Succession planning digs up raw emotions on the farm
The economics of passing down land and machinery to a new generation is staggering,
Succession planning is difficult. And awkward. And exhausting. The conversations surrounding it are a complicated blend of assumptions, hopes, wants and needs. Many thoughts are spoken and many thoughts are internalized and left to become accidental yet destructive monsters.
These complications are not unique to farming, but the economics of sustainably passing down land and machinery to a new generation that is responsible for securing your retirement is staggering and challenging.
I’m in the muck of this. Succession is a puzzle that we pick away at when there’s time. But it’s also one that I am more than happy to put back in the closet.
Most farms are family businesses. They run with heart. They represent a way of life. Their continued operation is a symbol of success, hardship, toil, joy and sometimes tragedy.
Land that once sold for anywhere between $500 and $1,000 per acre is now going for upwards of $10,000. For multi-generational farms, some land hasn’t been sold or bought at market rates for more than 100 years, but for many, retirement plans hinge on the fact that land is a good investment and increases in value — a value that becomes tricky to extract when passing it down to a generation that likely cannot afford $10,000 an acre to start.
Sitting next to this reality, is the one where I feel the need to express that in no way, shape or form expect anyone — my parents, other relatives, strangers — to sell me something at a loss solely based on the fact that my wife and I chose to return to the farm. If I could shout this from the rooftops every day, I would. But that would get suspicious.
Ideally, every element of a succession plan — from the fiscal nuts and bolts to the emotional quagmire — should be parsed out, enumerated and then dealt with. But, for a lot of people, as stoic as they appear, fiscal decisions are not easily teased from more subjective notions, such as trust, fear, fairness and many others.
There are even farm family coaches to help navigate this emotional and economic minefield.
My wife and I farm together with my parents. It works and it works well. But, the heavy lifting hasn’t happened yet.
We finished harvest last week, and are now faced with making decisions about what next year’s crops will be and what that means for fertilization this fall. These are typical considerations. Amid this, I am facing the possible purchase of 80 acres of land. The seller wants market value. Farm loan organizations such as Farm Credit Canada and others offer competitive rates and customizable packages to make debt servicing less crippling. They are accommodating.
Purchasing this land and potentially spreading myself thin is a risk I can stomach right now. But I know down the line — and I don’t know how far down the line — my wife and I will be purchasing the farm, the details of which have yet to be ironed out.
As most accountants will tell you, no two succession plans are the same. They will also say that the trickiest part of any generational transfer is getting both parties to be honest about their wants, needs, hopes and assumptions.
To hand over a farm is to have delved deep into the recesses of human experience, struggled for clarity and dealt with the emotions attached to handing over your life’s work to a generation that will do things differently, make mistakes, suffer loss and have a unique set of weaknesses and strengths.
My wife and I, my parents and my siblings will keep chipping away at this. Every year we’re on the farm, things become clearer. Every year we’re on the farm, things change. And every year, we’re more confident that the farm is where we want to be.
As for answers and a clear path, sometimes patience is the most rational decision — sometimes clarity comes with time.