(Taken from a presentation to a group of Junior Farmers.)
Becoming a daughter-in-law for most women means their lives will change – new husband, new home, in-laws, and possibly a partial new identity through a change of surname. The stories of the late Princess Diana and Sarah Ferguson (daughter-in-laws in the royal family) highlight the difficulty some women experience as they try to fit into their husbands’ family.
A daughter-in-law in a farm family can also find herself automatically becoming a business partner. Despite great attempts to make her feel welcome, she may still feel like an outsider. The old saying that, “ there is nothing thicker than blood” can ring true for a young woman joining a farm family.
Why is being a daughter-in-law challenging for so many women marrying into a farm family? First of all, no two families are alike. Each family has a culture that is somewhat unique. Cultural differences between families can be significant. For example, which parent was the key decision maker in your family – mother or father? How does this compare to your new husband’s family? What about males doing household tasks in each respective family? How many siblings do you each have? Where in the family hierarchy were you born? While these may seem to be subtle differences, they shape the patterns of an individual’s perception of how family members relate to each other.
When a woman gets married and becomes a member of a new family, she is marrying more than just her new husband. In most cases she is going to be sharing this person with the rest of his farm family.
A daughter-in-law needs to be aware of how she is perceived by her new family. Very few families want to have radical changes forced upon them. If you are seen as an instrument of change trouble could be brewing around the corner for both you and your husband. Immersing yourself in your husband’s family culture helps to bridge many gaps, yet at the same time caution must be taken not to lose your own personal identity.
For example, in your family birthday celebrations may have been a big event – cake, candles, gifts, flowers, cards, and possibly even an evening out with dinner. But in your husband’s family birthdays were possibly just another day – maybe a cake but no gifts, cards or flowers. Gifts and flowers may seem like minor cultural differences on the surface, but to a newly married daughter-in-law, this may feel like a mountain that is beginning to form between you and your new family. Your husband may have tried to impress you with special treatment on your birthday when you were dating, but somehow the magic of celebrating your big day is now getting lost in the day-to-day routines. Over time, hurt, anger and frustration can start to build.
How can a young woman successfully make the transition into the role of daughter-in-law in a farm family business? Continue to be true to yourself – don’t lose your identity. Try to differentiate between farm business and family issues. Become aware of the differences between your family’s culture and your husband’s, and try to understand and appreciate the different traditions. You and your husband have the opportunity to create new traditions that are unique to you – be creative. Team up with a good mentor. Ideally the best mentor should be your mother-in-law. She probably was also a daughter-in-law. On top of this, she knows your father-in-law and has been a mother to your husband. If anyone should know how to get along with these individuals it is she.
Getting the next generation started into the business of farming is a monumental challenge facing many rural families. The rapid rising of land prices, equipment, and facilities over the last 30 years has created new barriers for those wanting to enter farming.
Almost every agricultural sector today is facing the grim fact that if current asset values are used, it is virtually impossible to show a positive cash flow when doing a startup budget. The reality check is that parents who are now looking at turning over their farms to their children were able to start their farming careers with a total investment of a couple hundred thousand dollars. Today for one family to earn a living from farming requires the use of assets valued well in excess of one million dollars. Sacrifices undoubtedly will need to be made and somebody will need to subsidize the entry for the next generation.
A successful farm transfer can be problematic if the parents do not have a clear picture of their retirement: where they will live, vacation, what they will do with their time, and most importantly, what all of this will cost. For parents, particularly fathers, sitting down and talking about retirement can be a difficult task.
The younger generation wanting to take over the farm will also need to sincerely ask themselves, “is this really what I want to do for the next 20-25 years? Am I willing to pay ‘the price’ through sacrifices of time and emotional energy to make a farm business succeed?”
This whole process can be boiled down into three fundamental questions that need to be answered by parents and children. (1) What type of financial arrangement needs to be put in place so that mother and father can enjoy a peaceful night’s sleep and not toss and turn wondering if they are making the right decision? (2) Is the dream of the younger generation big enough to continue to pull them out of bed every morning until the debt is paid? (3) Is it eventually possible to put together a deal that will satisfy the answers to questions one and two?
To help parents answer the first question, they will first need to determine if the farm business has the financial capacity to cash flow the debt that will need to be assumed by the children. Secondly, they must assess their confidence in their children: do they feel the next generation is capable of running a successful enterprise? Thirdly, they must determine how to treat each child fairly when it becomes time for the estate to be divided.
These three points can be summarized as: cash flow capabilities of the business, confidence in your children, and the capacity to be fair to everyone.
The younger generation must consider several points when answering their question about their desire to farm. How strong is your passion to be a farmer? Do you have the mental toughness that will be needed? Do you have the ability to work with and manage other people? Is your education extensive enough to help you see the ‘big picture’?
Putting the financial deal together is much easier if everyone has first sorted through the answers to their respective questions. Most farming operations already have access to excellent accounting and legal resources. If you are not confident in your advisers you should seek out individuals whom you deem to be competent.
Farming can provide a wonderful lifestyle. Transferring this lifestyle to the next generation can be done relatively stress-free through meticulous planning. This process takes time and requires patience on everyone’s part to ensure a happy ending.
Gone are the days when a farmer can work in isolation. Smartphones, text messages, e-mail, put many farmers in positions where they are required to communicate regularly with people all day long. Using technology to communicate with business colleagues is simple and easy compared to maintaining an effective communication dialogue with family – the people you love and care about.
Some days it can be almost impossible for farm family members to talk with each other without yelling.
Over the past few years, I have been privileged to work with farm family businesses that have wanted to improve their communication patterns. More bluntly put: these families were tired of the yelling, the slamming doors, the pouting, the cold shoulder treatment, and the awkward silence that prevailed at mealtimes and family get-togethers. I frequently heard comments like, “we can’t agree on things anymore, we don’t seem to like or even respect each other anymore. Are we the only family with these problems?” If you are reading this and are thinking, “ this sounds like us” rest assured you are normal. Working with the ones you are supposed to love is a daunting challenge.
Managing a farm today presents unique challenges compared to most other businesses as the labour pool and management are usually one and the same. To further complicate things, everyone usually lives on the job site.
The communication dilemmas most frequently experienced on farms are firstly, the father’s inability to communicate with his children (usually his sons), and secondly lack of communication between siblings.
A classic example of ineffective communication is illustrated in the following story.
Friday evening Father was in the milking parlor finishing the milking when his newly licensed 17-year-old son came rushing into the barn to ask for the farm pickup to go into town with his buddies. Father being a somewhat quiet fellow, had his head half buried under a cow’s belly. As he listened to his son’s request he rolled his eyes skyward and let out a grunt. Pulling his head out from under the cow to address his son’s request, he turned to see the milkhouse door slamming shut as the youngster ran for the house. Five minutes later while washing the milking equipment, Father looks out the window to see the tailgate of the new diesel pickup truck disappear down the laneway in a cloud of dust—the son had obviously interpreted the grunt to mean “yes”.
Father was still fuming and muttering as he stomped in the back door of the house. Upon seeing his wife he bellered, “that kid of yours just took the pickup without asking for my permission”. Mother using her carefully honed maternal skills asked father what actually had happened. Questioned and prodded, Father reluctantly admitted that he had not said yes or no, but had in fact just uttered a grunt. The mother knew their son had learned how to take advantage of his father’s communication weaknesses. Farm women seem blessed with the ability to know what is going on between their husband and sons without actually being present at times of disagreement.
To be an effective communicator takes practice and patience. It is vitally important to listen to every member of the family so that when you do speak others will understand what you are saying and not tune you out. Old communication habits die slowly but they can be improved. Searching out more productive ways to communicate with family members has immediate benefits. Reduced stress levels and happier people can frequently translate into a more profitable business.
The corn had been planted for about three weeks and was nicely out of the ground. The farmer I was talking to is approximately 32 years of age and he and his wife have been in the transition process with his parents of assuming the ownership and management of the farm. (I will call him Joe) They milk over 180 cows and Joe’s parents are starting to move into the background as far as the workload and management goes.
Joe asked me whether spreading dry fertilizer on the standing corn would be a better option than side dressing liquid 28 percent nitrogen. Joe’s father had always used dry fertilizer in the past and their crop yields were some of the best in the neighbourhood. There was no doubt the dry fertilizer program had worked in the past. I asked Joe what he thought would be the best for the corn crop. He said he would like to side dress the 28 percent nitrogen but his father wanted to spread dry fertilizer because it could be done a lot quicker. The culture on this farm is that they do all of their own fieldwork and custom workers are very seldom hired. With a lot of cows to milk, extra labor is a short commodity.
I asked Joe if there would be a big difference in the yield using liquid 28 percent nitrogen versus dry urea. He said the concern he had was that spreading dry fertilizer on ground that might not get moisture could cause a loss of nitrogen. We stood looking at each other for a few moments and then I asked him what he thought the decision should be regarding liquid side dress nitrogen versus spreading dry nitrogen. There was about 20 seconds of silence and then he said, “I think we will spread dry nitrogen this year”.
I think Joe made an excellent decision that day and this is why. He did not agree that his father’s choice of fertilizers was the best, but he also knew that it had worked very well in the past when father was the sole decision-maker and that using dry fertilizer for another year would not have negative repercussions for the farm.
In Joe’s case, his father is giving him a significant amount of responsibility in managing the herd. Father has given up almost all input into what goes on in the barn. However, when it come to managing the cropping program, father’s confidence in Joe’s ability is increasing, but in the case of the dry fertilizer versus the liquid, father still wanted to have some input – yes he still wanted control.
Joe decided not to argue over how to fertilize the corn this year.
As I walked across the yard to leave, I thought to myself, “Joe is a young person who is willing to set aside what he thinks is the best decision this year for the cropping program, and not challenge his father”.
In Joe’s case it has been amazing how he and his father have transitioned the management of the herd – it has been almost seamless. Production has continued to rise as Joe has assumed more responsibilities.
Joe’s secret is that he never forced his his views on to his father if they were contrary to what he knew his father wanted to do. On the other hand, his father has felt respected by Joe and has continued giving Joe more responsibility.
Next year I will be surprised if Joe is putting dry fertilizer on their cornfields. Dad will have had another year to think about the value of side dressing and with Joe’s enthusiasm for that type of fertilizer dad will probably be making the suggestion to go liquid himself.
My wife and I had just helped celebrate our granddaughter’s first birthday. One year earlier we had received a phone call at 1 a.m. in the morning from our youngest daughter informing us that she had just given birth to a baby girl – our first grandchild. Seven hours later, I was sitting in a chair in the hospital room holding our little 6 lb. 5 oz. granddaughter. It was a surreal moment. As I was trying to balance my tiny granddaughter in my arms for the first time, standing right next to me and monitoring my every move was her mother. 31 years earlier -she- was the little 6 lb. 7 oz. baby I was trying not to drop as I held her for the first time.
As we drove home from the hospital after having met our granddaughter for the first time, I started to think back to what I had learned about parenting. I reflected back on the childhood of our youngest daughter who had just become a mother herself. Our youngest daughter was never a child who created a lot of problems for her parents, but she always seemed to be in the middle of sibling squabbles with her two older sisters. Even in kindergarten she had been sent to the principal’s office for drawing blood when she clawed a fellow student for not being willing to share the toys.
It was this same daughter, at the age of two, who taught me the most fundamental of parenting lessons. These lessons were learned at our supper table. Our two-year-old sat in her high chair. Her four-year-old sister sat to her right at the end of the table. Her six-year-old sister sat across the table. Once the food was served, the two-year-old would frequently throw food or utensils at one of her sisters – always precise with her timing when her mother and I were looking the other way. Scolding her had a minimal effect. Telling her to straighten up? Also, minimally effective. Taking her food away? Again, virtually no effect. She would make faces at her siblings and they would point at her and say, “Mom, see what she just did?” The two-year-old was quick and cunning.
Her mother and I were getting frustrated and running out of solutions so we embarked on a new plan and this was where my lessons started. As soon as an altercation took place at the table I stopped eating and would get up from my chair and without saying a word, walk around the table and pluck the two-year-old out of her high chair. As I walked into the living room with her in my arms, she would be kicking and squirming and protesting. Eventually, she would slowly start to relax. I would then look into her eyes and tell her that she was a wonderful person but the behavior she had just exhibited at the supper table was not appropriate and unacceptable. I explained as best I could in a language that a two year old could understand that she had two choices. She could return to the supper table and change her behavior or she could head off to her room and I would bring her supper to eat by herself before going to sleep. Then I would put her down on the couch and leave her to decide which of the two choices she was going to make. Without exception, she would return to the kitchen to finish her supper without incident. This scenario happened two to three times per week. And went on for a few months.
So what were the lessons I learned from our youngest daughter? I learned that even two-year-olds can make good decisions for themselves when given the appropriate guidance. (It would have been nicer if she would have made the decision to behave without having to leave the table but that was the process we had to go through with her to eventually reach the point the family could all eat supper together without the drama). She obviously did not like the consequence of eating alone in her room so she chose to rejoin her family and change her behavior – at least for that particular evening. Both as an adolescent and as a teenager, our daughter would always push back if her mother and I pushed our ideas too hard. However, when we gave her the responsibility for making her own decisions after explaining what the consequences would be, there was much more harmony in our home. There were times that she made choices where the consequences were not what she anticipated but she still lived with her decisions. At times this was difficult for us as parents to watch.
In conversations with her now as a young mother, our daughter has said that our confidence in her to make good decisions for herself at a very young age without being told what she absolutely had to do, has been a very fundamental cornerstone in how she is now mothering her own daughter. She also said that the most important thing that has stayed with her is that she understood that we as her parents would enforce the consequences of her decisions.
Life is all about making decisions and living with the consequences. Running a business, whether it is a farm, or another business in the city, is also all about making decisions and living with the consequences. Parents who want to protect their children from the consequences of life, or the consequences of the business world do their children no favors.
When I look at my own life, it is those difficult events where I learned the most. Experience is a great teacher. Protecting our children from experiencing the negative consequences from the decisions that they made may make us feel better – at least in the short term, but it does not give them the opportunity to learn and understand how to take responsibility for themselves.
I love the analogy of learning how to ride a bicycle: It is all about getting on the bike and pedaling until we lose our balance and fall off. You get back up and make the decision to try again. Scrapes and bruises are part of the process. But once you have mastered the ability to balance on two wheels that skill will stay with you for life.
Life is about choices and consequences. Even a two-year-old can begin to make good choices for themselves if we as parents don’t flinch when the going gets challenging.
Farm succession can be defined as the “passing of ownership and management from one generation to the next”. In the past this process may have been called, “passing on the farm, or dad is finally letting go or the son is taking over.”
Family members can and do react in a variety of different ways when they hear the words farm succession. For some, particularly the younger generation (successor generation), there is excitement and anticipation. When it comes to parents, you never can predict how they will respond. Mother may be dreaming about travelling and spending more time with friends, family and grandchildren, father on the other hand may be dreading slowing down.
Farming is no longer a lifestyle that automatically provides a good living. Farming today is big business, it requires the ability to make difficult decisions, the ability to change and adapt, and the ability to develop and maintain a mental toughness for dealing with the day-to-day stresses.
To generate one income from farming often requires an investment of $1-$3 million and in some sectors even more. To have over $10 million invested in a farm business is no longer exceptional.
Over the past 13 years, I have had the opportunity to work as a communication coach with families going through the succession process. Some families do it very successfully – it is virtually a seamless transition from generation to generation. Other families struggle to make the transition work. Why the difference? One word – Communication! In families where communication takes place naturally, or is formalized through meetings, the succession process has a much greater chance to take place in a seamless manner. When communication among family members is a struggle, and there is no formalized meeting structure, succession can become a dragged out process. In this environment when decisions do get made, they are often made out of frustration and not well thought out.
Good decision making requires excellent communication.
How do you start the process of Farm Succession?
It can be helpful to distill the succession process into three very basic, but pointed questions:
As mentioned, these questions are basic and pointed, but they must be answered for a successful succession to take place.
To answer the first question, please seek out the advice of your accountant. The numbers must work before you even start thinking about succession.
The answer to the second question is more difficult to quantify. The following are some best practice suggestions for the successor generation:
1. Pursue a post-secondary education at the diploma or degree level. A degree in business or at least significant business courses will serve you well. Take up employment away from the farm for a minimum of three years. Live away from mother and father. If you want to come home on weekends and holidays to help out, great.
2. Consider working for more than one employer during this period.
3. Start talking about your interest in coming home to farm while still holding down your job away from the farm. Dream about how you would like to run the farm. Draw up businesses plans – yes more than one plan is good. Do budgets. This can be a time to do a lot of “fantasy farming” without fear of making mistakes. But please do not be tempted to short-circuit this experience away from the farm and come home early.
What is next? Trusted advisors are essential. Your accountant is going to be the cornerstone to the success of your succession process. Having faith in your accountant is essential because you need them to provide tax advice, create shareholder agreements, critique budgets, give advice on life insurance needs, provide direction to your lawyer, and answer the many questions you will have. They are the heart and soul of the process. You will also need the involvement of your lawyer, insurance agent and your lender(s). I have also seen situations where other trusted farm advisors such as veterinarians have been asked for advice. Also, do not discount the value of talking with other farmers.
My first experience with farm succession was as a successor – my brother and I took over a 60 cow dairy farm from our father in 1975. We expanded to 125 cows over the next 15 years. That is when I had my second experience with succession – I transitioned out of the partnership. My brother and I still operate a seed business together that has been part of the family since 1975.
I am frequently asked, “Do we need a communication coach/facilitator?” Even though farming is big business, when it comes to making decisions, particularly around the topic of succession, EMOTIONS frequently trump logic. For example, mother may have a different opinion on how the non-farming children should be treated regarding inheritances than what father does. A non-farming child may feel that the parents are favoring their sibling who is going to stay on the farm. A daughter-in-law may feel that her husband is more dedicated and a harder worker than his younger brother. In another situation a daughter-in-law may feel that her contribution on the farm is not being valued by her in-laws. If there are situations like this that you are facing, engaging a skilled coach/facilitator maybe an excellent decision. Everyone needs to be listened to. More importantly they must feel they have been listened to. Getting everyone’s thoughts and feelings out in the open at the beginning of the process before sitting around the board room table in the accountant’s office can eliminate a lot of frustration and surprises. There is often a perception that if there is conflict before succession has taken place that succession will solve the problem. Wrong! Conflict is going to happen. It is how families deal with the conflict that is critical. Acknowledging that conflict is part of business and creating strategy to deal with it should be part of the succession process as well.
The final question: Can a deal be put together that will allow mother and father to sleep peacefully each and every night? The succession process can take two to five years to put in place. One of the reasons is that mother and father frequently need this time period to feel comfortable that the successor generation has the ability, the required skill sets, the passion and commitment to carry the business forward. They want to see results. The security of mother and father’s golden years are dependent upon a thriving business.
It may seem a bit radical to conclude an article on farm succession with this thought, “in certain incidences selling the farm might be the best decision for everyone”.
If mother and father agree that they will be able to sleep peacefully each and every night after this deal gets finalized, you are well on your way to having a successful transition of your farm business.
Starting to build a Farm Succession plan can be an overwhelming topic at first. If the process is broken down into two components or parallel tracks it can be easier to get a grasp of what needs to be done. Track #1 is the operational side of the business (managing the business and ensuring the work is done appropriately). Track #2 is the ownership side of the business (who controls the equity and who is responsible for the liabilities.)
Understanding the distinction and differences of these parallel tracks can help demystify the process of building your Succession Plan. In the past when the younger generation started to farm the typical news up and down the concession was that they, “took over, or are taking over the farm from mom and dad”. Today’s farm operations are much too complex to just “take over”.
The Succession Plan, when put together properly, is a roadmap that provides a path to follow for the transitioning of one generation into farming and the senior generation out of farming. It is crucial to view the plan for what it is: It is NOT the process – it gives you the step by step instructions in how to go about the process in the future.
Timelines are the cornerstones of a great Succession Plan: using the above model of parallel tracks, the responsibilities for the operational side of the business can be transferred to the beginning generation over a period of three to five years. For example, the goal may be that the beginning generation works for the first year under the direction of the senior generation without decision making responsibilities. Over the next four years, the Succession Plan could call for an increasing level of responsibilities be assumed by the younger generation each year with the ultimate goal that full responsibility is on their shoulders for the day-to-day operation of the farm (this is just an example of time lines)
Capital purchases etc. would still need to be discussed with the senior generation. This graduated approach allows both generations to adjust gradually versus trying to deal with abrupt changes. It also allows the senior generation to establish their confidence in the beginning generation that the business will be managed with competence. However, it is in this transition phase of management that disagreements and frustration can set in. For the generation entering the business, it feels the process is going too slow. For the senior generation, the process seems to be going too fast. This is where planning and talking is so important! If you are the younger generation and you think Dad is not giving you the responsibilities you expected, refer back to your plan. What did you agree to? Are you on track?
The ownership transfer can start off at a much slower pace and continue to build over time. For some families, the beginning generation may work for a salary for the first one to two years. Depending upon the age of the parents, and what level of income they may have from off-farm sources will depend upon how fast they want to transfer their equity in the business. In some cases the beginning generation will need to out-right purchase the farm, and in other cases there will be a combination of purchase/gifting. Either way it is critical to create a plan that shows the younger generation that they are able to build equity at a pace that equals their input and contribution to the business. Working for a promise doesn’t cut it. Carrots are to be eaten – not for dangling in front of some ones nose. It is not fair and it makes the younger generation feel that they are under their parents thumb.