of how to continue the family’s legacy.
Keeping a large, complex farm with parents, children, brothers, sisters, uncles, aunts and cousins involved is possible if there is a there a high level of formal organization and communication.
Large farms can also be split among family members and still fulfill the promise to previous generations to keep the farm in the family. Family members can farm separately and collaborate by operating different enterprises or by sharing labor, equipment and other assets.
Beginning farmers can get into the family businesses of any size by starting new enterprises that complement what the farm is already doing, such as producing for a niche market, custom farming on the side, or working full- or part-time off the farm.
Keep Farmers Farming doesn’t sell insurance or lend money. It is strictly a consulting service. Although it is a division First Dakota National Bank, you don’t have be a First Dakota customer to use its service.