While daily responsibilities of farm life make it easy to put off planning for the future, an early start and attention to details are critical to creating and implementing a generational farm succession plan, according to Charlie Gardner, DVM.

A dairy transition coordinator for the Pennsylvania Center for Dairy Excellence since 2015, Gardner shared his experiences during a “Keeping the Farm in the Family” discussion held during the Pennsylvania Dairy Summit in February.

Gardner offered several suggestions for farm families considering the generational farm transition process:

1. Bring in the professionals

“Throughout my career [as an on-farm veterinarian], I was privileged to work with a lot of farm families, get to know them really well and have a lot of conversations about a lot of things,” Gardner said. “One of the things I’ve learned from talking with them about transitioning is: It often tends to be delayed; it gets put off.”

Gardner said he believes there are many contributing factors to putting off transition planning for another day, a chief one being: Most people working on farms full time have little experience with the process. The key to avoiding that trap, both as a farm business and a family, is accepting help from a facilitator and being open to third-party opinions, he said. Then, enlist the counsel of an attorney after the initial planning and reflecting has begun.

2. Schedule meetings and stick to them

Scheduling meetings can be a challenge for families who are used to “just catching up” with one another as needed. Setting dates and times for the meetings, and only rescheduling when absolutely necessary, holds everyone accountable for their attendance and participation.

Gardner’s involvement is often as a facilitator at these meetings, around the farm family’s kitchen table.

“I like to always leave a meeting having scheduled our next one,” Gardner said. “This helps keep everyone accountable for their tasks. When we get together in 60 days, or whatever it is, there is a deadline on some of those projects and decisions.”

A critical element of these meetings is absolute honesty. “Everyone has to be completely honest, especially at this stage,” Gardner said. “We can have civil conversations, it doesn’t have to be rude, but sometimes it does get that way. These are hard conversations but important to have at the early stages and during the process to make sure everyone is on the same page.”

3. Reflect, talk, strategize ... and write it down

Once initial conversations have begun, the next step in Gardner’s approach is an analysis of strengths, weaknesses, opportunities and threats as they pertain to the farm operation, both today and in the future.

While evaluating the strengths and weaknesses in regard to herd, land, equipment and other resources or skill sets among those involved, families should also consider opportunities to potentially branch out and try something different. That may include expanding, opening a dairy store, processing products through retail stores or seeking other endeavors.

Threats to consider will also be unique to each farm but could include neighbors unhappy with noise or smell, low milk prices or lack of support from the bank.

Then, Gardner says, it’s time for the mission statement. While not every farm chooses to create a mission statement, those that do may find it helpful to refer to in future planning discussions and keep it as a daily reminder of what lies at the heart of their operation. It also helps when determining what the farm operation’s most pressing or important goals look like.

“One of the first goals families should work toward is full disclosure of farm finances,” Gardner said. “Often, we have parents who are 70 years old, everything is in the father’s name, and the mother controls the checkbook. Kids who are in their 30s or 40s working on the farm have no idea what the farm finances look like. That’s something everyone needs to be aware of before permanent future plans are made.”

Money can be a tricky subject but, by making this conversation part of the meeting action list, it becomes easier to tackle and discuss as a group.

Equally important in this phase is determining the timeline of the transition process. In his presentation, Gardner cited several different scenarios for farm transitions, noting they will differ for each individual operation.

“Once a son or daughter has come back and worked on the farm with some intention of staying for a few years, it’s time to really set a plan in motion,” Gardner said. “If they come back to the farm around age 21, by the time they’re 25 or even before then, the plan should be in place and in writing that, somehow, this is how we’re going to trade for equity. By 35, they should own or at least be in 50-50 partnership, and by 45 at the oldest, they should own all of the cows and equipment. At that point, it’s time to tackle the real estate.”

As a start, some families may agree every other heifer calf born goes into the younger person’s name or, eventually, all heifer calves are in their name and they have full ownership of the herd before moving on to equipment or real estate. These agreements help to recognize sweat equity – what the younger person or people are entitled to based on their involvement and commitment to the farm over an extended period of time.

Panelists agree

Gardner was joined in the discussion by Adam and Hunter Smith of M.W. Smith Farms, who are working through the farm transition process on their 600-cow, 1,800-acre farm at Newport, Pennsylvania, and attorney Todd Fuller, with Brenlove & Fuller, LLC. Fuller specializes in agricultural estate and business succession planning, estate and trust administration, and taxation and real estate.

From the official transition completion date to a mission statement and even each individual’s expectations for their farm partners, creating written agreements for everyone’s reference is of the utmost importance, the panelists agreed.

Conclusion

By making use of available resources, communicating with one another about expectations and plans, and giving everyone a voice, transitioning a farm from one generation to the next doesn’t have to be a burden. Holding one another accountable and keeping detailed, legal records can create opportunities to reflect and re-imagine while helping to bring a family’s pride and joy into the farm’s future.  

PHOTO: (Left to right) Hunter Smith of M.W. Smith Farms, Dr. Charlie Gardner, dairy transition coordinator for the Center for Dairy Excellence, and attorney Todd Fuller of Brenlove & Fuller, LLC, participated in a Pennsylvania Dairy Summit discussion on farm transition planning. Courtesy photo.

Callie Curley is a communications student at Penn State University.