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3 Biggest Farm Family Business Lies
During the past decade, an increasing number of young farmers have entered agriculture, encouraged by record profits and heady land values.
The current downturn in the farm economy isn’t a crisis. The projected 2015 farm debt-to-asset ratio of 10.9% is far below the 22% ratio during the 1980s.
In 2012, about 4% of farmers held 68% of total U.S. farm debt. Today, fewer farm operations than in the 1980s have large debt loads. The farmers who do have large debt, however, have about the same level held by 30% of farmers in 1979.
Succession and transition are even more challenging to achieve in lean economic times. With lower profit margins, the younger generation will struggle to build enough net worth to buy out the owner generation.
Women are key members of the farm crew when it comes to keeping the books and navigating the choppy waters of succession. That’s one reason why Successful Farming magazine is pleased to welcome Jolene Brown as a new member of the “Can Their Problem Be Solved?” adviser team.
Brown is a professional speaker, author, and family business consultant who farms near West Branch, Iowa (firstname.lastname@example.org). She’s known for her unique style of straight talk.
“Farmers lie,” she says. “Not intentionally, but they say the same thing over and over, and then they don’t do it, or it’s not true.”
Brown says these are the three biggest family farm business lies:
1. Work hard, someday this will all be yours. “A conversation is not a contract,” she says. “If it’s not in writing, it doesn’t exist.”
2. I’m going to retire. “Farmers are willing to transition the labor but not the management, the leadership, or the control of assets,” she says.
3. Don’t worry about your brothers and sisters. They have their own jobs, and they’re not interested in the farm. “That may be true – until Dad dies. Then everyone’s interested in the money,” she says.
Farm business planning encompasses a daunting range of other management issues, Brown says.
“The challenge isn’t just transitioning from one generation to another,” she says. “It’s making sure that you operate as a business and that you have the tools and processes in place when times are good so you can use them when times get tough.”
Look for Brown’s “Can Their Problem Be Solved?” column in the September issue.