Succession Planning

When Risk in a Crisis Becomes a Turning Point: Lessons from Top Producers

Wed, 25 Feb 2026 21:51:25 GMT

In a volatile agricultural landscape, risk is a constant. Weather, markets, input costs, succession issues, cyberthreats and pandemics all push farm families into uncomfortable decisions. During the “When Taking Risk in Times of Crisis Pays Off” panel at Top Producer Conference, six producers shared how they’ve navigated those moments — and what they’ve learned when the stakes were highest.

The panel, moderated by Rena Striegel, president of Transition Point Business Advisors in West Des Moines, Iowa, included: Edward and Rebecca Dalton, of Dalton Farms, Wakeman, Ohio; Chris Payne of 3B Hay & Straw, Ontario, Ore.; Wendy Alsum Dykstra and Heidi Alsum Randall of Alsum Farms and Produce, Friesland, Wis.; and Ron Rabou of Rabou Farms, Albin, Wyo.

Their stories spanned family tragedy, ransomware, COVID-19 disruptions, organic transitions and bold expansion moves — offering a candid look at what it really means to take risk in agriculture.

Here are five key takeaways from the conversation:

1. Crisis as a Catalyst, Not a Dead End

For several panelists, a crisis didn’t just test their operations; it forced a complete re-evaluation.

The Daltons describe being emotionally exhausted and financially stuck before a Top Producer event pushed them to question everything.

“We were floundering in agriculture,” Rebecca says. “We were not making any money, really. We were just doing it to do it and to continue that legacy. And we were to the point where, like, ‘why are we doing this?’ You know, we only have so many days here. We only have so much time here.”

After a series of family tragedies and persistent unprofitability, they made a bold move to transition about half their acres to organic production. The shift brought much-needed profitability and renewed purpose.

“The risk was I was going to quit farming,” Edward explains. “We needed something and a spark and to just want to farm again.”

In Wyoming, Rabou’s turning point came after the sudden death of his father and the unraveling of a complex family ranch structure. Walking away from a fifth-generation operation was emotionally painful, but necessary.

“We did a lot of soul searching, and I kind of came to the conclusion that the risk for me for not doing something was much greater than actually doing something,” he says.

Rabou and his wife started essentially from scratch, building an organic grain operation and a hunting enterprise, borrowing heavily despite having grown up in a “never borrow” mindset.

2. Numbers Matter — But They Aren’t Everything

A recurring theme was the importance of knowing your numbers while recognizing data alone cannot drive every decision.

“Knowing our numbers is what really helped us,” Edward explains. “If you know your own data front and back, when you really get into those tight situations that you need to be able to think and move… sometimes you just have to move, whether you want to or not.”

Recently, the Daltons made a bold move back to conventional production. The Daltons’ choice to step out of organic was a conscious decision to go against what the spreadsheet said, in favor of their family and team.

“Right now, when I’m hauling $12 beans instead of $40 beans, like we were for a few years, I’m not really happy with that decision, but it was too much time,” Edward explains. “We were losing time with our boys, and that ultimately is why we went back, even though we were making more money per acre.”

Rabou emphasizes having a clear philosophy about leverage: “I have no problem borrowing money on appreciating assets, but I have to be very careful about borrowing money on assets that depreciate.”

For him, land and infrastructure are long-game investments, and he admits he more often regrets the risks he didn’t take than the ones he did.

“I’ve never looked back and said I shouldn’t have made that investment,” he says. “But I have looked back a multitude of times and said, ‘Wow, I wish I would have made that investment.’”

3. Fear vs. Action: Moving When the Window Opens

Panelists agree that fear is often the biggest barrier to seizing opportunity — especially when decisions must be made quickly.

Oregon onion grower and packer Payne describes how, in the middle of a tense meeting, he and another young partner were essentially challenged to buy out older shareholders in an onion packing facility. They had seconds, not months, to commit.

His broader advice to producers now: “Don’t get caught up in fear. If you let fear dominate your thought processes, you’re never going to succeed.”

Preparation helps in those “15-second” decision moments, Payne adds. Continually learning, attending conferences and thinking through scenarios ahead of time gives you a framework so you’re not starting from zero when opportunity knocks.

Edward adds, “You absolutely know how it’ll go if you don’t try. If you’re not willing to try, it’s not going to work. You can’t move forward if you don’t do something or try.”

4. Cyberattacks, COVID-19 and the Power of Systems

For Alsum Farms & Produce crisis came in very modern forms: a ransomware attack and then the COVID-19 pandemic.

“At 3 a.m. one morning in October, I got a call from our IT manager that we had been hit with ransomware,” Wendy explains.

She explains recovery from the attack required all hands on deck, multiple external experts and months of work to protect traceability and keep product moving. The aftermath included layered backups, new server and email security, user training and an ongoing relationship with cybersecurity and insurance professionals.

Just months later, COVID-19 hit. With 90% to 95% of their business retail-focused, the Alsum team quickly formed a COVID-19 response group, redesigning workflows to keep employees safe and shelves stocked.

The sisters say one key result from COVID-19 was when another supplier faltered, the Alsums were ready to step up for a major retailer — turning crisis into opportunity.

5. Relationships as a Strategic Asset

Beyond capital and land, the panel underscores the value of relationships — with peers, competitors and buyers.

Edward, Payne and Rabou maintain a group text, often used when one of them is wrestling with a big decision.

“Have people in an industry that you can trust and communicate with,” Edward stresses. “There’s been days they’ve literally had to walk me off a ledge when I’m trying to figure out how to make a decision.”

In the potato and produce world, Heidi says, competitors often become collaborators when the chips are down.

“The nice thing about the potato industry and the produce industry in general that we’ve experienced is that it’s been very collaborative,” she explains.
Rabou adds he sometimes sells grain below top price to maintain long-term relationships and outlet security.

“Those relationships to me are more important than making the dollar in the moment,” he explains.

His broader warning to producers is to stop comparing your operation to your neighbors’.

“You really have to determine what works good for you as an individual, you as a couple, you as a business,” he stresses. “Stop paying attention to what everyone else is doing.”

The Bottom Line from Top Producers

Across all their stories, the panelists echoed a few core principles:

Know your numbers but also know your values.
Act in crisis — don’t let fear make the choice for you.
Be willing to pivot, even away from something profitable, if it no longer fits your life or strategy.
Invest in appreciating assets and in relationships, both of which can pay off long after the crisis has passed.

In short, risk in times of crisis isn’t just something to endure; handled intentionally, it can be the turning point that reshapes a farm for the better.

Overcome the No. 1 Challenge in Passing Down Your Family Farm

Tue, 01 Jul 2025 21:16:05 GMT

Between now and 2048, about $124 trillion is expected to exchange hands from older to younger generations in the U.S., according to Cerulli Associates, a Boston-based market research firm.

For perspective, that dollar amount is approximately five times the size of the 2023 U.S. Gross Domestic Product (GDP), which totaled $27.72 trillion.

How will farmers fit into what many people are calling the “Great Wealth Exchange” over the next two decades? Much of it is specific to land, according to the American Farmland Trust (AFT). It predicts 300 million acres of U.S. agricultural land will change hands in the next 20 years.

Based on $5,000 an acre for farm ground, Paul Neiffer, the Farm CPA, estimates that would be a transfer of between $1.5 trillion and $2 trillion in land from older farmers to younger generations.

“If you throw in rangeland, that’s another trillion, so $3 to $4 trillion at most is where I think we’re at,” Neiffer says.

The Reason Succession Often Fails

A common issue is that while 69% of farmers plan to transfer their operation to a younger family member, only 23% have a plan , according to AgAmerica Lending LLC.

But the No. 1 issue that trips up people in the succession planning process is most people – farmers included – focus more on the mechanics involved in transferring assets than on keeping their family relationships intact.

That’s according to Amy Castoro, CEO and president of The Williams Group, a family coaching and consulting organization. Her firm does relationship planning to help family members make sure they’re still speaking to each other after the wealth transfers.

Many times, she says, the friction in the transfer of wealth has little to do with money and material goods and a whole lot more to do with whether the family members involved felt loved.

A Formula For Success

The Williams Group did a 20-year field study and from that developed a formula for how people need to focus their time and energy in the succession process.

The company recommends spending:
60% of your time on building family trust and developing good communication practices;

25% preparing your heirs to take over the operation, laying the business and fiscal groundwork for the farm to continue under their leadership;

10% of your time getting on the same page about your family’s values and having a family mission;

5% of your time on the estate planning mechanics, the nuts and bolts of how the assets will transfer.

In addition, The Williams Group advises that you work with your heirs to:

Strike a balance between control and collaboration.
Embrace the next generation’s perspectives.
Bolster intergenerational solidarity.
Embed high-trust behaviors.
Co-design standards for readiness.

Start The Plan Sooner, Not Later

If you want to see your farm succeed with the next generation of family members, make sure you have the right structure in place – and set it up sooner than later. Don’t put it off, Neiffer advises.

Once you have a plan in place, you have a tool you can modify to fit what your family and farm need over time.

“Having a plan in place can help alleviate stress, even if things change down the road,” Neiffer says. “Keep in mind that farming is a dynamic business and your plan needs to be, too.”

Your next read: Big Questions Remain For Next Gen Farmers

5 Options to Consider During Farmland Transitions

Thu, 12 Jun 2025 16:40:34 GMT

Transitions are hard. It doesn’t matter what the transition involves, the nature of moving from one thing to the next is complicated. Farmland may be one of the toughest, says Steve Bohr of Farm Financial Strategies in Lisbon, Iowa.

“Farmers often believe that what differentiates him or her is their ability to own the land,” Bohr explains. “And by God, you’re not taking it away from them. A lot of times, land ownership doesn’t transfer until death, and I’m OK with that. But we’ve got to drill down and figure out how that land is going to transition from one generation to the next.”

Over the years, he’s discovered there are three fundamental areas of concern in an estate and farm transition plan that each family should independently address — cost of administration, creditor protection, and transition plans for land and operating assets.

He shares five options to consider for the transition of land assets.

1. Give the land to the farmer.
The first option is to get the land transitioned to those who are farming it or have an affinity to own it, Bohr says. Each generation cannot afford to take a step back in equity and expect to compete in today’s marketplace.

“The clear problem with that is, how are we fair to the ones who aren’t interested in farming? Every family is different,” he says.

If your family is expecting to farm the same (or more) acres with a land base that has been divided across siblings, each generation will be in a weaker position to complete. How many times will your family have to pay for the same land? Which generation will eventually lose it due to no fault of their own (other than choosing to carry on the legacy)?

2. Divide the land equally.
An undivided ownership in real estate can cause great anxiety for the owners of the land who want to farm it or who want to continue to own it, he explains. There is a greater chance of peace if you divide the land, but also a greater chance it gets away from the family.

“Most people believe this is the answer,” Bohr says. “I don’t believe that, because the problem with dividing the land is that it’s a recipe for the land to get away from us. Whether it’s divorce, bankruptcy or poor planning.”

At some point in time, the more people involved, and the more independence those people have, the land’s going to get away from you. If it doesn’t, then it has to be divided again at the next generation. By the time you divide a farm two generations, the grandkids don’t have enough to be able to farm.

“We are dividing ourselves right out of the plat book,” Bohr says.

3. Deed land into a family trust.
Leaving the land in trust after death may be a wise option for families who cannot afford to get the land to one heir and who do not want to divide their land. There are solid reasons to leave the land in trust for management, including if one or more children have marital, money or addiction issues or if one or more children are independently wealthy.

Oftentimes, leaving land in trust gives a false sense of security that may be deferring the problem to the future.

“When we leave it in trust, we’re asking for big problems. Whenever that land comes out of trust, it can be very inflexible,” Bohr says.

4. Create a family land entity.
A land entity like a Limited Liability Company (LLC) or Family Limited Partnership (FLP) has become popular for a family where the first three options do not fit.

“I call this the boomerang plan because the rules in the operating agreement of the entity always bring the land back to the family,” he says.

Those entities will have rules, and within the entities, those rules will talk about lease options and purchase options at family pricing and terms, whatever that looks like. A vast majority of them are special use paid over a 30 -year contract so they can guarantee opportunity and affordability for family members.

5. Develop a hybrid plan.
There is not one plan that fits all families. That’s why a combination of multiple options sometimes works best for most families. A hybrid plan gives everybody an opportunity.

“Right now in succession planning, I think we have to give a huge amount of understanding to what will or won’t cash flow,” Bohr says. “What are the tax ramifications? What is the timing of the transition? And are we going to give an adequate opportunity to those who are going to be that next generation in our communities, paying taxes, going to churches, going to schools?”

Your Next Read: How an Iowa Family is Passing on the Farm from One Generation to the Next

Sustainability and Succession: A California Avocado Grower Eyes the Future

Thu, 12 Jun 2025 12:03:14 GMT

What does sustainability mean to the multigenerational avocado and citrus farmers of Camlam Farms in Camarillo, Calif.?

“It means you’re making a profit,” said John Lamb, president of Camlam Farms.

The Lamb family has been farming in what is now Ventura County, Calif., since Juan Camarillo, John Lamb’s great-great-grandfather, purchased a 10,000-acre Spanish land grant in 1876. The town of Camarillo was named by Lamb’s great-grandfather Adolfo Camarillo, who inherited the land from his father Juan Camarillo.

Today, the family, led by John Lamb and his brothers Bert and David Lamb, still own a few thousand of those acres, 1,000 of which are planted predominantly to avocados, with lemons and mandarins playing a supporting role.

On a recent media and influencer tour of Camlam Farms organized by the California Avocado Commission, Bert Lamb said their father, Robert, first planted avocados on the farm in the 1950s, and now some 70 years later, it remains the family’s core business.

“When our parents passed, this is what we had to work with, and you try to make the best you can out of it and make a living and keep it going better than you found it,” he said.

It’s a mission that can test a farming family’s strategic vision and resiliency daily. Given the challenges, has there ever been a time the Lamb family thought about leaving the farm?

“Like right now,” said a half-joking Bert Lamb addressing the tour group. “It’s tough when your markets are poor and with the water allocations up in the valley. Every place you go [farmers] have their own individual challenges, but one of them for us is that we’re in both lemons and avocados. Avocados are pretty good this year, but our lemons are absolutely horrible, so a good part of the ranch is losing money. It has been for a few years now, and it cuts into reserves and makes it challenging.”

He said that while California lemons used to command $24 a carton, the current price has plummeted to around $11.

John Lamb leads a tour of his family’s avocado and citrus ranch.

(Photo by Jennifer Strailey)

California’s water woes and complex regulations also can be burdensome for farmers.

“From the regulations aspect, things just keep tightening,” said John Lamb. “Right now, we’re under what’s called an ‘agricultural order’ with a regional water quality control board. And it’s a constant. Now, we’re going to move from this phase into a TMGL phase, and you’ve got to do testing on your water, and you’ve got to have nutrient management plans. And that’s not a big problem. We do tissue analysis every year, and that’s how we decide how to fertilize our trees.

“But it’s just this constant, one more thing, one more thing, one more thing,” he continued. “And you get that from five different [directions].”

Maureen Cottingham with her uncles and father are proud to cultivate California avocados at Camlam Farms.

(Photo courtesy of California Avocado Commission)

Return of the Next Gen

The daily demands of running the family farm eventually led the older Lamb generation to question its future.

“We actually had a family meeting a couple years ago because Bert and I and our other brother David were all getting, you know, long in the tooth,” said John Lamb. “We said, ‘Do you guys want this?’ Because it’s not for everybody, and maybe you don’t. Everybody in the next generation said, ‘Yes, this is something we want to maintain.’”

A succession plan was born with Maureen Cottingham, Bert Lamb’s daughter, as the heir apparent.

Cottingham, who studied ag business at California Polytechnic State University in San, Luis Obispo, Calif., had served as the executive director of the Sonoma Valley Vintners & Growers Alliance for 17 years, when she returned to her family’s farm in 2021 as assistant manager.

“In the wine industry, my role would be Cellar Rat — I do anything and everything,” she said. “As in any family business, you wear many hats. So, it just depends on the day.”

The mother of three is now rearing her children on the same land that was her childhood stomping grounds.

“Farming in California is very special because we have incredible climate, incredible soils and we are able to grow a lot of things that the rest of the world can’t,” she said.

Lamb hass and GEM avocados thrive at Camlam Farms.

(Photo by Jennifer Strailey)

Camlam Farms has some 500 acres planted to avocados and lemons and 10 acres devoted to mandarins. Among the avocados varieties cultivated on the farm is the family’s namesake Lamb hass avocados. In the late 80s, the Lamb family participated in university trials of different avocado varieties, including GEM avocados and what would become known as Lamb hass, both varieties of which flourish at Camlam Farms today.

“I just feel so blessed and honored to be able to follow the footsteps of my family and our legacy here and our farming tradition — to be part of that and continue, hopefully for our next generations after me, my siblings and my cousins. It’s truly an honor,” Cottingham said.

When it comes to the family farming legacy, Cottingham is taking a page from her father and uncles’ playbook.

“As far as preserving that tradition and the legacy for our family and next generations, to quote my dad and my uncles, I think you’re working on it every single day, and while it sounds very romantic to say that there’s a tradition, our tradition is we do tomorrow what we did today. And just continuing that.

“The biggest thing is that the business has to be profitable, otherwise you can’t afford the tradition,” she continued. “It has to be profitable to stay in existence. Dad always says, ‘We put beans on our table with what our ranch makes, and so every day we have to turn a profit.’”

For Cottingham, part of staying profitable means taking a science-based approach to fertilization, irrigation strategies and daily farming practices.

“We focus on a sustainable agricultural model, which is really important,” she said. “We prioritize on a daily basis with our crew, practices that grow the best quality, which we think results in delicious fruit that’s consistent in taste and texture when it hits the marketplace.”

Adolfo Camarillo opens a well on the family farm in Southern California.

(Photo courtesy of Camlam Farms)

Setting the Next Gen Up for Success

Cottingham also credits her father and uncles with making decisions for the family farm with future generations in mind.

“They look to the future and are careful not to put things in place where they’re going to be ruling from the grave,” she said. “They always say, ‘We don’t know what you guys are going to be facing in 30, 40 or 50 years.’ So, they’re really careful in their decisions for the next generation.”

What’s an example of decision-making from the grave?

“There are a lot of preservation groups in California that do a lot of great work in preserving the open space and our agriculture and so forth,” Cottingham explained. “But sometimes farmers want to preserve their land so much so that they sell their developmental rights to keep their properties in ag or in cattle ranches, and then that does not allow their future generations to make decisions — to expand, to shrink or to continue their businesses — in a way that that reflects the current day.”

She said the family has made a conscious decision to avoid the limitations of land preservation and focus instead on continuing to make sustainable decisions from a business standpoint with the goal of keeping the ranch for next generations.

Citrus Struggles

Your father called the lemon situation “absolutely horrible.” Where do you see Camlam Farms’ future with citrus headed?

“It is not revenue generating right now and hasn’t been for the last couple of years,” she said. “It’s even scarier looking at this year and the next couple years as far as the lemon industry goes. We’re hoping there’s going to be a big enough shakeout in the industry that guys that are growing the best quality citrus will be able to hang in there, and that potentially, if the industry shrinks enough that it will bring the guys that are still standing back into profitability.”

Cottingham said that a market flooded with lower priced lemon imports has created a tenuous situation.

“It’s such a shame because Ventura County is the lemon capital of the world, and so it’s really sort of a sad situation that a lot of our colleagues and family farmers here in Ventura County are facing,” she said.

Cottingham said while the vision has always been crop diversity on the farm, the family could turn to more avocados and fewer lemons moving forward.

Loyal Labor

Beyond the family members tending to the future of Camlam Farms, the ranch has 15 farmworkers on its payroll, 10 of whom live on the ranch with their families. It’s a mutually beneficial arrangement that offers safe, family-friendly housing to the farmworker team, who are then on the scene when there’s a night frost or something else that needs immediate attention. The family attributes this perk to their ability to keep a full-time staff on the farm.

“We treat our employees well, and we’re very, very blessed to have good people,” Cottingham said. “We try to give to them, and in turn, they’re loyal to us. At the end of the day, we treat our employees well, and we provide full-time work so there’s not any question or uncertainty as to whether or not they’re going to have their jobs tomorrow or next week.

“Whether you’re growing avocados or almonds or asparagus or broccoli, it comes down to regulatory conditions and challenges, water and labor. But I think right now it’s also markets,” she said. “It goes back to making that commitment to a sustainable approach, making certain you’re dedicated to quality, treating your employees well and making the right decisions for generations to come.”

It's Time To Lead: Strong Succession Won't Happen By Accident

Thu, 12 Jun 2025 12:14:58 GMT

Succession planning isn’t just a checklist item — it’s a defining leadership moment. As a farm or ranch owner, it’s time to stop waiting for the “right moment” and start leading with purpose. You’re not just passing on assets; you’re shaping the future of your operation. That means stepping into the role of leader with clarity, courage and commitment.

First, take a hard look at what kind of leader your farm needs. Are you focused on daily operations or vision and growth? Are you modeling strong financial discipline and decision-making? Are you addressing conflicts head-on and keeping your family aligned? Leadership requires more than technical skill; it demands the courage to tackle tough conversations, whether with partners, successors or family members. Great leaders don’t shy away from discomfort; they lean into it with the goal of building stronger relationships and a more resilient operation.

Communication is foundational. If your team doesn’t know what’s happening, how can they help move forward? Hold regular family meetings, define decision-making roles and ensure everyone understands their responsibilities. Avoiding conflict only leads to confusion. Structured, transparent communication builds trust and keeps succession planning on track. Communication is also how you build buy-in from the people who will carry your operation forward.

Leadership Isn’t Handed Over

Next, you must actively develop your future leaders. Don’t wait until you’re ready to retire to begin mentoring. Give your successors meaningful responsibilities now. Let them learn by managing projects, participating in financial discussions and handling day-to-day operations. Leadership isn’t handed over — it’s earned through real-world experience and demonstrated commitment. Every season serves as an opportunity to develop those skills and test readiness.

Set clear standards for advancement. Define what success looks like: required experience, education and financial knowledge. Make sure successors understand what it takes to lead and hold those leaders accountable. If someone isn’t ready or is unwilling to step up, be honest. Your farm’s legacy deserves strong, prepared leadership.

Succession planning is hard. Many families stall out due to fear, conflict or lack of clarity. But real leaders don’t quit when times get tough, they face challenges head on. If your planning has gone off track, reset. Re-engage your family, bring in outside support if necessary and commit to consistent action.

The future of your farm depends on your leadership today. Will you linger in uncertainty, or will you lead with confidence? Strong succession isn’t going to happen by accident. It’s driven by leaders who are willing to plan boldly, act decisively and invest in their next generation. Your family and your operation are counting on you. Be the leader they need.

Your Next Read — Quiet Crisis, Unfolding Rapidly: Big Questions Remain For Next Gen Farmers

Why it's Time to Think About Farm Transitions

Mon, 09 Jun 2025 10:40:59 GMT

Fourth-generation grower Chris Pawelski understands firsthand the struggles of transitioning his family’s farm from one generation to the next. Thankfully, Pawelski’s family made the tough decision to put the family farm in a trust. Pawelski returned to the “Tip of the Iceberg” to talk about why it’s so important for families to talk about succession plans before they’re needed.

Pawelski said his family chose New York FarmNet, a Cornell University-based program that offers support and assistance to farmers in the state, to help with the farm transition and protect his family’s assets. He said Pawelski and his family saw firsthand that family farms in the Hudson Valley cope with losing assets when a key family member could no longer run the family farm.

Pawelski said many farm families wait until it’s too late because talking about succession plans means having difficult conversations.

“People don’t like to think about it,” he said. “People don’t like to think about the fact that we grow old, and we die, and things move on. You have to plan for that, and it’s something you don’t want to think about because sometimes you’ll carry the illusion that if you don’t think about it can’t happen, but it is going to happen.”

But, as the Pawelskis created a farm trust, Chris said his father remained in charge and the law firm his family worked with enacted protections to ensure nothing changed in terms of decision-making. And Pawelski said his parents saw firsthand what happened when other farming families lost assets when the decision-maker or owner went on Medicaid, so he said his parents understood the objectives of transitioning the farm into a farm trust.

“My dad was in the driver’s seat and until the day he died, that didn’t change,” he said. “Even during his sickness, when he was diagnosed with cancer through those six months, he still made the decisions.”

And Pawelski said his mother was also diagnosed with dementia before his father died, and when the family eventually applied to Medicaid, the farm needed to already be in a farm trust.

“You have to get rid of a lot of your assets, and there’s a five-year look back,” he said. “You want to start working on [a farm transition] now because under the federal rules for us getting our Medicaid application, there’s a five-year look back.”

Which, Pawelski said, thankfully, the family had put the farm into a farm trust 13 years before the family needed to.

“It’s difficult, but it’s a conversation you have to have now. You have to start working on now, today,” he said. “The sooner the better. It costs some money and a lawyer to set it up and such, but it’s money well spent, and it’s very much worth it.”

As for the next generation hoping to take over family farms? Pawelski said it’s important that farming is profitable, otherwise the next generation won’t want to come back to the family farm. He said one of his children enjoyed working on the farm, but saw how much he and his wife struggled, especially in down years, and wanted to make a decent living in a career. If there were protections to support farmers better in from natural disasters and to help earn a decent living, more young people might want to make a career in farming.

“I think that’s a main reason why the next generation is not going into [farming],” he said. “Why would you go into something where you see how hard your family works and you know how much risk they take and sometimes losses they have and then have nothing to show for it at the end. It’s totally understandable why they wouldn’t want to go into it.”

5 Succession Planning Mistakes to Avoid

Fri, 28 Jul 2023 14:06:39 GMT

It’s time. You need to finally make your farm’s succession plan a priority. As you take a first or second or 20th step in the process, shoot to avoid some common landmines.

“Although there are a lot of scary stories out there about succession planning, there’s actually way more positive stories,” says Rena Striegel, president of Transition Point Business Advisors based in Des Moines, Iowa. “I encourage everyone to become one of those positive stories. Take that first step or break through the roadblocks so you can be one of those success stories.”

Listen in as Striegel discusses succession planning with Andrew McCrea on the Farming the Countryside podcast :

Here are the roadblocks Striegel sees farmers commonly face.

You engage only one professional.

“Our philosophy is a farm needs to have a collaborative team of professionals that helps them with the decisions and discussions around succession planning,” Striegel says.

This team can include a CPA, lawyer, business adviser, banker, insurance professional and others. By having all these viewpoints at the table, you ensure your plan is comprehensive and meets your goals.

“I personally do not believe any one professional can come up with a succession plan independent of the other professionals,” she adds. “We encourage farm families to work with their team to develop and implement their transition plan.”

Your plan is driven by tax implications.

Taxes, of course, are a big concern for farmers, especially with the new tax policies coming out of Washington, D.C.

“But if you do succession planning with the sole intention of reducing or eliminating taxes, you actually miss a lot of really valuable tools you could be utilizing if taxes were not the major goal,” Striegel says. “What we try to do with farm families is identify the true goal of the family. Almost always the goal isn’t: I want to transition in a tax-effective way. Most of the times it’s about making sure that my operation stays viable, multiple families can support themselves or the farm is going to be here for future generations.”

You ignore the elephants in the room.

Succession and transition discussions are stressful. Most of the time, they will include several topics you’d just rather not talk about.

“We don’t want to talk about someone dying,” Striegel says. “There’s a lot of things about these conversations that make people feel really uncomfortable. And so oftentimes, even families who communicate well tend to have a hard time being really open.”

If you fall into this category, Striegel suggests working with a mediator or facilitator to help ease the tension and encourage honest and focused communication.

You don’t draw lines between being a family and a business.

“The thing we have found that has really helped farm families is when we can separate the family dynamics from the business itself,” Striegel says. “We try to help families understand when conversations are business discussions versus family discussions.”

In having clear lines between family and business conversations and decisions, she says, you can remove some of the emotional pieces from the equation.

“When we separate those a little bit, it does make it easier for farm families to be able to communicate and make decisions together as a group,” Striegel says.

You procrastinate, procrastinate and then wait a little longer.

The worst option for farm families, Striegel says, is waiting until your farm or family is at a breaking point before seeking help. Don’t wait until a family member is threatening to leave the farm.

“Oftentimes when the family fractures, so does the farm,” she says. “If you think that you’re going to need help, it’s far better to seek that help out and bring those resources in to preserve your family relationships. Wherever you are, today is the day to start.”

Want to jumpstart your succession plan? The DIRTT Project by Transition Point Business Advisors is an all-inclusive guidance plan to help you transition your farm business. Learn more.

4 Things to Do When Your Kids Come Home to Farm

Thu, 20 Jul 2023 18:56:54 GMT

Matt and Lisa Moreland hoped at least one of their sons would return to their farm based near Medford, Okla. What they didn’t anticipate was all three sons – James, Will and David – wanted to join the family business once they completed their college degrees.

“It put me back on my heels. I thought, ‘Wow, we’re going to have to find a way to grow,’” Matt recalls.

That was seven years ago. Here are four things Moreland says he has learned in the process.

1. DON’T SLICE YOUR “PIE” INTO SMALLER PIECES. Instead, make a bigger one. The Morelands have grown their operation to accommodate each son’s return.

With James, they added an Angus cowherd. Will has taken the lead on all things agronomic on the farm, which grows corn, soybeans, winter wheat and cotton. David runs the excavation/construction side of the operation.

Scaling up the faming enterprise as each son returned has enabled the Morelands to compensate them accordingly. “They also get an annual bonus and equity in the operation,” Matt says.

2. LET YOUR LEADERS LEAD. “I quickly learned as we’ve grown there’s only so much I can do. I can guide, but I can’t be a control freak,” Moreland says.

How that plays out: each son leads in their respective areas of expertise, and then he and the farm’s eight employees provide support as needed.

“We meet as a group every Monday morning to look at what needs to be done in the week ahead, make assignments and then modify them as necessary,” he says.

Don’t underestimate the value of having clearly defined roles and accountability when children return to the farm, suggests Rena Striegel, president of Transition Point Business Advisors.

“Create a template to delegate responsibility and build in accountability to develop the next generation of leaders,” she advises.

3. CARVE OUT YOUR ROLE. Moreland functions as the managing partner in the operation, overseeing the cash flow for the farm as well as the big-picture direction for the operation. He also takes the lead on lender, landlord and Farm Service Agency (FSA) relationships.

4. HARNESS HELP FROM EXPERTS TO CREATE PLANS. “The investment of good counsel is minimal compared to the cost of mistakes,” says Kitt Tovar Jensen, staff attorney at the Iowa State University Center for Agricultural Law and Taxation.

Moreland knew, even with professional counsel, mistakes can be made. His solution: “Vet your plans with key individuals and organizations. For financial planning, you have to consider the accounting side of things as well as the legal components, and it can be challenging to understand what might work for the FSA, as well as for your accountant and even the IRS,” he says.

Some key questions Moreland asks of experts: What do you think of our plan? How can we make it better? What else should we do?

Take Control Of Your Succession Plan at the Top Producer Summit!

Date: Monday, January 23, 2023
Time: 8:30 am - 4:30 pm
Cost: $219

Use the topics and tools included in The DIRTT Project to jump-start the succession planning process for your operation whether you are just beginning or need to get on track.

Learn how to set goals for both the transitioning owners and the operation.
Learn how to create a plan to ensure that your heirs and successors are ready to lead and work effectively together.
Learn how to address family disharmony or handle communication with successors who do not get along.
Learn how to choose your professional team and hold them accountable for the work they will be doing for you.
Network with and learn from other farmers in transition.

Learn more and register now!

If you are in the process of succession planning, be sure to check out the tools Farm Journal offers. To learn more, visit FarmJournalLegacyProject.com

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Why water is the new oil for landowners

Fri, 11 Aug 2023 10:00:30 GMT

There are signs that water is the new oil.

This is a question sent in by U.S. Farm Report viewer David Marshall of Lafayette, Indiana: “You’ve covered the subject of foreign land ownership and rightly noted that it’s a very small percentage. I think the issue that we really need to address, especially in the southwestern states, is the purchasing of farmland by corporate entities that have nothing to do with farming but who solely want to obtain the water rights that the purchase of the ground includes. Their main reason for purchasing the land is to have a resource that they can sell to the highest bidder. How long before hedge funds and corporations own all the water rights and the farmer and the public are left to be the highest bidder or do without the needed resource?”

As Mark Twain said, “Whiskey is for drinking, water is for fighting.” While our arguably arcane water rights laws have provided thousands of billable hours for water lawyers in the West, I don’t think we’ve seen anything yet.

“First in time, first in line” may have seemed like a good idea centuries ago when rivers and groundwater appeared inexhaustible, the enormous use by modern agriculture — about 80% of our nation’s resources — is testing the practicality of those laws. I can’t imagine modern lawmakers reforming our laws with the needed speed, so the backup method of acquisition for water consumers is to buy the water needed from agriculture.

Bluntly put, there is a price for every gallon, and many farmers are just now realizing how extremely valuable those gallons are.

As I have argued in every land-use debate — from solar panels to suburban development — with rare exceptions due to location or unique qualities, the rights of landowners should be preeminent to allow the market to redistribute those assets.

Consider the rapidly growing cities of the Southwest, like Phoenix. Spending millions to buy water rights from nearby farmers currently growing alfalfa in the desert to feed dairy cows, when milk is being dumped in Wisconsin, looks to me like an inefficient market hampered by regulation and unable to rationally allocate assets.

Between our outdated milk pricing programs and water laws, the outcome you describe is capitalism’s way of solving a problem. Farming may always be the optimal use for our ever-scarcer water.

I think not, but I think this is a problem being solved by accountants, not lawyers.

Succession Planning: Your Most Important Farm Task for 2023

Thu, 20 Jul 2023 18:42:58 GMT

The hardest decision you have to make once a year is crop insurance. It is complicated, and only a few people it as well as they should.

While that’s an annual tough task, the hardest decision you have to make once in your life is transition planning. I’m here to tell you there is nothing more vital you can do in 2023 than get your house in order for transition planning.

When to Start?

Believe it or not, the people we enjoy working with the most start their transition plan when they are 35 to 40 years old. Time, structure and peace of mind are huge factors for successful planning.

Those in the 55-to-62 range are another targeted timeframe if you’ve already missed that first window. Five to seven years of transition is ideal for turning over assets, tax implications and some managerial decisions. Some operators choose to have financial involvement for even longer if it makes sense for both parties.

If you are age 62 to70 and haven’t started transition planning, clear your schedule after reading this and get rolling. You owe it to yourself, your family and your successors to get your ducks in a row.

Plan Before Need

Don’t view succession planning as picking your retirement date. I want you to have a plan and be ready for when that day comes.

Whether you’re 35 or 65, things happen. We often humor the situation lightly by joking with people about “what would happen to your farm if you got hit by a beer truck on the way home today?” That proverbial beer truck prompts many questions:

Who knows what you know?
Who doesn’t know what you know?
Who needs to know what you know?
What exactly do they need to know?

Unfortunately, in our line of work, we see the good, the bad and the really, really ugly. There are situations, also, where we can’t help. Either the retiring farmer is too old to draft a plant or the problem is too complicated or the family just simply won’t work together.

Don’t let your farm and business get to that point. Get started, make a plan and put it into action. The most important thing you can do for your business in 2023 is get started on your transition plan.

Don’t know where to start? Shoot me an email at shay@agviewsolutions.com, and I’ll send you five documents: Budgeting for Retirement, Transition Checklist, Transition Timeline, Transition Questionnaire and a sample Family Meeting Agenda.

High Exposure: Understand How Record Farmland Prices Impact Your Estate Plan

Thu, 20 Jul 2023 19:40:35 GMT

When you hear of a new record sale of farmland it raises eyebrows — and your farmland’s worth. With this key asset rapidly increasing in value, you need to analyze your estate plan.

“All farmers undervalue their land,” says Randall Borkus, partner with Borkus Law Group. “They always think people overpay for farmland, but what neighbors pay is essentially the fair market value for your land.”

On average, he says, 80% of a farmer’s assets are tied up in farmland. This is important when it comes to planning. For 2022, the lifetime estate tax exemption is $12.06 million per person, meaning you won’t owe federal estate taxes for gifting that amount or less to children or other beneficiaries during life or at your death. You could owe up to 40% estate taxes on above that.

The exemption will adjust for inflation through 2025, but then it is expected to drop to nearly half of that ($6.5 million to $7 million) in 2026. “As a result, you could quickly have a tax exposure,” Borkus says.

ASSESS YOUR ASSETS

To understand your situation, start with an inventory of your assets and debts. “Essentially, create a rough balance sheet for your farm,” says Roger McEowen, agricultural tax expert at Washburn University School of Law.

As the planning process progresses, those estimates need to become specific.

“The only way to really determine what land is worth is to sell it,” Borkus explains. “If you’re not ready to sell it to find out the value, you have to have a formal appraisal.”

Another option is to compile farmland survey data from universities or farmland management companies. With reviewing sales data, McEowen suggests throwing out the outliers. Instead, watch the trend lines.

“Land values have in essence doubled in the last year or two,” he says. “For instance, if a 500-acre Iowa farm sells at $15,000 per acre, that’s $7.5 million.”

You want to review your plan when you have a change in your family or goals or when there’s a policy change. A doubling in your biggest asset easily qualifies.

Read More

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Tracy Ranch Celebrates 150 Years of Farming

Fri, 23 Sep 2022 21:31:07 GMT

Tracy Ranch celebrates five generations of California farming

It took 150 years to earn it. The Tracy Ranch marked the rare sesquicentennial milestone in 2012. For the clan of Buttonwillow, Calif., it validated the struggles of five generations that kept the ranch afloat.

Now a thriving business spanning 9,000 acres, Tracy Ranch has come a long way since Ferdinand Tracy homesteaded there in 1862. The family relishes their history, but it’s aware that 21st-century California is as fraught with uncertainty as it was for the first four generations.

“The ranch is a lot of responsibility,” says Michael Frey, fifth-generation family member and ranch partner. “Times are good now, but they haven’t always been. It could all collapse tomorrow if we lost our water. Everything is on the line, but we do what we can to manage that risk.”

Diversification. Today, the ranch’s approach to survival hinges on diversity. Under its modern name, Buttonwillow Land & Cattle Co., the partnership grows almonds, pistachios, potatoes, carrots, corn, alfalfa, wheat and cotton. No more than 20% of its acreage is planted to any one crop. That’s a far cry from the ranch’s early years. “For my dad’s generation, it was all about economy of scale,” says Frey, 47. “Now, diversification seems to pay better.”

The ranch also partners on two cattle feedlots in the Texas Panhandle with a combined capacity of 55,000 head. Additionally, it’s ventured into commercial real estate, with office buildings in Bakersfield and an oceanside hotel in Pismo Beach, Calif. “We’re still in a learning curve on that,” Frey says.

Almonds and pistachios have emerged as the ranch’s profit leaders. First planted in 1996, the almonds took four years to mature. This year the youngest pistachios will produce their first marketable crop. The two nut crops occupy the biggest share of cropland at 1,400 acres each. “The trees have worked out much better than we projected,” Frey says. “It’s not pay, pay, pay anymore.”

The potatoes are grown on contract for Frito-Lay and In-N-Out Burger, while the carrots are marketed to Kern County’s Grimmway Farms and Bolthouse Farms. “You don’t hit a home run when you grow on contract, but you get consistent, solid performance,” Frey says.

Family First. Behind the diversification are 10 family partners. Five are fourth-generation first cousins: brothers Bill and John Tracy, brothers Wes and J.B. Selvidge, and Larry Frey (Michael’s father). They’ve been partners since 1971, when they returned to the ranch fresh out of college. The other five partners are fifth-generation members Mike and Jack Frey, Todd and Rob Tracy, and Jason Selvidge.

Each has his own area of oversight and the group meets monthly to discuss operations. “Even though our family is large and tries to work as a unit, it’s important that each individual has the freedom to do things he thinks are right, even if it means going out on a limb,” says Wes Selvidge.

Change Evident. Earlier generations of the Tracy family would probably recognize the old homestead shack, the 19th-century barn and the tall eucalyptus trees that still stand. But the Tracy Ranch couldn’t be more different. There are more crops and acres, a potato packing shed, computers and tractors that use GPS-guidance systems. Crops grow on laser-leveled land and orchards rely on a sophisticated drip irrigation system. “Technology has been the biggest change, even over one generation ago,” Frey says.

But challenges remain, with none as worrisome as the ranch’s water supply. Underground pumping and surface deliveries from the California Aqueduct irrigate the ranch, but it’s vulnerable to drought, environmental demands and legal rulings. Ranch partners Todd Tracy and Jason Selvidge stay close to the water situation by serving on local water district boards.

Other challenges include stringent state and federal regulations governing water and air quality, food safety and labor management. “If we weren’t already in farming, that would be a real barrier for entry,” Michael Frey says.

The trump card for survival lies in the family. “Our family rallies around each other when adversity hits,” he says. Only time will tell what the future holds for the Tracy Ranch. “Every generation of our family has brought something new to the table,” Frey adds.

Farm Succession Planning Gets A Boost From An Ethical Will

Wed, 18 Nov 2020 03:05:51 GMT

This article is from the Top Producer 2019 Executive Women in Agriculture Conference. Learn more about the 2020 EWA Conference agenda and register here: https://bit.ly/30jjkwY

Thirteen years ago, Mitzi Perdue says an experience changed the trajectory of her life.

At a meeting of wealthy, high-profile people who belong to what she describes as the “Famous Last Names Club,” she heard nearly everyone share a story about how they weren’t getting along with their family. Perdue, who grew up as part of the Sheraton hotel family, the Hendersons, and later married Frank Perdue, the poultry giant, was puzzled.

“I couldn’t really relate,” she recalls. Both of her families had been what she describes as high functioning. Plus, their respective businesses had thrived through multiple generations, an unlikely feat given that 70% of family businesses don’t survive beyond the first generation.

“I started studying why some families are high-functioning and others are not,” she recalls. “Why do some families want to help each other be all they can be?”

That question sent her on a quest during the next decade to find the answer. She read books, she attended conferences, she watched programs on YouTube and talked with tens of experts.

Her conclusion, she notes, could be summed up in one word: culture.

“Culture is a road map that guides us in what’s right or wrong,” she says. “The families that don’t [succeed] left their culture to accident. The strong ones invest in and teach their children values.”

She shared three things with attendees at the 2019 Executive Women in Agriculture (EWA) Conference that she says saved both of her families and their thriving businesses through the years.

“We keep our quarrels in the family,” she says. “We know that being part of a family requires sacrifice. Relationships are more important than money—what good is it to succeed financially but fall apart as a family?”

Along with those three factors, she says the Perdue family made five additional decisions that it continues to use. She recommends these to help other families that are wanting to survive and thrive in the future. They are:
1. Create an ethical will
2. Encourage and cherish traditions
3. Have awards that reinforce your culture
4. Write newsletters just for children
5. Produce a “What It Means to Be Us” book

Upon his death in 2005, her husband, Frank Perdue, left the following “ethical will” for his children and grandchildren, which she says the family still uses today. It reads:
1. Be honest always.
2. Be a person whom others are justified in trusting.
3. If you say you will do something, do it.
4. You don’t have to be the best, but you should be the best you can be.
5. Treat all people with courtesy and respect, no exceptions.
6. Remember that the way to be happy is to think of what you can do for others.
7. Be part of something bigger than yourself.
8. Remember that hard work is satisfying and fulfilling.
9. Nurture the ability to laugh and have fun.
10. Have respect for those who have gone before; learn from their weaknesses and build on their strengths.

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The Proposed Transfer Tax Can be Much Worse for Most Farmers Than the Estate Tax

Wed, 21 Sep 2022 06:27:54 GMT

President Biden’s American Families Plan proposes a new transfer tax on farm and ranch families. Many commentators refer to this as an elimination of the step-up in basis. This is incorrect. Step-up in basis remains, however, families will now face a burdensome transfer tax during lifetime or at death.

Farming and ranching are very capital-intensive with low margins, subject to the whims of weather and markets outside the control of the farmer or rancher. Placing a new transfer tax on simply transitioning the family business to the next generation may result in the family business liquidating due to the tax being greater than the business net worth.

The estate tax is based on the fair market value of a farm or ranch and the tax should never exceed the business net value. The proposed transfer tax will be determined on appreciated assets and may easily exceed the net equity. Here is an example:

John Farmer owns a dairy farm in California with assets of $10 million that have an income tax basis of $1 million. The farm has total debt of $7 million. John’s heirs will inherit the farm with a net worth of $3 million, however, the transfer tax on the $9 million of appreciation based upon President’s Biden’s top capital gains rate of 43.4% plus California’s top rate of 13.3% equals a total transfer tax of about $5.1 million. Instead of inheriting a dairy farm with a net value of $3 million, the heirs now face the prospect of negative net worth of $2 million and owing $5 million of transfer tax. They are in a $3 million hole and either can’t pay the tax or their primary creditor will be the IRS for the next 15 years simply to get it up to zero. With the IRS lien, their banker likely won’t renew the operating line.

The unintended consequence of the proposed transfer tax is the dairy won’t be able to borrow the $7 million in the first place. The bank, fearing an unexpected death of the owner, won’t risk its collateral being yanked away from it at the instant of death.

Some countries have some type of transfer tax (such as Canada), but they do not pair it with an estate tax. A combination of an estate and transfer tax would likely result in the United States having the highest tax on farm and ranch families in the world. In some cases, the actual tax could easily exceed the value of the farm or ranch to the next generation as in our example.

The American Families Plan indicates some protections for family farms and ranches; however, this protection seems to simply defer paying the transfer tax with interest. This “deemed” debt to the IRS will create a lien on the farm and ranch that will create issues with obtaining needed financing to keep the farm and ranch in operation. This so-called protection may simply accelerate the liquidation of the family farm or ranch.

There are other equitable means of raising revenues that will not eliminate American Farm and Ranch families as the proposed transfer tax would accomplish.

$1B to Biofuels in Build Back Better

Mon, 27 Dec 2021 18:52:54 GMT

USDA Secretary Tom Vilsack and Rep. Cindy Axne joined AgriTalk with host Chip Flory and Pro Farmer policy analyst Jim Wiesemeyer recently to comb through President Biden’s reframe of the Build Back Better (BBB) plan.

The proposal is now $1.75-trillion dollars and is almost 25-hundred pages long. It includes the following for biofuels:

$1 billion in funding for the biofuels industry
A four-year extension of the $1dollar biodiesel tax credit
Plans to develop “sustainable aviation fuels
$320 billion in clean energy tax credits
$110 billion for investments in clean energy technology
$105 billion to address extreme weather

Ethanol

“There is a specific appropriation of $1 billion for the industry,” says Vilsack. “Secondly, there are a series of tax credits the industry could potentially take advantage of as it formulates low carbon fuel, and the combination of those two is a very positive aspect.”

Projections for sustainable aviation fuel (SAF) have been top-of-mind for Vilsack. He says the industry can expect a 35-billion-gallon demand.

Opportunities for production facilities to “be able to store carbon, to sequester carbon and there is a potential tax credit that they can benefit in the bill for that kind of storage capacity,” says Vilsack.

Representative Cindy Axne (D-IA) shared ADM’s intentions to produce SAFs at multiple locations, saying, “they expect to get to 500 million gallons a year and then scale up.”

Conservation

The decreased BBB budget reduces conservation funding from $28 billion to $27 billion for programs like Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP), as well as the conservation easement efforts.

“When was the last time we invested $27 billion over a couple years in conservation programs? Never… There’s $27 billion in additional assistance for forests to help avoid these catastrophic forest fires,” Vilsack says.

Rural Economy

“There’s a significant amount for rural housing, rural economic development, and billions of dollars for the Rural Energy for America Program (REAP),” says Vilsack.

USDA renewable energy grants will also be made available through BBB in the range of $3 billion. Vilsack says universal preschool, college expense assistance and lower healthcare and housing costs are also included “to strengthen American families.”

Axne elaborated on these efforts saying the childcare provision will provide relief for those looking to reenter the workforce as it is “the number one thing that’s holding people back from getting into the workforce.” She says this legislation will help roughly 20 million children.

In conjunction with the BBB, Vilsack emphasized the bipartisan infrastructure (BIF) package will improve broadband access in rural America, along with improved roads, bridges, ports, and inland waterways. He also shared he recently rode a barge down the Mississippi River that resulted in over an hour and a half wait for a barge to move through a single lock and dam. “You’re going to cut that time in half” with the BIF improvements, he notes.

Vilsack also noted opportunities to increase debt-relief for farmers “who are in a distressed circumstance that have loans from USDA” can be found in the reframed BBB.

Climate Change

Commodity Credit Corporation’s (CCC) authority for carbon goes untouched in the new BBB, according to Vilsack.

“We are confident that the program we announced last month, which will utilize the Commodity Credit Corporation, is a legitimate use of those resources as it is helping to create a climate-smart commodity and the standards for climate-smart commodities so that there will be some clarity and some direction in the future as to folks who want to go to consumers and say, ‘Buy our stuff because it is produced sustainably,’” says Vilsack.

The climate-smart commodity efforts development, according to Vilsack, will open the door for documentation of how commodities are produced. “For that, farmers should be compensated, and they should also be able to legitimately participate in carbon markets that are privately operated,” he says.

Stepped-Up Basis

In the BBB reframe, Vilsack claims there isn’t any literature outlining the end of the stepped-up basis. Additionally, there is “nothing” suggesting the current estate tax will be altered.

“The people that are paying for this are corporations that made more than $1 billion and didn’t pay any tax, and individuals that make more than $10 million per year or $25 million--they might pay a little extra tax,” Vilsack says. “I think they can afford to do that. And tens of millions of American families are going to see their taxes reduced because the child credit continues and because the Earned Income Tax Credit is extended and increased.”

House Agriculture’s Glenn Thompson (R-Pa.) shared he’s fearful the tax policies “shrouded in secrecy”, will wreak havoc on farm families, saying, “a recent study has shown these policies could add $1.4 million to the average tax liability for a farm family.”

Biofuel Aid

Vilsack provided an update timeline on the COVID-19 aid package for biofuel producers, saying “It’s ready to go, we just need to get the clearance from OMB and the White House, and I’m sure we will get that very soon.”

“It may physically still be here [at USDA], but because we have been working with OMB, once it goes over there it’s not going to take very long for them to sign off on that,” Vilsack says.

According to Vilsack, the USDA will detail how the funds will be split up to help the industry. He says the combined tax credits and support through the BBB demonstrate industry support and interest in aviation biofuel.

The reframed BBB legislation will continue the $1-a-gallon tax credit for biodiesel that was previously noted in the original, $3.5 trillion plan. However, under the new, $1.75 trillion plan, that credit will now only through 2026 and would then be replaced by a clean fuel credit that could extend to other products, including sustainable aviation fuel and lower carbon versions of ethanol.

5 Ways to Ready Your Farm and Family for a Successful Succession

Fri, 18 Feb 2022 21:53:19 GMT

If you want to see your farm succeed with the next generation of family members, make sure you have the right structure in place – and set it up sooner than later.

There can be huge costs if you don’t set up the structure correctly, say Paul Neiffer, CPA and principal with CliftonLarsonAllen, and Rena Striegel, owner of Transition Point Business Advisors. They hosted a session on farm succession planning during the 2022 Top Producer Summit in Nashville.

Here are five takeaways from their presentation and discussion on AgriTalk.

1. Take into consideration the financial side of the business.

On the financial side, Neiffer says farmers can relieve much of the stress they encounter by having real-time data at their fingertips to monitor their progress and results. That sounds obvious, but too many farmers are still unable to do that.

Accrual financial statements can help you know your costs and monitor your actual costs against a budget, so you can adjust accordingly.

“If you adopt accrual accounting, you will be so much better off,” Neiffer says. “Too many farmers today still aren’t using it.”

If you don’t understand how to implement accrual accounting practices, you’re not alone. Reach out to a farm CPA in your area or online and learn how to put it into practice.

2. Start the succession process while the next generation of farmers is still young.

“The farms that have done succession the best start when the kids are learning the tough stuff – how to pick up rocks and pull weeds,” Striegel says. “You’re stamping out entitlement at a very young age.”

In the process, Striegel says you are teaching the next generation about the psychological ownership of a farm.

“They learn that the farm is theirs to care for and not that it’s theirs to simply benefit and draw (a paycheck) from,” Striegel says. “The next generation needs to understand how to care for the farm, the people and everything around that operation – from the family relationships, to employees, the livestock and the crops.”

3. Give the next generation a combination of responsibility and accountability.

Often, the older generation has a difficult time delegating jobs and tasks to the younger generation. “Often it’s because there’s a lack of trust that the job will be done the way the current generation wants it done,” Striegel says.

But delegate you must, in order for the next generation to be equipped for succession when the time comes to formally transition the farming operation.

Start with small steps and build upon them, she advises.

“Set expectations and know what you’re going to do when they aren’t accountable,” she recommends. “If you can get that level of openness in your conversations when your kids are younger, by the time you get to a transition conversation or a succession discussion, it is so much easier, because you’re used to talking to each other. You’ve already had some tough conversations about behavior or performance.”

Accountability isn’t about keeping your thumb on the person, micro-managing their every move, Neiffer adds.

“It’s being clear about what you expect and saying how you’ll determine whether the expectation is met,” he says. “It can prevent a lot of frustration in the operation and be a real positive.”

4. Play to people’s strengths, even while they’re still youngsters.

If the operation has more than one family member that you expect to take over the farm reins in the future, consider how to equip each person according to their talents and abilities.

Along the way, provide training and coaching.

Neiffer relates his personal experiences about how he and his brother have different aptitudes and that their parents understood that so both boys could succeed.

“In my family, I was the financial person from an early age,” he recalls. “Growing up, I was dealing with the finances with my mother because she had the math brain. My brother did more of the production and learned from my dad. I can drive a combine, but I’m still better with spreadsheets, and that’s OK.”

The important thing is, help your children embrace what they’re good at and emphasize those abilities and skills for their personal development and for the farm.

5. Understand that a succession plan is not linear. Adapt accordingly.

Anticipate that there will be changes on the road to succession for your farm, so adopt an attitude of flexibility, Striegel says.

With a plan in place you have a tool that you can modify to fit what your family and farm need over time.

“Having a plan in place can help alleviate stress, even if things change,” Neiffer says. “Keep in mind that farming is a dynamic business and your plan needs to be, too.”

Hear the complete discussion between Striegel and Neiffer on AgriTalk here:

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3 Reasons Your Family Could End Up in Court (And How to Avoid It)

Mon, 24 Jul 2023 15:59:17 GMT

The major causes can all be avoided with smart estate planning

You’ve heard the horror stories. The ones about farm families who spend months in court fighting over assets. The result? A destroyed business and fractured family.

Why does this situation play out over and over? After studying numerous family farm cases Kitt Tovar Jensen, staff attorney at Iowa State University’s Center for Agricultural Law and Taxation , points to three key reasons:

Disappointed beneficiaries. Heirs are surprised by what they find in their family’s will. Often assets were divided differently than they expected or unspoken agreements were not followed.
A failure to plan. This can include not having a plan at all or not finding the correct professionals to guide you to create the best plan for your farm and family.
Life events. People often don’t account for big live events, such as marriage, divorce, births, disability, death or disagreements.

By knowing these common hurdles, you can plan to avoid them. “Don’t wait to make or update plans,” Jensen says. “You and your family need to engage in family discussions before it’s too late.”

For instance, Jensen suggests updating your will when life circumstances or goals change. Then tell your family members about your desires – ideally at a family meeting.

“If you adjust your will due to new goals, write your reasoning for the changes in the updated will,” she says.

Also, be mindful of the beneficiary designations in your estate planning documents and assets. The language and defaults for these can vary by state.

“The No. 1 mistake is not naming a beneficiary,” Jensen says. “Check yearly to ensure beneficiary designations are up to date. Also, make sure everyone’s name is spelled correctly.”

Above all, Jensen says communication is vital in avoiding litigation. If this is difficult in your family, consider working with a trained mediator or other professionals.

“The investment of good counsel is minimal compared to the cost of mistakes,” she says. “This is not the place to cut corners.”

Ready to start your plan? Learn what “ not dead yet documents ” you should have in place now.