Alec Boekhoven had turned over at 2 a.m., fretting about ways to reduce feed costs on his family’s 600-sow farrow-to-finish operation. Eventually he drifted off on the couch, which is where his son Evan discovered him and woke him up early.
It’s why Alec brought his three-year-old with him to do chores, and it also helps explain why the three-year-old chatted non-stop like he was already a seasoned farmer, talking about their computerized feed program and about pigs.
Alec nods, “We want to encourage our kids to talk, to ask questions, to not always agree, to take the initiative.”
Alec and his wife Shelby Boekhoven farm with Alec’s parents, Debbie and Harold, near Appin in southwestern Ontario. Their barns are on three separate locations and a few years ago they built a new facility. Altogether they grow 1,000 acres of corn, wheat and soybeans and manage a team of about six full- and part-time employees.
At 30 years old, Alec is about half the age of his parents, and all his life he has never wanted to do anything else but run the family farm. He went to the University of Guelph and studied agricultural economics, and in the process he learned how to learn, and how to interpret information, make fact-based decisions and, through his experience in student government, how to network and lead.
After graduation in 2009, Alec worked at home as well as off-farm for two and a half years for a nearby farm-supply company, and also started a sheep business that grew from 25 to 200 ewes in four years. It was a time of running between his work obligations, eventually relying on help from his family for lambing as the home farm expanded the pig business.
Even for Alec, it was too much. At 23, he was burning the candle at both ends. He got so tired and stressed that his health suffered and he came down with shingles.
However, the extra off-farm work was paying off with a network of associates near where the Boekhovens would build a new barn. Those connections helped immensely during the construction phase.
Plus the sheep business helped him and Shelby buy the farm next door and taught them about taking and managing risks, and the importance of cash flow.
At the home farm, succession talks were under way too, led by his parents and by farm succession adviser Len Davies.
They seemed to get off to a good start, with parents Harold and Debbie individually visiting their other children. Everyone thought it was a good idea for Alec to become part of the farm and carry on the tradition.
“The romance phase” is how Alec now sees the first five years of coming home to farm. “We were all so excited, we are all on the same page, there were no spouses, no people issues,” he says.
Then comes phase two. “Eventually the next generation start questioning how things are done, presenting better ideas… both generations have to learn how to back down and how to manage conflict to get to better ideas.”
Yet there were learnings too, including one very important one. It helps if both sides give credit when credit is due and build trust amongst themselves as adult peers. “It’s time for the older generation to set aside their fears. How can you not trust him? After all, you trained him?” says Alec.
Even so, there was another problem. Although everyone on this farm was excited for the next generation to take over the farm, the process depended on the older generation driving it. And it turned out they were stuck and unsure about their own retirement plans. “Spouses need to be on the same page in their view of retirement,” Alec now says.
A target to aim at
In her many years of coaching farm families through succession, Manitoba’s Elaine Froese has found the ideal process gets everyone together at the beginning to clarify what they want, especially about retirement.
“Many folks are unprepared to start the conversations on succession and transition because they are not self-aware in what they truly want — or the founding spouses are in disagreement — so the process is stuck,” Froese says. “Some farmers also have ‘paralysis of analysis,’ and they don’t make decisions for fear of making a mistake.”
Often Froese suggests founders meet first with a financial planner to help them become clear about their lifestyle needs, income streams, and tax efficiency. In other words, before they even start succession planning, they begin to answer what assets they as parents can afford to give and what assets need to be bought.
Froese also encourages them to update wills and powers-of-attorney immediately. Tweaks on the will can come later in the process.
Supporting the parents
Early on, Alec and Shelby made an important discovery of their own. The younger generation needs to actively support the older generation in transition planning.
That support will in turn help move the succession process forward, says Alec. “After all,” he says, “we are only as far as we are today because of the sacrifices our parents made to get us here. I think that message cannot be lost in succession.”
Alec and Shelby also found they needed to help keep the focus on succession, so it didn’t get pushed aside. Operational distractions can derail the transition planning process, Alec says. “Issues need to be fixed, yes, but succession gets put off. We’ve learned to prioritize it, to go to bat for it.”
Then, like many families who have a next generation come back to the farm, the Boekhovens decided to expand. Transition planning was sidelined by the all-consuming task of constructing a new barn. Alec took the lead on the building project and his parents were even able to go on an extended vacation in Brazil during excavation, trusting him with the practical construction decisions. Within one year the new sow barn was built.
Froese has seen this many times, since expansion is often necessary to sustain adding a family to the farm income stream. And she says building something feeds into their “farmer” personalities. “Farmers are fixers and want quick solutions,” she says. “A new barn or new tiled land is very tangible. Solving the tax plans or selling of shares for the company is not tangible, but still takes attention to detail.”
Since Alec has been home, the farm has doubled its sow numbers and increased the number of employees to six. “Expansion is exhausting,” says Alec. “… And it was exciting. Everyone wants to be a part of something bigger, something better but the effort to build the barn and expand sow numbers was huge.”
Time, though, continued to slip by. This past winter marked two years since they stopped actively working on a transition plan. The young couple now has two small children. Debbie and Harold are still heavily involved, work on the farm and own 100 per cent of it, including where the young family lives. CEO Dad still controls the money.
And when the family dove back into succession planning, the parents started right back at the beginning, once again asking each of the siblings if they wanted to become involved. All of their children now have successful careers off-farm and were still on-side with Alec and Shelby wanting to keep the family farm going.
Two years makes a difference
By now, the family’s attitudes had begun to evolve. Mom and Dad were about 60 years old and had become more willing to talk about slowing down, retirement and maybe even moving out of the home farm.
The younger couple, for their part, were now parents and were feeling vulnerable because they didn’t own much equity, and they could see how important it would be to someday be able to help their kids build personal equity off the farm.
Now in their 30s, in other words, Alec and Shelby are more highly motivated to get a transition plan in place.
Adviser Len Davies set the family up to have several different types of meetings. Every quarter Alec and Harold meet with the farm’s bookkeeper to look through ratios and cash flow. “Debt to equity ratio is so important now with the expansion,” says Alec. “The dollars are so huge, it’s become imperative to know the numbers.”
Davies also set up transition planning meetings once every two weeks at the home farm, but the format wasn’t formal enough for them and soon they were once again bogged down discussing details instead of addressing how to change the overarching management and ownership structure.
The big moment
Everyone was getting frustrated, but then something unexpected happened.
Alec offered to chair the meetings. Shelby would take minutes.
It was a subtle shift in leadership but it has made a huge difference to the transition process. “Before it felt like you’re being read to, like a child would be read to. Now it’s different,” says Alec, and Shelby nods in agreement.
Froese thinks optimally the leadership should be shared, and that the culture of the family needs to be one of respect for getting the job done, regardless of who takes the lead.
At what point should the leadership roles switch? Froese finds it only happens when the older generation is confident the next generation will lead, follow through, and keep everyone in the family and the advisers accountable to meeting expectations for the process.
Alec and Shelby now set the agendas, email them ahead of the meeting to Mom and Dad asking for input. Often they include background reading or links for things they’ve found inspiring or insightful. For a few of the agendas, Alec added a question like a roll call to open up discussion or get everyone to consider their own assumption filter, to look at what it will take to operate in the future and to embrace change.
At their bi-weekly transition planning meetings Alec just starts at the top of these agendas and works down the list for two hours. When the time’s up, they adjourn and the agenda items not covered go to the top of the next meeting. He had chaired meetings at university, as part of student government, so this kind of more formal process was familiar.
Shelby takes minutes at the meetings and emails them out as soon as possible after the meeting, along with everyone’s action items. Having a person dedicated to writing down ideas and discussion has really helped the process, says Alec. “Shelby’s an English teacher and is amazing at writing.”
While their children are small and Alec is working so many hours on the farm, Shelby has put aside her teaching career to help make it work. “Spouses — daughters- and sons-in-laws — are often the most undervalued assets of a farm,” says Alec. “And you need them on-side. Besides they are living with the choices. They need to be part of the decision-making and be valued.”
Alec and Shelby went to a course that included a session on how to write value, vision and mission statements, and felt this would be a good place to start, so they began with that on their agenda items.
Shelby had a good idea of what these statements should look like and listened and wrote everyone’s ideas down during the discussion about goals and priorities. By the end of the meeting she was able to write simple statements reflecting all their dreams and hopes.
It was surprising how much they aligned, and it was a positive place to start their planning process.
For the younger generation, understanding why the farm is operating and what they want it to look like in the future is extremely important. For them, a mission and vision felt like having a launching pad, a place to start for all the big decisions, and the discussion shifted the focus of the transition planning to the future — to their future.
Entitled successor syndrome
This more professional approach has also allowed everyone to voice their opinions and needs with some distance and not get bogged down in guilt and fear.
Alec captures the point with a real-world example. “My parents built this farm and worked so hard, and we respect that so much,” he says. “But when do we get to stop feeling guilty about not having plastic furniture?”
Shelby is not from a farm but her Dad had a local business so she has a different lens to look through, and often this different lens helps keep the farm history from hindering the process. “Farm kids have a great attitude. They are raised with a different appreciation for farming. They were raised in the thick of it,” she says.
And sometimes still today the older generation feels they need to test the next generation to build character. However, the stresses today are not like the ones they had to face. Today there can be more stress about managing employees and much larger balance sheets, while for the parents the biggest issues may been managing interest rates and mortgage payments.
“Parents will always have it harder, and they will always have more experience than we do,” says Alec. “But we need to set that aside to be able to move ahead.”
With many of their friends going through transition planning at the same time, Alec and Shelby understand that there are always two sides to every story. “The young ones with too much piss-and-vinegar and the older generation unwilling to make changes,” says Alec. “Transition can turn into a tug-of-war.”
Some of the biggest challenges for parents include giving up control, taking on more risk and remembering to speak to their child like they would a peer, especially when they are under stress. “If my ideas are out to lunch, let me down gently please,” says Alec chuckling.
Conversely, some next generation children come back to their farms entitled or quickly become frustrated. “If you can’t farm with your parents, who are you going to be able to farm with?” says Alec.
The science of age versus risk
Three years ago Brian Roe at Ohio State University studied risk tolerance and found age was directly related to being more risk adverse. He found the most risk-tolerant farmers were young, male with larger operations and higher incomes, less formal education and close proximity to metropolitan areas.
First-generation farmers also had greater risk tolerance than farmers who had inherited farms, as do ones who had just begun operating a farm. This pattern did not emerge in non-farm business owners he studied.
Now, Alec says transition planning depends on a team approach. Although it’s quite lengthy, he has used the Canadian Agricultural Human Resource Council’s HR tool kit at hrtoolkit.cahrc-ccrha.ca and has been surprised by its practicality.
Froese understands. “If there is no driver (i.e. one or both of the founders, or the successor) then things tend to just drift or get stuck,” she says.
Drivers need to lead the process, especially with their professional team, by using respectful communication with specific timelines. They need to set up calls for clarifying what documents or decisions are needed to keep the process moving.
Says Froese: “The folks who are respectful and come from a position of ‘I am just curious, how is that share transfer plan progressing, we wanted it done by July 1st, remember?’ will keep the process moving.”
Writing a mission and vision statement
To start, extension specialists Robin Brumfield and Stephen Komar provide questions to help develop a clear vision for the business:
- What values do I hold that I will not compromise?
- What characteristics do I want to portray to people?
- What principles do I stand for?
- How do I want to be seen or thought of when I interact with people?
- What do I want in life?
Next, to create the mission statement, focus on the farm’s present:
- List broad goals and identify the company’s products, services and customers, as well as its purpose.
- Describe your farm with words like sustainable, conventional, grass fed or whatever applies.
- Define what guides your choices of farming practices such as being profitable, sustainable, efficient, involved in the community, etc.
For the complete worksheet, search at www.anniesproject.rutgers.edu.