Farming Families – Generational Transfer

There’s a dirty little secret in the farming community, it’s called Generational Transfer.  It’s dirty because we don’t talk about it, we avert our eyes.  In fact, it’s probably easier to talk about marriage infidelity than it is to ask how and who is going to inherit the farm.

My grandparents moved to this farm in 1941, fleeing California just two months before the start of WWII.  My grandpa was worried that if war broke out, he would be drafted so he brought my grandmother and three year old dad home to North Dakota, where Grandma was from.  In 1941, they lived in an old grainary.  And that grainary is still part of the house I’m sitting in right now.  My Dad chose to come back to the farm full time in the early ’70s.  But he didn’t own the house he (and we) lived in until the day my grandpa died…at age 91.  Thankfully, my dad was an only child or I’m not sure what we would have done.  My parents could never have bought out any siblings.

Sadly, as I talk to other farmers (and more importantly, children of farmers) this story is not unique.  In fact, I hear this same iteration over and over and over again.  Farmers who are currently farming have worked for decades, many of them nearing retirement themselves, and they do not know what they own.

Let’s paint a picture that I would like to say is hypothetical, but it isn’t.  Bob Sr. is 90 years old.  He pulled himself up by his bootstraps, carved this farm out of nothing and has lived on the place for 70 years.  He can’t do everything anymore, but he darn-sure wants to be involved in everything.  Bob Jr. is 60 years old and doesn’t own the land he farms.  Bob Sr. still owns it and will until he dies.  Bob Jr. has no idea IF his parents have a will, much less what it says.  And as he nears retirement of his own, he and his wife (who has always worked off the farm to provide household income) have no idea what retirement would even look like.  They don’t know their net worth.  They don’t even know who owns the lawnmower or the disk or this shovel!

And, for fun and to be realistic, let’s add in Little Bobby.  Little Bobby is 25 years old and wants nothing more than to come home and farm.  He has lived and breathed the farm his entire life.  But Little Bobby can’t figure out where and how he would fit into this situation.

Sound familiar??  It should!  It is happening all across our country.

Now, let’s say that Bob Sr. passed away with all his family gathered around him.  All four of his children were there.  As it turns out, Bob Sr. has consented to the nagging of his wife and did do a will.  And because Bob Sr. wanted to be fair to all of his children, he left the farm and estate to all four of them in equal shares.  That’s fair, isn’t it?  No.  Not by a long shot.  Bob Jr. has spent every day working on this farm.  Dedicated his life to carrying on this tradition, bringing his creativity, innovation and work ethic to this farm.  For 40 years, he has not called in sick (who would he call) or taken a day off (to do what?).  His siblings worked desk jobs, with sick leave, paid time off, 401K retirement accounts, health insurance and stock options.  But to be “fair”, the farm is split equally.  That isn’t fair!  For 40 years, that farm was Bob Jr.’s investment, his 401K, his stock options are grazing in the pasture.  What if his siblings decide to open their share of the farm up to bids from other renters and expect Bob Jr. to match it?  What if one (or more) of them wants to sell their share?  Bob Jr. doesn’t have that kind of cash on hand, nor will a lender finance the purchase of something he only owns 25% of.

And what about farm equipment?  Tools?  How do you buy 75% of a hammer?  A combine?  The house you’ve lived in for 40 years?

I’d say that is far from fair.  But it is the norm, rather than the exception in farm families.

And let’s not forget about Little Bobby.  Where does he fit in?  Who knows?  How can he begin to make a farm plan?  To work on his dreams when the future is so unclear?

In this scenario, my advice to Little Bobby is to start farming somewhere else.  With his own equipment, livestock, tools, everything.  This cycle of “earning it” does not empower the next generation, it demeans them.

If we want our land to stay in the family, we have to let it go to the family.  To those who will live on it, steward it, and in turn, pass it on as a heritage.

Day 18 Homework:  What is your farm transfer plan?  Are you willing to let go of control so that the next generation can succeed?