The day I caught up with famed farm family coach, Elaine Froese, she had already had two conversations with families who cannot bring sibling partners to the table. Phrases like “avoidance of conflict,” “bullying” and “silence is a form of violence” tumble out of her.
“Procrastination and conflict avoidance are the root of the issue for farm families being stuck,” says Froese.
And more farm families are getting stuck.
Compared to five years ago, the percentage of farms with a farm succession plan has dropped from 20 to 16 per cent. The 2016 Agri-Food Management Institute survey of Ontario farmers found 84 per cent of the farms lack succession plans.
Yet on those farms, succession planning was in their overall top three goals, right after profitability and debt reduction.
One stumbling block is that succession planning involves talking about death and finances, topics that families often avoid. Even thinking about losing a loved one can be painful and terrifying, and discussions about estate plans can be loaded with a whole other basket of emotions.
As well, the younger generation knows the farm is loaded with value — financial, traditional and emotional — and they know it’s something the parents have worked so hard on, so they’re intimidated by the thought of actually asking for it. And some parents, who maybe are finally feeling financially stable, are frightened that talking about transition will rock the boat again or take it in a riskier direction.
Young farmers are always asking Froese for tools to get the succession conversation started. “Some young farmers are scared to talk to their parents out of a sense of respect and not wanting to seem pushy,” she says. However, these young farmers have so much at stake. They need things to be discussed openly, and they cannot keep their plans on hold forever.
Often, says Froese, they simply want to explore the timelines for the plan.
To help farm families struggling with succession, Froese and Megan McKenzie, both from Boissevain, Man., have joined forces to develop a new online course, called Getting Farm Transition Unstuck. It’s available at elainefroese.com/unstuck/ and costs about $750.
Although many farm production or tax specialists say the best course of action is to deal with the business and keep the emotion out of it, over the years of helping families Froese has found the exact opposite to be true. “Deal with the emotional factors affecting planning first, and then you’ll have a great foundation for being clear on expectations, creating timelines for agreements, and a commitment to action,” she says.
Before plans can be effectively created there must be transparent, honest, clear conversation that attacks specific issues, not the people, Froese says. A foundation of trust and understanding is required for each generation to negotiate what they want to see happen with the future of the farm.
Negotiating succession can’t be approached like bickering for the best deal on a used tractor, Froese continues. Instead it requires giving and taking with respect, and it requires expressing emotion, plus seeing the needs of the others. To be able to do this well takes an understanding of constructive conflict behaviours, such as seeing things from another’s perspective, expressing emotions, adapting, creating solutions, reaching out, reflective thinking, and delaying responses, which Froese says is different than stomping away mad to the shop.
Froese tells families to resist the urge to jump to the decision-making stage. Take some time for easier information-gathering conversations. “Farmers love to wheel and deal, but they are not fond of disclosing their fears, wants, needs and emotions,” she says. “That’s where good facilitators hold the sacred space of deep sharing of core values.”
Talk openly about what the business means to each family member. Also, talk about the fun memories on the farm or ranch, about the legacy created by hard work and sacrifice.
Help everyone share the hopes and dreams for the future.
As you go forward…
Do choose successors based on their skill sets and their passion to manage farm risk, not gender or birth order. “This is 2017; daughters can run farms,” says Froese.
Also encourage potential successors to work for a non-family member for a few years.
Do start by setting down a timeline. “Deadlines make people think,” says Froese. For instance, consider saying, “We need to know by the time you are age 27 whether you are going to be a committed member of this farm team. Would you like to start owning some equity, or would you like to do an enterprise project to get started farming, such as cropping, custom spraying or owning livestock?”
The goal, says Froese, is to start with a business plan that the young farmer can tweak and manage to get some “skin in the game.”
Do have a family meeting with the non-farming heirs shortly after the process starts. They’re curious and engaged, and might be willing and able to help. If they are concerned about who is getting the best deal, ask if they’re willing to take on the risks that the farming siblings are taking on. How much is enough? What do they realistically expect the farm to give them?
But do know that money does not equal love. Some folks are never happy no matter how much they are given, and each person needs to be clear about what money means to them. They may also need to learn to accept that a farm kid who has toiled alongside their parents for years deserves a chance to take over.
Equally, the child who is going to carry on with the farm is not responsible for the wealth of the siblings, but could be raised in a culture of making sure everyone is doing well. In one family, for instance, they have promised to be a financial safety net for an urban sibling who has been divorced.
“There are many ways to distribute wealth,” says Froese, “but one of the best ways is with a warm hand as parents, so you can explain your intent for the gift, and the recipient can say thank you and grow the gift.”
Some individuals will never be happy no matter what is decided. If there are some in your family, at some point you will have to let that angst go.
Do consider hiring a facilitator, though. As the family detective, facilitators like Froese use private conversations to find out everyone’s expectations. But remember, conversations about inheritance expectations are easier when life insurance and good financial personal wealth plans are in place, and when the founders don’t need a huge income stream ongoing from the farm.
And do also have patience. You will need many conversations and explorations about how each passionate person perceives their role within the bigger-picture legacy for the farm “This is a long process of unfolding ideas and putting a new business plan puzzle together,” says Froese. “It’s not a Roundup quick-fix solution.”