The transfer
of a farm business from one generation to the next is not an event.
When it is successfull, it is a process.
John Baker, an extension agent and the administrator of the Iowa State
University Beginning Farmer Program, said that improving succession
is a matter of improving communication.
“Learing about succession can be important, and the skill learned
can be used thoughout the farm business,” Baker said. Growers
thinking about success should learn to avoid maintaining too firm
a grip.
“When you die - and you will - your heirs or successors will
wind up with a business that is being run by people that have no idea
of how to do it,” Baker said.
Many farmers are aware of counterparts or neighbors who have suffered
from what has been described as the “farmer’s boy phenomenon.”
Baker said that British farm researcher Andrew Errington uses this
term to describe a 65-year old farmer whose 87-year old father is
still calling the shots.
“There is nothing wrong with the system, until the older manager
passes away and the next generation has never been exposed to the
decision making and managerial skills necessary to run a farm,”
Baker said.
Baker, an attorney by trade, said he tries to dispel the idea that
there are complex legal issues around farm succession.
“While there are important legal issues to consider, the interpersonal
issues between the generations are the ones that usually take the
most effort,” he said.
Baker helps conduct an annual program that helps young Iowa State
University students and their parents manage a smooth transition from
one generation to the next. The sessions usually involve the father,
mother, son or daughter, their siblings and spouses. often the family
will come to the meeting, and the father may say “this is how
we are going to do it” and the kids look at the farmer like
“who is this man,” Baker said.
“When each person knows what is important, what they value and
want to put their energy into, the process proceeds a lot smoother,”
Baker said.
For those involved, it is easier to understand a family farm business
by dividing it up into three parts, Baker said. The family - which
is the entity involved; the farm - which is the assets used; and the
business - which is the activity they are involved in.
For each part, the parties need to defiine their measures of success,
Baker said. Everyone needs to know what they need from the family,
the farm, and the business as well as what they are willing to contribute.
There is no need to be critical of the older generation when it comes
to resistance to change because it is natural.
“The older I get, the more risk averse I get,” is a phrase
that can apply to many small businesses, Baker said. When small businesses
begin their succession plan earlier, rather than later, they are often
more successful, he said.
“Farmer’s aren’t that different from other small
businesses,” Baker said. “Often the businesses and the
family can have antithetical goals. The younger generation may want
lots of time with the children. And in some farm businesses, such
as a dairy, that is difficult to make happen. When older farmers see
that the youner ones would take off to go see their children play
soccer they would say you just don’t do that because they never
were able to.”
The key is to understand the generational differences are bound to
come up in any transition. Adults who grew up during the depression
often never took vacations because they were afraid their jobs wouldn’t
be there when they came back.
“Some (in the younger generation) may not fully understand the
tremendous amount of work needed to continue to grow the business,”
Baker said. Consequently, a natural tension between growing the business
and keeping it profitable can arouse between the younger and older
generation.”
Everyone involved needs to know the measures of success for themselves,
their partners and the business, Baker said.
Other key parts of successful plans include whether dad will retire,
what will be done when and what the critical path to success is.
