I have been wondering what I can contribute that would be worthwhile for others within the industry, wondering if a prodigal son of the dairy industry had anything to offer. I am not sure how valuable it will be, but I am very often asked about our transition plan, how my parents are transferring the farm to my brother and I, so since it has been a relatively smooth transition I will share our experience and hopefully others will find it helpful. I think I will make it a three part series as I feel there are three distinct parts that can be addressed: planning for the transition, the legal part of the transition, and the implementation of the transition.

I will start with a little of the history. My brother and I are the fourth generation on our farm, we currently milk 400 Holstein cows, raise all of our replacement cattle, and farm approximately 1400 acres, growing all of our own feed as well as having some excess grain for sale. We have vigorous expansion goals, trying for a minimum of 10% growth in income on an annual basis, where that comes from we try to be opportunistic, grain sales, milk sales, feeder calves etc. Both Will and I left the farm for 10+ years before we returned. I feel that this was a generally positive experience for us but it did lead to some continuity and communication issues, which could I have been avoided and made the transfer that much smoother, but like I said I think we are better off for the experience so no crying over spilled milk!!

Planning For the Transition:
My parents had given up hope that either one of us were coming back home and were two years into a five year plan to eliminate debt and liquidate the cows when my brother and I independently of each other expressed to them our interest in coming back home to the farm and wondering if it would work from a financial standpoint. They believed that we could make something work, so we began looking at the best way to make this happen.

The first thing that we did was recommended to us by our nutritionist who works for Vita Plus. They (Vita Plus) have on staff a consultant who works with farm families who are starting the transfer process, so we scheduled a meeting with him. Included in the meeting were my parents, Will and his wife, and my wife and me. This was a "touchy feely" meeting as there was no discussion about the finances, day-to-day farm operation, future goals, etc, but rather a focus on why we wanted to come back, what my parents felt about the situations, what roles Will and I expected to do when we came back, the role of our spouses in the business. It ended up being well over two hours of oftentimes emotional conversation but was very productive. Will and I agreed that we would each concentrate on one enterprise of the business – he the cropping and maintenance side of things and I would handle the dairy portion of the business. This is where our specific interests lie and due to the nature of our operation is a very simple way of splitting responsibility. At the conclusion of this meeting, we were given the name of an attorney to work with whose primary focus is farm transfers.

The next phase of the transfer involved a meeting with the aforementioned attorney. This again was a marathon 2+ hour session in which several things were discussed. The first thing that we did was to turn over all financial information about the farm. The attorney then asked about our family, who was and wasn't involved in the farm, what lifestyle expectation we had, etc. He took this information, looked over the financial information and then laid out several options that we had for transferring the farm from one generation to the next. Upon laying out options we were told to spend some time exploring the various options to see what we are most comfortable with from a personal perspective and from a financial perspective. He also recommended that we work with a financial farm consultant that could help us get some perspective on the day to day finances as well as do some benchmarking to help Will and I better understand how the farm was performing and areas that we could improve.

Over the next two years we continued to have a series of family meetings in which we discussed how to best work on the transfer, and what roles everybody (parents, spouses, and the two boys) was going to play. Over the course of this time my brother married, and he and his wife moved back to the farm, Sarah and I adopted our two children, sold our house and moved back as well. Needless to say it was a busy time for all of this. During this time we also met a few times with our lender, accountant, and attorney to make sure that we were headed down the correct path. Finally in the fall of 2012 we thought we had everything figured out so we scheduled a meeting with the attorney, accountant, and lender with the plan to work on finalizing the transfer.

To get to this point seems like a long process and at times I was very frustrated due to a perceived lack of progress, but in hindsight it was time well spent. As I learned going through the process that there is significantly more to a transfer then the legal and financial issues, there were far more emotional challenges to be faced than I was expecting. While we certainly ran into challenges of this sort I think that by laying expectations out on the table before going farther in the process we avoided some common "rubs" that can occur while a transfer is ongoing. Hope you enjoy and next time we will pick up with the mechanics of our transfer.

Views: 191

Comment

You need to be a member of Proud to Dairy to add comments!

Join Proud to Dairy

Events

© 2019   Created by Ray Merritt.   Powered by

Badges  |  Report an Issue  |  Terms of Service