Legacy Planning

When Risk in a Crisis Becomes a Turning Point: Lessons from Top Producers

Wed, 25 Feb 2026 16:51:40 GMT

In a volatile agricultural landscape, risk is a constant. Weather, markets, input costs, succession issues, cyberthreats and pandemics all push farm families into uncomfortable decisions. During the “When Taking Risk in Times of Crisis Pays Off” panel at Top Producer Conference, six producers shared how they’ve navigated those moments — and what they’ve learned when the stakes were highest.

The panel, moderated by Rena Striegel, president of Transition Point Business Advisors in West Des Moines, Iowa, included: Edward and Rebecca Dalton, of Dalton Farms, Wakeman, Ohio; Chris Payne of 3B Hay & Straw, Ontario, Ore.; Wendy Alsum Dykstra and Heidi Alsum Randall of Alsum Farms and Produce, Friesland, Wis.; and Ron Rabou of Rabou Farms, Albin, Wyo.

Their stories spanned family tragedy, ransomware, COVID-19 disruptions, organic transitions and bold expansion moves — offering a candid look at what it really means to take risk in agriculture.

Here are five key takeaways from the conversation:

1. Crisis as a Catalyst, Not a Dead End

For several panelists, a crisis didn’t just test their operations; it forced a complete re-evaluation.

The Daltons describe being emotionally exhausted and financially stuck before a Top Producer event pushed them to question everything.

“We were floundering in agriculture,” Rebecca says. “We were not making any money, really. We were just doing it to do it and to continue that legacy. And we were to the point where, like, ‘why are we doing this?’ You know, we only have so many days here. We only have so much time here.”

After a series of family tragedies and persistent unprofitability, they made a bold move to transition about half their acres to organic production. The shift brought much-needed profitability and renewed purpose.

“The risk was I was going to quit farming,” Edward explains. “We needed something and a spark and to just want to farm again.”

In Wyoming, Rabou’s turning point came after the sudden death of his father and the unraveling of a complex family ranch structure. Walking away from a fifth-generation operation was emotionally painful, but necessary.

“We did a lot of soul searching, and I kind of came to the conclusion that the risk for me for not doing something was much greater than actually doing something,” he says.

Rabou and his wife started essentially from scratch, building an organic grain operation and a hunting enterprise, borrowing heavily despite having grown up in a “never borrow” mindset.

2. Numbers Matter — But They Aren’t Everything

A recurring theme was the importance of knowing your numbers while recognizing data alone cannot drive every decision.

“Knowing our numbers is what really helped us,” Edward explains. “If you know your own data front and back, when you really get into those tight situations that you need to be able to think and move… sometimes you just have to move, whether you want to or not.”

Recently, the Daltons made a bold move back to conventional production. The Daltons’ choice to step out of organic was a conscious decision to go against what the spreadsheet said, in favor of their family and team.

“Right now, when I’m hauling $12 beans instead of $40 beans, like we were for a few years, I’m not really happy with that decision, but it was too much time,” Edward explains. “We were losing time with our boys, and that ultimately is why we went back, even though we were making more money per acre.”

Rabou emphasizes having a clear philosophy about leverage: “I have no problem borrowing money on appreciating assets, but I have to be very careful about borrowing money on assets that depreciate.”

For him, land and infrastructure are long-game investments, and he admits he more often regrets the risks he didn’t take than the ones he did.

“I’ve never looked back and said I shouldn’t have made that investment,” he says. “But I have looked back a multitude of times and said, ‘Wow, I wish I would have made that investment.’”

3. Fear vs. Action: Moving When the Window Opens

Panelists agree that fear is often the biggest barrier to seizing opportunity — especially when decisions must be made quickly.

Oregon onion grower and packer Payne describes how, in the middle of a tense meeting, he and another young partner were essentially challenged to buy out older shareholders in an onion packing facility. They had seconds, not months, to commit.

His broader advice to producers now: “Don’t get caught up in fear. If you let fear dominate your thought processes, you’re never going to succeed.”

Preparation helps in those “15-second” decision moments, Payne adds. Continually learning, attending conferences and thinking through scenarios ahead of time gives you a framework so you’re not starting from zero when opportunity knocks.

Edward adds, “You absolutely know how it’ll go if you don’t try. If you’re not willing to try, it’s not going to work. You can’t move forward if you don’t do something or try.”

4. Cyberattacks, COVID-19 and the Power of Systems

For Alsum Farms & Produce crisis came in very modern forms: a ransomware attack and then the COVID-19 pandemic.

“At 3 a.m. one morning in October, I got a call from our IT manager that we had been hit with ransomware,” Wendy explains.

She explains recovery from the attack required all hands on deck, multiple external experts and months of work to protect traceability and keep product moving. The aftermath included layered backups, new server and email security, user training and an ongoing relationship with cybersecurity and insurance professionals.

Just months later, COVID-19 hit. With 90% to 95% of their business retail-focused, the Alsum team quickly formed a COVID-19 response group, redesigning workflows to keep employees safe and shelves stocked.

The sisters say one key result from COVID-19 was when another supplier faltered, the Alsums were ready to step up for a major retailer — turning crisis into opportunity.

5. Relationships as a Strategic Asset

Beyond capital and land, the panel underscores the value of relationships — with peers, competitors and buyers.

Edward, Payne and Rabou maintain a group text, often used when one of them is wrestling with a big decision.

“Have people in an industry that you can trust and communicate with,” Edward stresses. “There’s been days they’ve literally had to walk me off a ledge when I’m trying to figure out how to make a decision.”

In the potato and produce world, Heidi says, competitors often become collaborators when the chips are down.

“The nice thing about the potato industry and the produce industry in general that we’ve experienced is that it’s been very collaborative,” she explains.
Rabou adds he sometimes sells grain below top price to maintain long-term relationships and outlet security.

“Those relationships to me are more important than making the dollar in the moment,” he explains.

His broader warning to producers is to stop comparing your operation to your neighbors’.

“You really have to determine what works good for you as an individual, you as a couple, you as a business,” he stresses. “Stop paying attention to what everyone else is doing.”

The Bottom Line from Top Producers

Across all their stories, the panelists echoed a few core principles:

Know your numbers but also know your values.
Act in crisis — don’t let fear make the choice for you.
Be willing to pivot, even away from something profitable, if it no longer fits your life or strategy.
Invest in appreciating assets and in relationships, both of which can pay off long after the crisis has passed.

In short, risk in times of crisis isn’t just something to endure; handled intentionally, it can be the turning point that reshapes a farm for the better.

Overcome the No. 1 Challenge in Passing Down Your Family Farm

Mon, 30 Jun 2025 18:41:37 GMT

Between now and 2048, about $124 trillion is expected to exchange hands from older to younger generations in the U.S., according to Cerulli Associates, a Boston-based market research firm.

For perspective, that dollar amount is approximately five times the size of the 2023 U.S. Gross Domestic Product (GDP), which totaled $27.72 trillion.

How will farmers fit into what many people are calling the “Great Wealth Exchange” over the next two decades? Much of it is specific to land, according to the American Farmland Trust (AFT). It predicts 300 million acres of U.S. agricultural land will change hands in the next 20 years.

Based on $5,000 an acre for farm ground, Paul Neiffer, the Farm CPA, estimates that would be a transfer of between $1.5 trillion and $2 trillion in land from older farmers to younger generations.

“If you throw in rangeland, that’s another trillion, so $3 to $4 trillion at most is where I think we’re at,” Neiffer says.

The Reason Succession Often Fails

A common issue is that while 69% of farmers plan to transfer their operation to a younger family member, only 23% have a plan , according to AgAmerica Lending LLC.

But the No. 1 issue that trips up people in the succession planning process is most people – farmers included – focus more on the mechanics involved in transferring assets than on keeping their family relationships intact.

That’s according to Amy Castoro, CEO and president of The Williams Group, a family coaching and consulting organization. Her firm does relationship planning to help family members make sure they’re still speaking to each other after the wealth transfers.

Many times, she says, the friction in the transfer of wealth has little to do with money and material goods and a whole lot more to do with whether the family members involved felt loved.

A Formula For Success

The Williams Group did a 20-year field study and from that developed a formula for how people need to focus their time and energy in the succession process.

The company recommends spending:
60% of your time on building family trust and developing good communication practices;

25% preparing your heirs to take over the operation, laying the business and fiscal groundwork for the farm to continue under their leadership;

10% of your time getting on the same page about your family’s values and having a family mission;

5% of your time on the estate planning mechanics, the nuts and bolts of how the assets will transfer.

In addition, The Williams Group advises that you work with your heirs to:

Strike a balance between control and collaboration.
Embrace the next generation’s perspectives.
Bolster intergenerational solidarity.
Embed high-trust behaviors.
Co-design standards for readiness.

Start The Plan Sooner, Not Later

If you want to see your farm succeed with the next generation of family members, make sure you have the right structure in place – and set it up sooner than later. Don’t put it off, Neiffer advises.

Once you have a plan in place, you have a tool you can modify to fit what your family and farm need over time.

“Having a plan in place can help alleviate stress, even if things change down the road,” Neiffer says. “Keep in mind that farming is a dynamic business and your plan needs to be, too.”

Your next read: Big Questions Remain For Next Gen Farmers

It's Time To Lead: Strong Succession Won't Happen By Accident

Wed, 11 Jun 2025 18:34:46 GMT

Succession planning isn’t just a checklist item — it’s a defining leadership moment. As a farm or ranch owner, it’s time to stop waiting for the “right moment” and start leading with purpose. You’re not just passing on assets; you’re shaping the future of your operation. That means stepping into the role of leader with clarity, courage and commitment.

First, take a hard look at what kind of leader your farm needs. Are you focused on daily operations or vision and growth? Are you modeling strong financial discipline and decision-making? Are you addressing conflicts head-on and keeping your family aligned? Leadership requires more than technical skill; it demands the courage to tackle tough conversations, whether with partners, successors or family members. Great leaders don’t shy away from discomfort; they lean into it with the goal of building stronger relationships and a more resilient operation.

Communication is foundational. If your team doesn’t know what’s happening, how can they help move forward? Hold regular family meetings, define decision-making roles and ensure everyone understands their responsibilities. Avoiding conflict only leads to confusion. Structured, transparent communication builds trust and keeps succession planning on track. Communication is also how you build buy-in from the people who will carry your operation forward.

Leadership Isn’t Handed Over

Next, you must actively develop your future leaders. Don’t wait until you’re ready to retire to begin mentoring. Give your successors meaningful responsibilities now. Let them learn by managing projects, participating in financial discussions and handling day-to-day operations. Leadership isn’t handed over — it’s earned through real-world experience and demonstrated commitment. Every season serves as an opportunity to develop those skills and test readiness.

Set clear standards for advancement. Define what success looks like: required experience, education and financial knowledge. Make sure successors understand what it takes to lead and hold those leaders accountable. If someone isn’t ready or is unwilling to step up, be honest. Your farm’s legacy deserves strong, prepared leadership.

Succession planning is hard. Many families stall out due to fear, conflict or lack of clarity. But real leaders don’t quit when times get tough, they face challenges head on. If your planning has gone off track, reset. Re-engage your family, bring in outside support if necessary and commit to consistent action.

The future of your farm depends on your leadership today. Will you linger in uncertainty, or will you lead with confidence? Strong succession isn’t going to happen by accident. It’s driven by leaders who are willing to plan boldly, act decisively and invest in their next generation. Your family and your operation are counting on you. Be the leader they need.

Your Next Read — Quiet Crisis, Unfolding Rapidly: Big Questions Remain For Next Gen Farmers

How To Leverage The 0% Tax Bracket

Wed, 27 Nov 2024 16:53:05 GMT

There are many situations where farmers can sell assets they have held for over a year and owe no federal income taxes on the gain.

Capital gains that are taxed in the old 15% tax bracket are actually taxed at a zero rate. For 2025, single taxpayers hit the top of this tax bracket at $48,350 of taxable income. Married couples top out at twice that amount, or $96,700.

Remember, these taxable income numbers are after itemized deductions or your standard deduction. The standard deduction for 2025 increases to $30,000 for a married couple, which means a farm couple could have long-term capital gains of $126,700 and owe no federal income tax (assuming they have no other income).

This can have great planning opportunities.

First, if a farmer has a C corporation and a personal income that is low for the current year, then paying a dividend from the corporation makes sense because the divided will be tax free. Plus, the corporation does not even need to pay out any cash. It can instead elect to distribute a “deemed” dividend, which is simply a paper entry to debit dividend and credit paid in capital. This also has the result of increasing the tax basis in the corporate stock, which can be helpful if the corporation is liquidated or converts into an S corporation.

Capital Gains Planning Example
Jim and Sara estimate their taxable income for the year will be about $50,000. Their corporation issues a deemed dividend to them of $75,000 because they would like to keep the cash in the corporation for operating purposes. They can also elect to pay a cash dividend to themselves and then loan the proceeds back to the corporation. This income added to their personal return will be taxed at zero for federal income tax purposes. They will pay state income if their state has such taxes.

Another option involves selling stock investments at a gain if you know the gain will be tax-free. There is a rule against repurchasing stocks within 30 days if you have sold the stock at a loss, but in this case, you are actually locking in long-term capital gains to be taxed at zero. The worst that can happen is you might be out a little bit of a bid/ask spread on repurchasing the stock if you use an online no-commission company.

Selling Assets Example
Andy and Gretchen estimate their taxable income at zero. They were early investors in Tesla and elect to sell Tesla stock that generates a long-term capital gain of about $125,000. They decide to not repurchase Tesla but will elect to use it as working capital for their farm operation. This gain will be tax-free at the federal level.

The bottom line as you do your tax planning at year-end is to review any assets you have held for at least a year to determine if your taxable income remains in the 15% tax bracket. If so, you might want to consider selling all or part of that asset to lock in tax-free money (at least at the federal level). Or, if you have a C corporation, always review that each year to determine how much of a tax-free dividend you can pay out.

Four Experts You Need On Your Succession Planning Team

Wed, 31 Jul 2024 18:14:24 GMT

When it comes time to get serious about succession planning, many operations turn to their lawyer to kick off the process. And while that’s a good place to start, Matt Gunderson, vice president of Farmers National Company, wants to make sure your journey doesn’t end there.

“A lot of times when folks think about estate planning, they think, ‘Well, I just need to go see an attorney, right?’ And to some degree, that answer is correct. But what we try to talk about is how to set up a good team,” he says.

Gunderson recently joined an episode of the Top Producer Podcast to share the four professionals he recommends for any succession plan, likening the process to building as sturdy of a stool as you can.

“What’s the best, most sturdy type of stool out there? Well, it’s a four-legged stool,” he says. “Think about that farm or ranch land asset as the seat. Then we start looking at the four legs.”

The Four Legs
1. Attorney
Gunderson stresses the importance of choosing the right lawyer for this process.

“There are different types of attorneys out there. So one, finding an attorney who does estate planning is important. But two, it really comes down to finding an attorney who understands estate planning and agricultural assets,” he says.

Be sure to also consider the state your land is in, and not just where you reside.

“We’ve seen where attorneys in one state drafted something according to that state’s laws, but where the land is at as a completely different example in terms of what that looks like from an estate standpoint,” Gunderson says.

2. CPA
He shares the second leg of the stool should be a CPA. This expert will help you understand the plan’s current tax implications and will also stay up to date on how that could change.

3. Financial Planner
The third leg is a financial planner. Financial planners can help you in some ways a CPA can’t. According to Gunderson, this role looks at future considerations for the plan, such as what it looks like for the upcoming generations.

Just as with attorneys, however, there are different types of financial planners, and it’s important to find one familiar with agriculture and the various accounts you will have.

4. Professional Manager
The fourth leg of Gunderson’s estate planning stool is a professional manager for the property.

“A professional manager can help take care of that land asset for the next generation if they’re not actively engaged in farming or they’re not actively near the property,” he says.

Gunderson adds that after this team is formed and your plan developed, you shouldn’t set it and forget it.

“Don’t throw it on the shelf or put it in a drawer. You better get that team back together every three years to look at that plan because things change, laws change and family dynamics change,” he says. “Was there a birth? Was there a death? Was there a marriage or divorce? Get that team back together to make sure that it’s up to date or it can still come back and bite you in a negative way.”

Catch up on episodes of the Top Producer Podcast

Farm Succession: Don't Neglect The Value Of Planning

Fri, 14 Jun 2024 20:30:00 GMT

The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.

Do you want to know the costliest mistake a farmer can make when it comes to safeguarding the future of their operation? It’s neglecting to plan or having an overly simple plan, says Jim Angell, an attorney with Kennedy Berkley.

There are all sorts of reasons farmers are lax about succession planning. Maybe the patriarch doesn’t want to give up control or face mortality. Maybe some of the kids don’t get along or the parents are stymied by the thought they need to treat all their kids equally.

“Farmers have spent 35 years in survival mode, and succession planning has barely registered,” he says. “The past five or six years they have gone from surviving to thriving, but it’s still hard for them to believe a sophisticated plan is necessary.”

That sophistication comes into play when deciding how to treat farm and non-farm siblings.

“Fair and equal are not the same,” Angell says. “The farming child(ren) needs to be provided with some advantages in order for the farm to survive. They need more value to keep the farm going, but there’s a difference between value and cash.”

Angell advises farmers separate the operational (business) side of the farm from the legacy (land). Equipment has to stay with the operational side, for example.

When it comes to the land, if it’s important for each child to own land, divide it up in tracts and don’t put multiple kids on a tract, he adds.

A succession plan often includes several documents, one of which should be a buy-sell agreement , Angell advises. If you are in business with someone, you should know how to exit the arrangement. A buy-sell agreement is a legally binding document between co-owners of a business that spells out how a business should be transferred if a co-owner leaves the business willingly or is terminated.

Legal Vs. Relationship Pieces

Speaking specifically to the next generation, Angell says don’t hesitate to push for communication. In his practice, he usually sees the next generation first to work on their estate plan, and then they bring in the senior generation.

For the senior generation, don’t believe the same philosophy your dad used: You get what you get, and you don’t throw a fit.

“ Please communicate ,” Angell says. ”Currently, my firm is involved in 10 to 15 disputes where land was distributed equally and kids can’t get along or an LLC was set up but there is no way out.”

The good news is there are legal devices to do whatever a farmer wants to do. The key is using the right mechanisms for the relationship pieces.

“Is it worth it to jeopardize your children’s relationship for any reason?” he asks.

Want more insights to plan for the future and be a leader in your field? Sign up to receive Farm Journal newsletters.

5 Conversations Every Family Should Have Before A Farm Transition

Thu, 13 Jun 2024 20:40:11 GMT

The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.

Before you handover the keys or step aside for the next generation, make sure you and your family are properly prepared for what comes next. Elaine Froese is a farm family transition expert, speaker and host of the Farm Family Harmony Podcast . She says we’re in the middle of agriculture’s “great wealth transfer” but there’s a serious lack of communication between generations.

“Often there are so many plans to be started that farmers are stymied, overwhelmed and anxious,” Froese says. “I’ve said many times that procrastination and conflict avoidance are killing agriculture.”

For those ready to be proactive in preparing for a farm transition, she recommends these five steps.

1. Calculate Your Income Stream.
Froese says farmers need to determine how they’ll maintain and secure a stream of personal income. Is that coming from their personal wealth or a combination of personal wealth and income from the farm. Once that’s sorted, farmers need to figure out what their living expenses really are apart from the farm.

“They have to figure out their own lifestyle costs first, where they’re going to live and what their lifestyle is going to be,” Froese advises.

2. Define Your Role.
Retiring farmers need to clearly define how they’ll show up for the operation after “retirement” from running the day-to-day. Does that mean fully stepping away, serving as a manager or simply as labor when needed, Froese asks.

“Many farmers who are male have their identity tied up in what they do,” she adds. “They have no capacity or understanding of how their roles are going to shift as they age in place at the farm.”

3. Talk to Your Spouse.
Retirement isn’t a singular decision. Froese says it’s important to discuss the transition to retirement with a spouse or significant other. He or she might have their own ideas of what will or should happen in retirement.

“They need to embrace a vision with their spouse because if the older farmer does not want the same thing as the older farmer’s spouse in regard to what their future role is then that transition plan is essentially stalled and not going anywhere,” Froese adds.

4. Build a Business Plan.
During a transition there will be differing opinions and passionate feelings about the direction of the farm. Froese says that’s expected and farmers need to remember different isn’t wrong, it’s just different. She recommends next-generation farmers bring a business or enterprise plan to the table that explains their intent for future growth.

“When you bring somebody back to the farm you need to generate at least $500,000 in additional gross income to support that new family,” Froese says. “People often do not pay attention to how many families a farm business can support and the level of support expected.”

5. Discuss Future Debt.
As a farmer transitions out of the principal operator role and focuses on retirement, often their risk tolerance for debt decreases. Taking out loans against the farm’s assets for expansion or technology upgrades might feel risky or even irresponsible. Froese says debt loads should be discussed and decided upon early in the transition.

“Many older farmers don’t want anymore debt, and they have it in mind they don’t want to pass debt on to the next generation,” she says. “But where is it written that the younger generations can’t manage the debt?”

Want more insights to plan for the future and be a leader in your field? Sign up to receive Farm Journal newsletters.

A Silent Legacy Will Fail: 3 Ways to Protect Your Assets Now

Mon, 10 Jun 2024 18:49:53 GMT

The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.

By Heather Gieseke

After witnessing a beloved and once-thriving family farm fail, I reached out to my colleague Kevin Bearley to make sense of what went wrong. As an estate and succession planning adviser for Pinion, Bearley often sees families make similar transition mistakes. For example:

Dad doesn’t want to deal with the issue of his own mortality. His father left it all to him to figure it out on his own, and it worked out.
The family avoids conversations about whether or when dad wants to retire.
Siblings or children don’t get along well, so parents delay retirement or succession planning because they fear it will increase conflict.
Thinking fair and equal means dividing everything evenly among on- and off-farm heirs.

But silence, or having no plan at all, is far worse than having even a bad plan in place.

Act Before Estate-Tax Exemption Drops
On top of that, there’s a compelling reason to address retirement and inheritance issues now. The estate-tax exemption will expire at the end of 2025, dropping from $13.61 million per person to $5 million (adjusted for inflation). The smaller exemption comes at a time when inflation and land values have ballooned. That’s led to growing anxiety about increased assets and estate-tax rates.

The government can currently tax up to 40% of an estate over $13.61 million. That’s set to change at the end of 2025, unless there’s an extension, and the government will be able to tax up to 40% of an estate over $5 million.
	Current 2024 Law	Proposed Change in 2026
Exemption (individual)	$13.61 million	$5 million*
Exemption (married)	$27.22 million	$10 million*
Estate and Gift Tax Rate	40%	40%

*Adjusted for inflation

“It’s imperative for the senior generation to have a plan because, if not, you’ll end up in a court proceeding,” says Bearley who’s an attorney and a CPA. “Judges don’t understand agriculture. They’ll want you to sell all assets, which could require selling land, and then you’ll have to pay your tax bill and attorney before splitting what’s left — and there’s rarely anything left.”

He recommends three techniques to protect your assets while the $13.61 million exemption is still in place:

Gift your assets. A husband or wife could use one spouse’s exemption to gift land and other assets while keeping the other spouse’s current $13.61 million tax exclusion.
Move your assets to the next generation. Transferring your assets to your heirs takes special expertise, but it can be a smart way to protect your estate from burdensome taxes.
Freeze your assets’ value. With the steady rise in land values, your farm’s worth could double in the next 10 years. If you take steps to freeze its value now, you won’t face a higher property valuation in the future, when tax-exemption rates drop to $5 million per person.

Bearley urges farm families to start today to devise a strategy to achieve your retirement goals or to pass on your estate to the next generation.

You’ll need to work with an attorney, a CPA and a family business consultant — trained advisers who understand farming. It takes time to find the right professionals, set goals, explore your options, map out a specific plan and communicate to all involved. Getting the right result for your family will help avoid strife, keep more of your wealth where you want it and sustain the farm for future generations.

Want more insights to plan for the future and be a leader in your field? Sign up to receive Farm Journal newsletters.

Focus On Making Your Succession Plan Fair, Not Equal

Fri, 22 Dec 2023 19:33:25 GMT

When it comes to succession planning, Travis Shuring, a financial advisor with Edward Jones, wants to make sure families are protected. This is something he does by helping put the proper plan in place, but also making sure expectations are accurate for everyone involved.

“The first thing I remind clients is that when we look at your legacy, fair is not always equal,” Shuring says.

According to Shuring, what might be considered equal doesn’t always make sense when the succession plan involves family members who actively work on the farm and others who do not.

“One of the things I do is have a discussion about what you’d like to do for the other siblings,” he says. “Maybe other assets are available we can supplement with and split to make fair. Maybe we have an insurance policy that only names the siblings and children who are not part of the current ag production, and they receive those assets. Those active on the farm can receive the farm assets.”

Planning for those other assets is an important part of the legacy plan and something that should be considered sooner rather than later.

“The sooner we get something started, the more time we have for it to work,” Shuring says. “It’s less about timing the markets and more about time in the market.”

Planning for the Right Assets
One of the biggest assets Shuring works to build into a legacy plan is life insurance. More importantly, the right kind of life insurance.

“People go get life insurance and I ask them why they have this type of life insurance and they can’t tell me,” he says. “I want them to know why they have an investment, why they have life insurance and why they have an estate plan. And do you have the right kind and amount of insurance?”

Along with life insurance, he encourages families to consider disability insurance, or setting aside funds to use as a sort of disability insurance.

“Life insurance is great, but life insurance is not about you – it’s about your family. However, in the event you become disabled, hurt or can’t work on the farm, the life insurance hasn’t kicked in and we have to have a plan in place,” Shuring says. “Maybe we can’t supplement to the point that a disability policy or supplemental insurance might provide, but we can still have funds that are reserved and we’re hoping not to have to use.”

Four Tips for Building the Plan
Shuring’s advice for building your legacy plan begins with having spouses present in the process from the start. But his next recommendation is not waiting too long to bring children into the conversation.

“Don’t be afraid to bring your children into the discussion,” he says. “Make sure they understand your plan and your desires and what you want to happen when that time comes.”

As the process moves along, it can get complicated. That’s why he also advises relying on more than one expert.

“I always encourage folks to have a robust team in place. Talk to the tax pros and include estate attorneys,” Shuring says. “They understand the law and they understand what changes may be coming down the line when it comes to the law.”

Once your plan is in place, don’t neglect keeping it up to date. Shuring suggests reviewing your wills and trusts no less than every five years.

To hear more from Shuring on legacy planning, tune into his episode of the Farming the Countryside podcast .

Overcome Family Dysfunction with the 3 C’s

Wed, 08 Nov 2023 20:55:23 GMT

Passing down a family farm from one generation to the next is as old as agriculture itself. It is both a dream and a responsibility. However, the path from one generation to the next is often fraught with challenges, conflicts and family dysfunction. Succession planning in the context of a family farm is more than just a business transition. It’s a journey that involves several critical steps.

Successful succession planning must revolve around consensus, commitment and the consequences of the decisions made.

Step 1: Consensus

Consensus is the cornerstone of any successful succession plan. In the context of a family farm, consensus means achieving a shared vision and understanding among all family members involved in the transition. Here are key considerations:

Have Open and Honest Communication. Family members must openly discuss their aspirations, expectations and concerns. Encouraging dialogue ensures that everyone’s opinions are heard and respected. Though this can be challenging, as family dynamics have potential to lead to misunderstandings and miscommunications, it is a vital first step.
Develop a Shared Vision. The family should work together to create a shared vision for the future of the farm. It should encompass not only the economic goals but also the values, principles and long-term objectives the family wants to preserve and promote.
Define Roles and Responsibilities. Establishing clear roles and responsibilities is essential to avoid conflicts and confusion. Each family member’s contributions and expectations should be outlined with their defined role in the farm’s future. This clarity helps mitigate potential disputes later on.
Seek Professional Guidance. Family farm succession planning requires legal, financial and tax expertise. Engaging professionals, such as lawyers and financial advisers, can help navigate complexities and ensure the succession plan adheres to legal and tax requirements.

Step 2: Commitment

Consensus is essential, but commitment is the driving force behind a successful plan. Family members need to be committed to the agreed-upon plan and dedicated to its execution. Here are critical aspects of commitment in succession planning:

Recognize Individual Goals. While consensus is crucial, it is equally essential to acknowledge the individual goals and aspirations of each family member involved in the farm. Commitment should stem from a genuine desire to see these goals fulfilled.
Set Timelines and Milestones. Establishing a clear schedule of events helps the succession plan progress effectively. Family members should adhere to these timelines, keeping the process on track and avoiding procrastination. It is helpful to identify a succession planning coordinator in the family who is accountable for keeping everyone engaged and on task.
Be Flexible and Adaptable. Commitment doesn’t mean rigidity. Family farms are dynamic, and unexpected circumstances can arise. Family members must be willing to adapt and make adjustments to the plan as conditions change.
Create a Family Code of Conduct. A code of conduct should outline acceptable behavior, conflict resolution mechanisms and ethical standards within the family farm. This helps maintain commitment by fostering a healthy and respectful environment.

Step 3: Consequences

Succession planning is not just about the present; it’s about securing the future of the family farm. As such, family members must consider the consequences of their decisions carefully. The decisions made at this stage will have a profound impact on the future of the farm and the family. Here are some critical considerations:

Financial Implications. The financial consequences of a succession plan are significant. It is essential to understand the financial implications of the plan, including taxes, estate planning and the allocation of assets to prevent financial strain on the farm.
Emotional and Interpersonal. Consequences. Family dynamics and relationships can be heavily affected in this process. Family members should be prepared for potential conflicts, emotional strain and necessary conflict resolution. It’s important to find healthy ways to address the emotional toll these decisions can take.
Legacy Preservation. The decisions made in succession planning will determine the legacy of the family farm. It’s crucial for the farm’s history, values and traditions to be preserved, even as new generations take over. Balancing innovation with tradition is a delicate but necessary aspect of the plan.
Evaluate Sustainability. The successful transition of a family farm is not just about passing down property. It must also ensure the farm’s sustainability for future generations. Decision makers should assess the ability of the next generation of leaders to work well together. This includes not only the ability to make decisions as a team but also the ability to plan for the future while preserving cash flow.

Top Producer Summit Pre-Event Workshop: Take Control Of Your Succession Plan
Date: Monday, February 5, 2024
Time: 8:30 am - 4:30 pm

Family farm succession planning is a complex and emotionally charged process that requires careful consideration of consensus, commitment and consequences. Achieving consensus among family members, committing to the plan and understanding the potential consequences are vital to secure the future of the family farm.

Successful succession planning doesn’t guarantee a smooth or conflict-free transition, but it does provide a structured framework for addressing challenges and disputes as they arise. By implementing strategies such as open and honest communication, clearly defined roles and responsibilities and a shared vision for the future, those involved are able to build a solid foundation for their succession plan. Family members’ commitment to the plan ensures its execution, while flexibility and adaptability allow for adjustments.

Lastly, understanding the plan’s financial, emotional and legacy consequences is essential. With thoughtful consideration, a family can navigate challenges and create a sustainable and prosperous future for their family farm, preserving its traditions and values. Succession planning is more than a business transition; it’s your legacy in the making.

The Silent Leader

Mon, 11 Sep 2023 14:04:15 GMT

Our sixth President of the United States, John Quincy Adams said it best on what it takes to be a leader, by saying, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

I would add that sometimes leaders silently lead. I see this daily with my 17-year-old daughter, Cassie. She doesn’t want a lot of attention but is more than happy to do what it takes to lead, although she sees it more as ‘helping out.’

A year ago, Cassie spent her fall break at World Dairy Expo. Instead of being on the colored shavings exhibiting cattle, she was found in the barns, helping get a string ready in the middle of the night, running nightline. She also has served as the sixth man coming off the basketball bench, while her teammates beg to start. Cassie is confident that her coach will put her in at the best time. When Cassie shows up to help out at the farm, our guy’s smile stretches even wider. They know Cassie is a doer and will do all that it takes to get the job done, going the extra mile, doing more than she is asked to do. She is a silent leader that so many people have come to count on and appreciate it.

As Cassie prepares to head off to college next summer, I often question whether we have taught her all that we know. The answer is most likely yes and now it is time for her to go explore the world and learn for herself.

Don’t Become Complacent

When I interview young farmers, like Reese Burnett, who is featured in our Milk Business Quarterly cover story ( Status Quo is Not the Goal for This Wyoming Young Dairy Producer ), I’m reminded that part of success is learning from others. Reese shares what he learned from his three college internships before returning back to his family farm in Wyoming. He also offers advice to other young producers, saying that you cannot be complacent about being good and must be driven to better yourself and your business.

The dairy industry is scattered with success stories like Reese. Plenty of people who started young, worked hard and found a path forward. Think of your own success story, even if your path wasn’t straightforward, had plenty of hurdles and might not always felt like a success. The industry is great because of all our great leaders who have continued to push hard, driving their businesses forward.

Do I Need A Trust?

Thu, 20 Jul 2023 20:48:40 GMT

Here’s what farmers should consider with this sometimes complex question

Most estate planning starts with a will. The legal document covers what to do with your assets and provides important direction on the care for minor children.

A will might be enough planning for simple situations. However, if you have a large estate, a second marriage, heirs with lifestyle concerns, children with special needs or charitable goals, you might want to consider a trust, says Kelly Jackson Hardy, CPA and principal with CLA.

“Whether you need a trust is about dollars, but it’s also about several other factors including control, asset protection, and family relationships,” she explains.

First, what is a trust? Simply, it is a set of instructions for managing a legal entity that owns property separate from the individual, says Shannon Ferrell, ag law professor at Oklahoma State University Extension.

“Think about a trust as a little miniature corporation,” he says. “You’ve created a separate legal entity that owns property by itself. So, when you put property into the trust, you don’t own it anymore, the trust does.”

TYPES OF TRUST

The basic categories of trusts are revocable living trusts, irrevocable living trusts and testamentary trusts. Hardy says you can also get into a slew of acronym trusts: CRAT, CRUT, IDGT, GRAT, SLAT, ILIT, etc.

“The basic trust is a revocable living trust,” she says. “Essentially during life, this trust operates as an extension of yourself. It can be changed and does not file a separate return. Upon death, it becomes irrevocable, and the assets are transferred per its terms.”

Most farmers, Hardy says, could benefit from a living trust for these two reasons:

If all your assets are owned by the trust at death, there is no need to probate an estate. This not only saves you legal fees but prevents an inventory of your assets to be filed at the county for all your neighbors to view, she says.
Administration of this type of trust is like a walking belt at the airport as opposed to walking up flights of stairs to get to the same place, she says. The trust moves the plan forward though administration and then moves the transfer of assets to the beneficiaries.

WEIGH THE BENEFITS

As you put your estate plan together, understand the purpose of each tool, says Connie Haden, founder and partner at The Law Firm of Haden & Colbert in Columbia, Mo.

“I see all the time people trying to jump around a trust, since they are more complicated and expensive than a will,” she says. “But they also provide you the most flexibility.”

In addition, once you set up a trust, she says, you title everything in your operation once. Then if you need to change your plan, you just change the single trust document.

“A trust can be very simple, or it can be very complex,” Ferrell adds. “Whether it’s simple or complex depends on how simple or complex your objectives are for what you want to achieve with the trust. In either case, your trust needs to be very carefully drafted.”

As you start or revisit your estate plan, Haden says you must stay focused on your big-picture goals.

“Rather than getting bogged down on if we should do a trust, come with an end goal in mind,” she says. “What is more important to me is for you to come in with a vision for what you want to have happen. Then we can talk about how to achieve that vision. Often it is a trust, but sometimes it is a different tool.”

The Three Parties in a Trust

When you set up a trust, you identify three key parties, says Shannon Ferrell, ag law professor at Oklahoma State University Extension. While one person can hold all these roles simultaneously, you have to name people to each role:

Trustor: The person who creates the trust and puts property into it.
Trustee: The person who’s responsible for managing the trust and legally representing the trust.
Beneficiaries: The people who either receive property or income from the trust.

(Farm Journal)

Learn more about the transition options with trusts .

Sara Schafer, content manager for Farm Journal, knows asking good questions creates the most useful stories. She uses her Missouri farm roots to cover innovative operations, farmland trends, business topics and more.

Stamp Out Entitlement: Develop Ownership Criteria For Your Farm

Thu, 20 Jul 2023 20:15:23 GMT

A desire to be part of the farm can quickly slide into an expectation of control. As you look at transitioning leadership and ownership of your farm to the next generation, be ready to tackle entitlement issues.

“If you are experiencing the phenomena of entitlement, you must acknowledge it and develop a plan for how you’re going to deal with it,” says Rena Striegel, president of Transition Point Business Advisors. “The longer you wait, the harder it’s going to be to get rid of it.”

What is entitlement? Essentially, she says, it is either the belief someone has a right to something or it is the belief one is deserving of privileges or special treatment.

Entitlement can actually occur on two different levels:

It can happen on an individual level where a person believes something has been promised.
It can happen when a parent creates an environment where their children are treated differently than other people in the operation.

“In either case, the outcome can be a really big source of disagreement between spouses and families who might have different philosophies,” Striegel says.

THREE STEPS TO TAKE

Your goal is to create a framework and tools for these tough conversations, Striegel says, so no one feels singled out or mistreated. First,
create a family employment policy. Keep it simple, she advises.

Gather your family and agree on how family members will be hired, compensated, managed and rewarded in terms of bonuses or other rewards, she says.

“Be sure to emphasize ownership and employment are two different issues — earning a check as an employee is very different than owning a piece of the farm business,” Striegel says.

Next, create ownership criteria. Detail the types of assets that can be owned and when by family members (see checklist). Be specific with duties and timelines.

“You want to use official language because this is an official document,” Striegel says.

Finally, make sure you have roles and accountability clearly defined for those involved in the farm. This can come in the form of job descriptions, organizational charts or other farm structure documents.

CALL OUT THE SPADES

As you create these documents and framework, Striegel says you will need to lead your team and focus on the end goal.

“Working through these important issues takes leadership and the ability to call a spade a spade,” she says. “If you see a problem, call it out and work through it. That’s how you’ll establish healthy boundaries and expectations with your team and with your family.”

Ownership Assessment: Who, How, When And Why

This checklist from Rena Striegel’s The DIRTT Project can be used as a guide to create ownership criteria for your operation. You can also use the tool to determine where potential owners might need coaching, mentoring or leadership development. Use the following to help create your requirements. Feel free to add.

Does a family member need to be employed full-time in the operation?

Does the family member need to demonstrate leadership?

Does the family member need to demonstrate responsibility displayed in all areas of the operation?

Is a track record of success required?

Does the family member need to be engaged and present or can they just “show up”?

Does the family member have a solid skill set that provides value to the operation in the role they currently play?

Does the family member need to be able to work collaboratively and cooperatively with others?

Does the family member need to understand the finances and show responsibility for them?

Does the family member need to show accountability to other owners and employees?

Does the family member need to support the vision of the operation and take action to make it a reality?

Does the family member need to communicate in an open, honest and respectful way?

Does the family member need to share and display the values of the operation?

Does the family member need to have the ability to be flexible and make changes when necessary?

Does the family member need to be willing to make sacrifices for the greater good?

Does the family member need to demonstrate emotional control and resilience?

Does the family member need to be committed to constant and never-ending improvement?

Read more stories from the 2023 Top Producer Summit:

Preventative Maintenance for Your People: How to Reduce Turnover and Boost Morale

How to Run An Innovation Sprint on Your Farm

Nominate Outstanding Farmers for Awards from Top Producer

Take Time to Celebrate Accomplishments

5 Business Principles That Define Success

Farming Boom or Bust in the Decade Ahead? How to Manage Price Cycles

Be Inspired by Five Remarkable Farm Operations

Ideas Big and Small: Create a Culture of Creativity on Your Farm

4 Things to Do When Your Kids Come Home to Farm

Thu, 20 Jul 2023 18:56:54 GMT

Matt and Lisa Moreland hoped at least one of their sons would return to their farm based near Medford, Okla. What they didn’t anticipate was all three sons – James, Will and David – wanted to join the family business once they completed their college degrees.

“It put me back on my heels. I thought, ‘Wow, we’re going to have to find a way to grow,’” Matt recalls.

That was seven years ago. Here are four things Moreland says he has learned in the process.

1. DON’T SLICE YOUR “PIE” INTO SMALLER PIECES. Instead, make a bigger one. The Morelands have grown their operation to accommodate each son’s return.

With James, they added an Angus cowherd. Will has taken the lead on all things agronomic on the farm, which grows corn, soybeans, winter wheat and cotton. David runs the excavation/construction side of the operation.

Scaling up the faming enterprise as each son returned has enabled the Morelands to compensate them accordingly. “They also get an annual bonus and equity in the operation,” Matt says.

2. LET YOUR LEADERS LEAD. “I quickly learned as we’ve grown there’s only so much I can do. I can guide, but I can’t be a control freak,” Moreland says.

How that plays out: each son leads in their respective areas of expertise, and then he and the farm’s eight employees provide support as needed.

“We meet as a group every Monday morning to look at what needs to be done in the week ahead, make assignments and then modify them as necessary,” he says.

Don’t underestimate the value of having clearly defined roles and accountability when children return to the farm, suggests Rena Striegel, president of Transition Point Business Advisors.

“Create a template to delegate responsibility and build in accountability to develop the next generation of leaders,” she advises.

3. CARVE OUT YOUR ROLE. Moreland functions as the managing partner in the operation, overseeing the cash flow for the farm as well as the big-picture direction for the operation. He also takes the lead on lender, landlord and Farm Service Agency (FSA) relationships.

4. HARNESS HELP FROM EXPERTS TO CREATE PLANS. “The investment of good counsel is minimal compared to the cost of mistakes,” says Kitt Tovar Jensen, staff attorney at the Iowa State University Center for Agricultural Law and Taxation.

Moreland knew, even with professional counsel, mistakes can be made. His solution: “Vet your plans with key individuals and organizations. For financial planning, you have to consider the accounting side of things as well as the legal components, and it can be challenging to understand what might work for the FSA, as well as for your accountant and even the IRS,” he says.

Some key questions Moreland asks of experts: What do you think of our plan? How can we make it better? What else should we do?

Take Control Of Your Succession Plan at the Top Producer Summit!

Date: Monday, January 23, 2023
Time: 8:30 am - 4:30 pm
Cost: $219

Use the topics and tools included in The DIRTT Project to jump-start the succession planning process for your operation whether you are just beginning or need to get on track.

Learn how to set goals for both the transitioning owners and the operation.
Learn how to create a plan to ensure that your heirs and successors are ready to lead and work effectively together.
Learn how to address family disharmony or handle communication with successors who do not get along.
Learn how to choose your professional team and hold them accountable for the work they will be doing for you.
Network with and learn from other farmers in transition.

Learn more and register now!

If you are in the process of succession planning, be sure to check out the tools Farm Journal offers. To learn more, visit FarmJournalLegacyProject.com

Malecha Enterprises: 8 Core Values Bridge the Dynamics of Family and Business

How to Create a Short-Term Operating Plan for Your Farm

How to Make a Successful Transition to the Next Generation

Who Gets What? Take This Important Estate Planning Step

Want to Grow Your Farm? Ask These 10 Questions First

Wed, 17 May 2023 19:57:51 GMT

More than 50% of farmers intend to grow their operation, based on responses in Purdue’s February 2023 Ag Economy Barometer.

(Farm Journal)

If you’re thinking about scaling your farm, Michael Langemeier, Purdue ag economist, says it’s important to first ask these questions.

1. Why should I grow my operation?

Before an operation expands, consider the vision and direction you want your farm to take.

“Are you interested in a commodity-based approach or a differentiated product strategy? Commodities will focus on cost control while products will be centered around value-added production and above-average prices for your crops,” Langemeiers says. “Start here and consider how growth impacts your direction.”

Once an approach is chosen, it’s time to decide which dominoes you want to play in the expansion game.

2. What ways I can grow my farm?

There are many ways to expand an operation: acquire land, new equipment and technology, upgrade facilities, etc. However, Langemeier says some producers need to think outside the box.

“Don’t just think about what you currently do or have always done. This step is a good time to do some soul searching to consider where you want to be in five to 10 years. Do you want to be the same enterprise, or do you want to make changes?”

Langemeier says this soul-searching step is especially important when someone is coming back to the farm.

“We’re seeing that a lot of students who come from farms want to go back, and we have to look into whether there are opportunities there or not,” Langemeier says. “There’s always new interest and ideas that come with the transition back to the farm.”

After establishing how you want to grow, consider your growth approach.

3. What should my growth approach look like?

A strengths, weaknesses, opportunities and threats (SWOT) analysis is a common growth approach in business. Langemeier says another way to think about SWOT is in terms of internal and external analysis.

“Internal analysis means looking at key resources and capabilities of a team or operation,” Langemeier says. “Does someone possess a unique skill you can maximize? Take advantage of those unique skillsets.”

Internal analysis mainly centers around strengths, but weaknesses play a role here, too. Are there areas in your operation that need professional development? Langemeier says this is the time to work on both.

External analysis, on the other hand, examines economic and market trends.

“The easiest example is in livestock; raising pasture pork, poultry or beef, or offering direct meat from a producer rather than a grocery store, are all growing trends,” Langemeier says. “If you have those opportunities, think about how they might fit into your operation.”

While there’s more risk in external factors, Langemeier says “the risk can be worth the reward” for producers who understand what trends they can support.

4. How do I evaluate my farm’s growth ventures?

Now that the growth options are laid out, how does a producer choose which option to pursue?
These eight criteria can help:
• Strategic fit
• Expected returns
• Risk
• Capital required
• Cost and ease of entry and exit
• Value creation
• Managerial requirements
• Portfolio fit

Strategic fit is one of the biggest points to consider, according to Langemeier.

“A few years ago, many growers were interested in hemp production. I would ask them if hemp would require new machinery and if they were used to dealing with contracts,” he says. “If the answer was yes and no, then it probably wasn’t going to be a good fit.”

He says ease of entry and exit is the second criteria he points farmers to.

“If your farm were to pursue a new venture and it fails, would it mean you could lose the whole farm? Because there will be things that fail,” Langemeier says.

If a specific venture requires a lot of capital, he says it is pivotal to explore how the investment could affect balance sheets in the long run.

5. What skills are needed to grow, especially in people returning to the farm?

Taking stock of employees’ skillsets, this is the part where growers consider the strengths and weaknesses of human capital currently on the farm and those soon returning to it.

“When someone’s thinking about coming back to the farm, that’s the time to assess the skills that are currently needed, and then try to encourage the younger person to garner some of those skills,” Langemeier says. “We might have the skills to expand our operation, but do we have the skills to start a new venture in a different enterprise? Think about it from all angles.”

6. How do I finance?

Are you willing to take on debt to expand? If so, how much debt are you willing to take on? Langemeier suggests looking at debt as enabling you to take advantage of an opportunity, not as a negative.

“If you have 2,000 acres and are thinking about adding 1,000 acres, even if that’s leased ground, you’re still going to need more machinery and people. You probably don’t have that retained earnings, so you’re going to take on debt,” he says. “As long as you’re making a profit on those additional acres, and you can make the debt payment, it’s not a problem.”

Langemeier warns that a small profit margin can quickly turn into an issue when a venture flops. He advises producers keep a somewhat equal balance of debt and projected venture profits.

7. What business models do I use to grow?

Expanding internal growth with retained earnings and debt is a typical business model for most operations, according to Langemeier. He says there’s a new trend in this arena.

“I’ve seen a lot of production ag cases recently where a farm acquires assets from a retiring farm,” he says. “Not only do they farm the land, but they also buy the machinery, the bins and the whole farm. This really works for some operations.”

Another model that’s becoming somewhat common is a joint venture. Agribusinesses use this model frequently, but Langemeier says more mid-sized operations are leaning toward this option.

“One of the advantages of joint-venture contract turkey, laying or finishing operations, especially in the Corn Belt, is that there’s a partner with you,” Langemeier says. “It allows us to grow effectively.”

Finding a partner to go-in on the venture isn’t always easy. However, Langemeier says producers often look in the wrong places.

“Some farmers say they don’t have any outside investors, so I tell them to think about family or non-farm heirs. Pitch it as a way of investing in your business so that you don’t have to make them partners or an operating entity,” he says. “Land, for instance, could be an outstanding source of outside equity with non-farm heirs.”

8. How would an expansion impact my current operation?

When considering growth options, it’s vital to your growth success to consider how each option will impact the farm’s balance sheet and income statement. Langemeier suggests running three projected scenarios — worst, most likely and best case — through a spreadsheet or a software, like the University of Minnesota’s FINPACK system .

If you choose to run the projections by hand, this is the process Langemeier suggests:

a. Impacts on cash flow and balance sheet

“A growth change will impact both — don’t just look at cash flow,” he says.

b. Debt versus equity

“Maybe the change will reduce your liquidity and increase your solvency too much,” he says. “If that’s the case, you can’t pursue that particular venture.”

c. Time management

“There are only so many hours in the day, and some of us sometimes work too much,” Langemeier says. “Say you’re going from conventional to organic, it’s going to be management intensive. Be realistic about what you and your team can handle.”

9. What challenges would an expansion create?

Construction delays, cash flow shortages, depleted working capital, short-term inefficiencies and management bottlenecks are often at play when starting a new venture, according to Langemeier. He advises producers to be proactive.

“If a venture creates massive cash flow shortages and eats into your working capital, you need to have a plan to deal with those issues. If you don’t, it will lead you into other challenges, like inefficiencies, and you’ll end up with a failed venture,” he says. “Make sure you have a contingency plan.”

10. What is my sustainable growth rate?

Calculating a sustainable growth rate means saying what a growth rate would be if retained earnings is the only money used, and then compare that to what a growth rate would be if only debt was used. Langemeier says this equation has other variables that often go unchecked.

In the debt scenario, he says you have to think about the downside of debt — the chance of going bankrupt and variability.

“Even if your operating cash flow is low, the lender still wants his payments,” Langmeier says. “You have to think about the coping strategies to make those debt payments even when corn is at $5, compared to $6.50. Make sure you run all the numbers imaginable.”

The Main First Step When Considering Expansion

With all 10 points in mind, Langemeier says the first stage of growth shouldn’t include producers running to formulate a 50-page business plan. He says step one starts with a conversation.

“You should be having regular farm and family meetings, at least once a year, to brainstorm with your employees and family members about the things you could do differently on-farm, and allot time to consider continued improvement, opportunities and threats,” he says.

According to Langemeier, these meetings will offer more than exploring growth; they will ensure farm, family and employee survival.