A Mind-Set for Farm Transition
When there’s no relative with the skills or desire to take over the farm, finding a successor from outside the family is an option. Preparing yourself mentally for such a move could be an important first step toward a successful transition.
“Think about who your real successor is,” says Joe Tomandl, a grass-based dairy producer from Medford, Wisconsin, and executive director of the National Dairy Grazing Apprenticeship (DGA). “The transfer of a farm resulting from a succession plan transfers assets along with management. Rather than focusing on the building of an estate for heirs, such a plan focuses, instead, on replacing yourself with a new farmer and a new farming operation.
“It requires a fundamental mind-set for transitioning the farm,” he says. “It means you’re willing to forgo a quick, top-dollar sale of your assets in order to help make the transition possible for a younger farmer. It’s as much a mind-set as it is a skill set that makes this possible.”
Developing a mind-set for transition might be furthered by considering these insights and steps.
Decide what makes you feel successful.
“For farmers who have a successful transition, financial gain is not their only criteria for success,” says Tomandl. “They take pride in transitioning skills and a business, along with a lifestyle.”
See transition as a real possibility.
“Get a vision for the process, and start planning eight to 10 years in advance,” says Tomandl. “Plan for your starting point for transition and plan how you will exit your operation.”
Build a workable process.
“Develop a management system that can be transferred to someone else and establish the economic profitability that allows a transition,” says Tomandl.
“Each of us hoping to transfer the farm to a younger operator needs to have a viable farm to transfer,” he says. “It has to support a family needing to make payments and cover family living costs.”
Search for potential successors.
The DGA has developed a step-by-step process of dairy farm transition. Candidates apply to the program and are available for approved master dairy graziers to interview and hire.
Along with taking educational courses, the apprentices work for two years as paid employees of the master graziers. If their mutual experiences have been positive, an apprentice may begin working into the management/ownership of the master grazier’s operation. Or, the apprentice may pursue such an opportunity with another dairy producer planning on retiring.
“The DGA is trying to create this community of skilled people who want to get into dairying,” says Tomandl. “We bring them into contact with retiring dairy producers who want to see their dairy stay a dairy and an independent business.”
Working in a similar vein, David Baker, farm transition specialist with Iowa State University Extension and Outreach, tries to help retiring farmers find a good match in a prospective successor.
For starters, he points them to the database maintained by the Iowa State University Beginning Farmer Center. The center maintains a list of beginning farmers looking for farms and retiring farmers offering farm-start opportunities to beginners.
“The young people on the list far outnumber the established farmers,” he says.
Similar matching programs operate in about 20 other states. Additional resources are offered by the International Farm Transition Network.
Screen promising candidates.
Established farmers and beginners using these matching databases can typically find contact information for participants on the list. Additional information can often be accessed.
Interviews between the individuals conducted by telephone or in person comprise the next step. During these interviews, getting a reading of the young person’s attitude can help you decide whether or not to move forward to the next step in exploring a possible working relationship.
“Communication is critical,” says Baker. “Think about how your choice of words affects the other person. Choose words that encourage the other person to respond in a positive manner. Really listen to each other.”
Listen for common interests and shared values. Try to discern the younger person’s degree of sincerity, commitment, and sense of reality. “While some young people are very aware of the demands of an agricultural life, others are sometimes naïve,” says Baker. “They believe their parents had a good and easy life on the farm, and they will be able to duplicate that. But four years of college and the prospect of owning land does not make you a farmer. It takes commitment.”
Watch for a can-do spirit in the younger candidate. “Does it seem like that young person will bring a positive attitude to a business that can be kind of rough?” asks Baker. “When it comes to difficulty, does it seem like he or she won’t take no for an answer?”
Plan for a trial period.
“For matches of beginners and retiring farmers that we help put together, we encourage the establishment of a trial period of a year or two,” he says. “That lets them share time or work together while they make sure they’re the right match for each other.”
Before beginning the trial period, agree upon an exit plan in the event your working relationship has problems. The mutually agreed-upon exit strategy should permit either party to call an end to the arrangement without emotional backlash.
The trial period could allow for the retiring farmer to mentor the beginner.
Prepare a phased-in transition for management.
“After both retiring and beginning farmers decide to move forward with the transition of the management of the farm, we encourage the use of what we call the 5-10-15 plan – even for father-son teams,” says Baker.
“For the first five years of this arrangement, the retiring generation is allowed to make final decisions,” he says. “For the second five-year period, the partners make joint decisions; they have to reach a point of agreement between each other. During the third five-year period, the entering generation makes decisions, with the retiring generation available for consultation. Working out this gradual transition in management allows the young person to participate in decision making while, at the same time, protecting the farm’s assets.”
From start to finish, holding your vision for transition in mind can help you enter into the process and move through it successfully. “You have to have a mind-set that this is the thing you want to do and this is the time for it to happen,” says Tomandl. “It’s not the closing chapter of your life; it’s just a couple of pages in the book.”