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What's a family farm without a leader?

Agriculture.com Staff 08/07/2011 @ 5:40pm

Problem submitted by S.Z., Iowa

I’ve built a large and successful grain operation, growing specialized crops under contract to large food companies.

I have a son and daughter in the business and three other off-farm children.

The problem I have is the fact that my wife and I own none of the land we farm. Instead, we depend on long and special relationships with many landowners in our area. I’ve been able to develop and maintain long-term lease arrangements based on honesty, quality farming, and win-win results.

My problem is that neither of my on-farm children seems to have the ability to step into my shoes. I want very much to keep our profitable business intact to provide opportunities for future generations, but I wonder if that’s realistic.

My wife insists on treating all of our children equally in the estate, which makes things even more complicated. What do you suggest?

Dr. Jonovic’s solution

This is not a common problem in agriculture, but it will become more so as farm land increasingly transfers to off-farm owners. S.Z.’s problem has two basic levels. The first and most fundamental is whether equality with the heirs is a sound idea.

Does S.Z.’s family truly value keeping the current operation as a family business? If they don’t, his wife’s understandable desire to treat the children equally notwithstanding, he could be making a mistake involving them in long-term ownership.

He shouldn’t throw them together as owners unless (1) they want to be together that way and (2) significant cash can be distributed year after year.

If either is unlikely, he’d be better off keeping the operating equity for the working heirs and cashing out off-farm heirs with notes instead of equity.

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