Farm Transition and Succession: More Than Yield Maps

There are very few industries that understand planning better than agriculture.

Every fall, plans start getting made for spring. Every spring, people are preparing for summer, harvest, labor needs, equipment issues, weather, marketing, and whatever else the season decides to throw at them. Farmers are constantly looking forward.

Should we hedge fuel? When should we buy seed? When do we sell grain? Should we contract commodities? What acres go to corn? What acres go to soybeans? What fields need tile? What equipment needs to be updated before it becomes a bigger problem?

The decisions are not always easy, and the plan almost never works exactly the way it was written. Anybody who has spent time in agriculture knows that. Weather changes. Markets change. Equipment breaks. Labor gets tight. Something always comes up. But the discipline of planning is part of what makes good farms good.

This week, though, I want to talk about planning beyond production. I want to talk about more than yield maps.

Over the last couple of weeks, we have focused on why it is so important to start the conversation around succession, continuity, and transfer planning. We have talked about goals and how difficult it can be to answer what seems like a simple question: where do we want this farm to go?

That question matters because it is almost impossible to build a good plan if we do not know what we are planning for. But once we begin to understand the goal, the next question becomes just as important: what is the most efficient way to get there?

That is where the conversation starts to move beyond next season. It moves beyond what crop goes in what field. It moves into leadership, ownership, business structure, compensation, control, profit distribution, risk, and long-term vision.

It starts with questions like these: Who owns the farm assets? How are those assets owned? Who has control? Who has a profits interest? How are profits distributed? What happens if the assets transfer from one generation to the next exactly the way they are organized today? Is there a better way to structure the business for the future?

In my experience, farm families often focus on one or two major items when they think about estate planning or transition planning. The most common one is taxes.

Will there be estate tax due? Will there be a cost to move the farm from one generation to the next? If generation one passes away, will there be a state or federal tax liability that now becomes the next generation’s problem?

That is a very real concern. Imagine waking up the next day and owing millions of dollars to the state or federal government just to continue operating the same farm you were working on the day before. That is not exactly a fun way to start a Monday morning.

But the tax conversation is only one part of the planning conversation. The bigger issue is often risk.

What happens if a key person is not there tomorrow? What happens if ownership transfers to someone who is not involved in the operation? What happens if the farm assets are owned one way, but the leadership and management of the farm need to function another way? What happens if the right people are working on the farm, but there is no clear path for them to grow, lead, earn, or eventually participate in ownership?

These are not always comfortable questions, but they are necessary ones.

One of the areas where people often get confused is the difference between ownership and leadership. They are not always the same thing.

Owning part of the farm does not automatically mean someone should be running the farm. And someone who is critical to the daily operation of the farm may not currently own any of it.

As farms grow, that distinction becomes incredibly important.

Corporate structures, partnerships, trusts, operating entities, landholding entities, and compensation agreements can all be used to separate ownership, control, profits, and management responsibility. That may sound complicated, and sometimes it is, but it can also be what allows a farm to grow and survive.

The goal is not to make the structure fancy. The goal is to make the structure useful.

A good structure should help keep the right people engaged. It should provide clarity. It should help manage risk. It should make it easier to attract and retain talent. And it should create a platform for the farm to keep moving forward.

That leads to one of the most important and most difficult questions in this entire process: do the skill sets necessary for the farm to be successful long term currently exist inside the family tree?

Sometimes the answer is yes. Sometimes the answer is no. Sometimes the answer is partly. And being honest about that is critical.As farms get larger and more complex, it becomes more important to engage people outside of the family. Some of those people may want to be highly compensated and simply work for the farm. Some may want a small ownership opportunity. Some may want to eventually take over a major piece of the operation.

Not everyone wants the same thing. Not everyone brings the same value. Not everyone should be treated exactly the same. But the people who matter need to know they matter.

I have been on farms across New York, the Northeast, and other parts of the country where key employees provide unbelievable value to the operation. They understand the land. They understand the equipment. They understand the livestock. They understand the people. They know how to solve problems before those problems ever make it to the kitchen table or the office.

And yet, many of them are not sure if they have a future there.

So eventually, they leave.

Then the farm is left wondering why.

Sometimes the response is frustration. “If he wasn’t loyal, we didn’t want him anyway.” But sometimes that frustration is just a way to cope with the reality that the farm had a great person and did not do enough to show that person they were part of the future.

Identifying key people before they have one foot out the door is important. Engaging them early is important. Putting them on a leadership and development path is important. Compensating them appropriately is important. Giving them a reason to see themselves as part of the next generation of leadership is important.

This is where long-term planning often gets pushed aside by the work of today.

And in agriculture, that is understandable. When the sun is shining, you make hay. When the field is fit, you plant. When the crop is ready, you harvest. The work does not wait because you have a meeting, a conference, or a strategic opportunity to think about.

But sometimes, the long-term gain is worth the short-term inconvenience.

Maybe there is a meeting about a new crush plant, processing facility, marketing opportunity, or partnership that could be important to the farm’s future. Maybe the person who really should be in that meeting is also the person running the planter, fixing equipment, managing the shop, or keeping the office moving.

It is easy to say, “We can’t spare them today.” But if that person is part of the future of the farm, sometimes we cannot afford not to include them.

That is the tension.

The work today matters. But the leadership for tomorrow matters too. If every decision is made only around what needs to happen right now, the farm may get through this season but struggle to build the next generation of leaders.

That is why this step is so important.

Once we understand where we want the farm to go, we need to identify the people who are critical to getting it there. Then we need to make sure those people have a development path, a compensation structure, and a reason to stay engaged.

The best laid plans will only go as far as the people who are able to execute them.

You can have the right estate plan. You can have the right tax strategy. You can have the right buy-sell agreement, the right operating agreement, the right trust, and the right organizational chart. But if we do not have the right people prepared to lead, the plan may never become reality.

This week’s focus is simple.

Start thinking beyond next season.

Think beyond yield maps, acreage, equipment, and production decisions. Think about ownership. Think about leadership. Think about business structure. Think about people. Think about who is ready, who needs to be developed, who needs to be retained, and who needs to be invited into a bigger conversation.

Because the future of the farm will not be built only by what gets planted next spring. It will be built by the people, structure, and vision we put in place long before the next generation is asked to carry it forward.

Next week, we will talk about one of the hardest parts of this entire conversation: fair versus equal, and why equal is not always fair.