CAN WE TALK ABOUT THE ELEPHANT IN THE ROOM?

And what might that be?

Farm Transitions

Baby boomers own and still farm the majority of the farmland. It is estimated that 70% of farmland will change hands in the next 20 years.

That’s a lot of change.

Who Takes Over the Farm?

The challenge agriculture faces is each farm is different. There is no cookie-cutter solution. Some farms have children following in the footsteps of their parents with plans to take over the farm. With proper planning, this would be a fairly easy and workable plan, but there is always change. The most well-laid-out plan can fall apart. And, then, what happens to the children who do not farm. There are options and that is where working with a good farm succession planner is needed.

If there are no children interested in taking over the farm, the farm transition becomes more difficult. Who and how is it transitioned? A neighbor, a friend, a young farmer wanna-be?

How Can a Young Person Start Farming?

The hardest question is how can a young person start farming? If one does not have close connections, It is nearly impossible due to the amount of dollars required. For many years, margins have been small. There are government programs available but they can only help so far. How many loans can a young farmer take out? Especially when interest rates are not low. And at the end of the day, what is left for profit? Is there enough to make the loan payments?

Many young farmers I know have off-the-farm jobs. It’s about the only way to get started. I remember when we were newly married. I worked off the farm for many years. My job provided us insurance. I paid for daycare, living expenses and put food on the table. Any farm profits went right back into the farming business. It’s not that easy anymore because things cost so much more now.

Moving Through Farm Transition

So how do older farmers move through the farm transition steps? One suggestion is to gradually move through the transition in multiple years. Find a good succession planner and make a game plan on how to move through the succession.

Personally, I can’t talk from experience as we know we need to do this but haven’t started the journey. We try to talk about it, but then we get stuck. Probably like many other farmers.

This is why the changing of the 70% of farmland over the next 20 years is a big deal.

It’s not going to be easy.

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5 Comments

  1. It’s definitely going to be a bumpy 20 years like you said – hopefully most folks will start planning ahead of time and not wait to get their ducks in a row!

  2. Current estate tax exemption is $13,610,000. How many family farms have a gross value over that amount?

    1. I hear what you are saying. But the second component is what are the state’s exemption amount. And, honestly, this is a small component in the farm transitioning process.

    2. Minnesota across the board estate tax exemption is $3 million with an additional $2 million for family farms for a total exemption of $5 million.

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