Archive for the year 2010

The Secret of Working together in a Farm Family Business

Posted on: October 28th, 2010 by Richard Cressman

Leaving a farm meeting one evening a young farmer and her husband asked me, “What is the secret to working together long-term with family members in a farming business?”

The answer is complex yet the core reason is that successful families do a better job of communicating with each other. Basic communication involves listening and speaking, but it’s far more than just words. The appropriate tone of voice and body language can convey as much or more meaning than the words spoken. Few people enjoy being yelled at. And most people enjoy being listened to. Knowing when to speak and when to listen is extremely important.

The following are examples of how three families have learned to successfully manage their communication system in each of their farming operations.

The Smith family farm business is comprised of six partners, mom and dad, and four brothers who are in their 40′s. They crop just over 1500 acres of land and operate two dairy farms plus a hog finishing operation. Each brother owns his own farm. All other farming assets are owned by the family corporation. Five days a week from Monday to Friday after eating breakfast at their homes with their respective families, the four brothers meet at mom and dad’s house from 8:30 a.m. to 9:00 a.m. Mom serves coffee and the day’s activities are mapped out and decisions are made. Everyone is expected to show up regardless of how busy things are. In-laws are not involved in farming decisions.

The Masterson family farm operation is owned by two brothers who are in their early 30′s. Their father still works full-time on the farm. They also have a sister who is a silent business partner. They have a grain drying business, a custom farming business and crop 1750 acres. There is one employee. All farming assets are owned inside one corporation. Each Monday morning at 7:00 a.m. dad, and both brothers meet in the farm office where they have a formal meeting and sort out what activities need to be accomplished during the week. Then twice a year they have a business meeting at their accountant’s office where all family members are present including each brother and his wife, their sister and her husband, and mom and dad. Their accountant chairs that meeting.

The Applegate family runs a 1900 acre cash crop operation and finishes 11000 hogs each year. The full time personnel are father and his two children, a 31-year-old daughter and a 27-year-old son. The daughter’s husband helps out part-time in spring and fall. The three partners have established an interesting routine for communicating. Each morning from Monday to Friday at 7:30 a.m. the daughter calls her brother with her cell phone and then sets up a three-way conference call with father. The daughter is often in the hog barn and her brother can be in the shop, fields, or pickup truck. Dad is usually just getting his day started at his home in town. They have also established a tradition of having a family breakfast at mom and dad’s place one Saturday morning a month. Both children and their spouses attend this breakfast meeting.

Family farming businesses in which family members work well together have mastered seven basic rules for managing an effective communication system.

Strict guidelines are followed regarding frequency of meetings and who attends. There is a clear distinction as to who has input into decision making. Some families exclude in-laws, other families include in-laws. Employees may attend or may be excluded.

Agendas. For families who meet at least once a week formal written agendas usually are not needed.

Disagreements will happen. Someone may leave a meeting in a huff. That will happen from time to time. However, they are expected to come back to the next meeting willing to participate. Adherence to this principle is possibly the most important attribute of successful families.

Fight fair. Do not solicit support from one family member behind the back of another. Keep all discussions transparent.

Respect confidentiality. Hearing from a neighbour or a friend what was talked about at a family meeting rapidly destroys trust, which can be difficult to re-establish.

Regardless of how often you meet, it is important to cultivate an attitude that your meetings are an integral part of the future success of the business. The more people you have involved in the business the more frequent meetings need to be held.

Taking time to talk when you are busy may feel like a waste of time. The families you have just read about all have developed a communication system that is adaptable. Flexibility is also needed at times, but never for the sake of being too busy to take time for the family business meeting. The trap many families find themselves in is that they have tried to have some type of regular meetings, but other things get in the way and the meetings stop. Frustration grows and it is difficult to get the process started again. If there is stress and conflict in your family, it will almost inevitably trace its roots back to a lack of effective communication at some point in the family system.

As the father of the Smith clan said, “we are going to take time for a coffee after breakfast anyway so we may as well spend it talking with each other. Our meetings are probably the most productive time we spend in our farming business”. The youngest Smith brother summed it up another way, “we have had regular meetings now for over 10 years. Before that we met but not on a regular schedule. I can’t prove that meetings help us make more money, but each of our wives tell us we are easier to live with since we meet five days a week. We just don’t need to drag our farm problems home with us anymore.”

Farm Ownership Structures

Posted on: August 17th, 2010 by Richard Cressman

The backbone of Ontario agriculture has been the family farm, traditionally owned and operated by one family. The single proprietor farm is being replaced by partnerships and family owned corporations where siblings frequently find themselves working together.

Initially these ownership structures work successfully and things go smoothly for the first few years. But the odds are stacked against true long-term success. Most people farm because they like being their own bosses, making their own decisions, and not having to take orders from anyone. In other words, they like to be in control. This personality style may find it difficult to work in a close business relationship with another like-minded individual.

There are many farm situations that look idyllic from the end of the lane. When you get up close, you see individuals who feel trapped with no other options than to stay where they are.

The following scenario highlights some of the problems that are encountered when siblings decide to operate their farm business inside a corporation and attempt to keep everything as equal as possible.

Robert, Bryce and Felix are three brothers who had started cash-crop farming together 17 years ago. Robert and his wife Sue live on the home farm, while Bryce and Felix, with their respective wives, live on two of the other seven farms. All assets with the exception of the three farms where the families live are owned inside one corporation. Each family draws equal wages. The brothers have kept everything equal right down to buying cars and pickup trucks of the same value.

Each spring an acre of sweet corn is planted at Robert and Sue’s place. Sue and Robert were on holidays in July and got home the day before a large family reunion. Sue planned to harvest 15 to 20 dozen cobs of corn for this event. When she got to the field she found that someone had already been there harvesting corn. She asked Robert if he knew who had taken the sweet corn. It turned out Felix and his wife had a corn roast for a group of their friends the night before Sue and Robert got home. Sue was livid that her brother-in-law went into the patch and took the sweet corn. Her comment, “how dare he go into my patch and take my corn without my permission? Does nobody have any consideration for what is mine? “ Upon questioning, Sue admitted that the corporation paid her and Robert rent for that acre of land and had paid for the seed as well.

The issue at the core of the conflict stemmed from the fact that neither brother owned nor controlled anything that was actually 100 percent their own. Sue’s comment that, “my husband and I don’t own anything – we just own a third of everything” puts the issue into sharp focus. Owning shares for many people does not give the same degree of satisfaction that comes from tangible ownership of a specific piece of machinery or a barn full livestock.

With the demise of the single-family farm operation, farm families will need to be innovative and creative as they go about designing ownership structures that can be successful in the long term.

For starters, each individual needs to look at their long-term goals. Is pride of individual ownership and being your own boss two important reasons why you want to farm? Can you be happy as a farmer and share ownership with a partner? Can your spouse be happy working with your siblings? How you answer these questions can be pivotal for your success. Having your blood pressure rocket skyward over a few dozen cobs of corn makes no sense. Farming is stressful enough without having to go through an emotional roller coaster ride every time a trivial decision gets made such as who gets to pick the sweet corn.