Dear TEAM: Can you offer some stumbling blocks to watch out for in starting an intergenerational family farm? I have had experience from the junior side, but will soon be involved from the senior side. – M.C., Radisson, Sask.
Dear M.C.: Since receiving your letter, I have done research and spoken with people across the provinces to find up-to-date resources to help farm families come to terms with this very difficult decision.
The Canadian Farm Business Management Council has done a study on transition planning between generations, interviewing 40 farm families to gain an understanding of farm transfers. These case studies of parents, farming children and non-farming children offer understanding, ideas and strategies. The study is almost complete and will soon be a valuable resource. At present, the agriculture departments in each province have information, videos and key people with whom to talk.
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The most important step is getting started by talking about a transfer plan. Joel Barker, a speaker about change, says, “the best way to predict your future is to create it.”
Course of action needed
Some families think that passing on the farm happens all by itself, often leaving it in their will to the farming children, with the expectation that things will continue as always. Not so – farms today are businesses worth a lot of money, and businesses don’t transfer that way. They need a plan that meets the needs of all the persons involved. Some farm families fail to develop a plan because the discussion is uncomfortable, or communication is difficult.
Most parents feel they want to treat all their children equally but if keeping the farm in the family is also a goal then equal must be compromised to make it equitable. How can this be achieved? People I’ve talked to seem to feel the most important thing is communication.
- Communication is real and genuine talking and sharing of feelings and ideas and identifying needs and wants.
- Talking it out comes easier to some families than others. Every member of the family needs to be involved at some point in the discussion.
- Communication between spouses, between couples and among all family members, farming children and non-farming children, is important.
- The family must all feel valued. They need to hear that you love them all the same even if they are being treated equitably rather than equally. But the love should not get in the way of business facts and number crunching.
- Ask for their input. Consider the alternatives they suggest.
- Another gentleman said when a sibling is involved financially in the farm, he or she comes home and works together, thus strengthening the family unit. When kids want to work together, they serve as a strong support for each other.
- What will work best for your family? Don’t lose family unity in the shuffle.
- Kids need to respect that it is Mom and Dad’s business, and Mom and Dad’s estate.
- Work towards consensus. If there is consensus with the decision, it is easy. If there is no consensus, the decision is tougher. Silence is not consensus nor is simmering behind polite agreement.
- Thinking about and setting goals are important for both generations of your family.
- Start with individual goals for the couple, the family and the farm. What do you want to see happen in each area? Discuss and write them down.
- A business meeting conducted away from the farm where all of you are equals may be the most important meeting you ever attend. Have a family discussion of goals and see where these goals coincide, and where you can agree. Focus on the positive – how close to agreement you are.
- Wants and needs are expressed, but parents’ needs are not negotiable.
- Discuss the points on which you need to work. There may be some disagreement on some points, and a need for compromise.
- With respect, patience and a little formality, it can be very successful.
Succession suggestions
Many of the resources I explored lead families into discussing alternatives. I like the suggestion made by Donna Hastings, of Manitoba, who works with farm families and succession planning:
- “Create a best-case scenario. Vision it. Role play. See how it fits. Try it on. See what parts of what you created seem all right or all wrong. Estate planning is not done all at once. Create a plan pretending that you died yesterday, then you can sit with it, and see how it fits, improve on the draft. When you are comfortable with it, you can show it to the kids.”
Take your time. Don’t make hasty decisions. Consider all the angles. Hastings also has a checklist for parents, and one for children to help them make their decisions.
- Writing it down, as if this was the plan is an important way to formalize the draft copy.
- Reread, fine tune and keep doing it. Many families are reluctant to put things in writing, but tell yourselves, “This is the best we can do right now, but we will keep revisiting and revisiting this plan until we get it right.” (Right is the best decision for you and your family.)
- This becomes a contingency plan that is continually updated. It is best to put things in writing, because misunderstandings cause hard feelings. Assuming everyone understands doesn’t always work.
- Look at your business, listing skills, strengths and interests of each member.
- Recognize positive attributes of each adult in the group, and show appreciation and acceptance of their contribution, interest or understanding.
- Discuss how to solve problems. What are the alternatives?
- How can you meet the needs of both generations?
- When people feel valued as individuals they will share openly their ideas and feelings. Good communication is the result.
- Seek advice. Resource people, such as family farm specialists, bankers, lawyers and accountants are all available to help ensure you look at all alternatives and come up with the best solution. Sometimes renting or leasing part of the farm protects the investment while the children gain experience.
- Often farm families want a properly drawn business agreement with an objective third party. There are mediators and arbitrators who serve as an objective third person and are a valuable asset in some rather complicated situations.
- It is essential to speak of conflict resolution, especially in a situation where partners are going to work together in the farming operation, until they can become financially independent. Partnerships more often stumble over human relationships than over business arrangements, but with the hard work of talking, listening and compromising, the results are positive.
- Create a business structure that fits your family with all of its different personalities.
- Be prepared to spend time, energy and money to have your families working together more closely than ever. The result can be a stronger family.
- Communication is the grease that keeps the wheels moving. It is as important to the farm operation as finance, production and marketing. Without communication, the whole system breaks down.
To look for more information in your province, write or call the following or phone your provincial agricultural department.
- Terry Peterson, 4607 – 23rd St., Vernon, B.C., V1T 4K7, 604-260-3016.
- Merle Good, 201 – 5030 – 50th St., Olds, Alta., T4H 1S1, 403-556-4240.
- Lyle Stavness, Room 323, Walter Scott Bldg., Regina, Sask., S4S 0B1, 306-787-5965.
- Donna Hastings, 908 – 401 York Ave., Winnipeg, Man., R3C 0P8, 204-945-8565.
Positive negotiating
Hastings’ tips on negotiating with a family member:
- Listen for objections and let the person know you recognize his or her concerns. Say “I know you’re not with me on this point. Can you come up with an alternate solution?”
- Watch for and act on verbal and non-verbal signs that indicate a turning point in the discussion, whether it is increased or decreased resistance.
- Remove the offending point to see if you can agree on everything else. Ask the person, “If your concern can be taken care of would you agree with my proposal?”
- Let the other person’s resistance be your cue. It may indicate you are pushing too hard and that you are really the inflexible one. Perhaps it’s time to stop what you’re doing as it is obviously not working.
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