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Farm and Ranch Succession Summary Research Findings

Up to 25 percent of the nation’s farmers and ranchers will retire in the next two decades.
A substantial portion of the 87 million acres owned by the 42 percent of operators planning to either rent or sell their land will likely become available in in the next several years.
Older farmers are staying in farming longer than did earlier generations. A recent Iowa survey found that one quarter of that state’s farmers do not expect to ever retire.
Given the weighty financial and emotional considerations, older farmers often resist developing farm succession plans. A recent study found that 88 percent of farmers and farmland owners neither had an exit strategy nor knew know how to develop one.
The smaller (in sales) the farm, the less likely it is to have a succession plan and less likely to have an identified successor.

Farm financial viability is an important pre-condition to a successful transfer from one generation to another. Exiting farm families must balance an adequate retirement income with making the farm affordable for the next generation.
Retirement income is of particular concern to farm wives who typically outlive their husbands.
The importance of taxes on the transition of the farm business is often overvalued. There are approaches and instruments to minimize tax consequences and address complex legal issues.

Of farmers planning to retire only about 30 percent have an identified successor.
While historically first-born male children were identified as successors, a growing percentage of farmers identify daughters as potential successors.
The actual farm transfer mechanics are not very different whether the successor is a family member or not. The key issues is finding a non-family successor, building the relationship and settling with non-farming heirs.

The transfer of management of the farm operation is a critically important part of farm succession that is often overlooked—by farmers, researchers and service providers.
The transfer of management is a process, not an event, which can involve positive mentoring and mutually rewarding shifts in responsibility or conflicts and power struggles.
Across cultures, the more important the farm management decision, the less likely the senior operators are to hand over the decisions to their successors, and the longer they delay in transferring responsibility for those decisions.
Effective succession planning begins well in advance of when the younger generation is expected to take control so managerial roles and legal ownership of the farm can be transferred gradually.

The "soft" (social, family, interpersonal) issues are the hard issues. Both family and business goals must be articulated and addressed. The first step in initiating a successful farm succession is discussing the goals, wants, and needs of all parties involved.
A survey of IA farmers found that nearly half had not discussed retirement with anyone.
The transition into retirement is often experienced as a profound change for the exiting farm family that can involve loss of identity, control, and community status, as well as lifestyle changes, health and health care concerns, and residential choices.
A key challenge for many exiting farm couples is how to treat heirs. It is important to distinguish equitable from equal treatment.
Succession planning is challenging because many farm families are disinclined to seek professional help. To be most effective, farm succession and transfer planning requires a team of professionals working in concert toward the farm family’s goals. While a number of agencies, land grant universities and private groups offer succession planning assistance, help is uneven, scattered, uncoordinated and often hard to find.

Last modified July 15 2009 10:50 AM