Farmers Legal Assistance Network

To visit the main page of the Farmers Legal Assistance Network, go to:  farmlawhelp.com



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Passing on the family farm: Can the next generation afford it?

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In the not so distant past, economics played a lesser role in farm succession planning.Let’s face it, with 7 dollar corn and 15 dollar beans, their generally was ample money to bring in the next generation into the farming operation and/or have the next generation buy out the older generation.Now, with prices that are break even or below, economics play a much greater role. The question becomes how do we ensure the next generation can financially afford to take over the farm?I was recently asked how does a farm family pass on a farm if the next generation cannot afford it.We all know it is next to impossible for someone to break into farming due to the capital costs of land, machinery, and so forth.So, how do we expect the next farming generation to do the same? In many instances, for the older generation, economics and the need for income is so important that succession plans do not get established because the older generation is fearful if the farm is transferred so does their incom…
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Observations on Ways to Make Farm Profitable for the Next Generation

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In last month’s article we discussed whether or not the next generation can afford to take over the farming operation.I received a lot of feedback on the article and one response stuck with me.The question was posed, if the farm is not making ends meet now, how can it then be profitable to the next generation, especially being profitable enough for to bring in the next generation? It was a very good question and had me thinking on a response for quite some time.I will first lay out a disclaimer (we attorneys are good at doing such) and say that I am not a farm economist.Nor am I versed in financial advising.In addition, not every farm is going to be helped by what I write in this article, nor is what I write about a good fit for everyone.I am merely going of off 14 years of law experience and having worked with hundreds and hundreds of farmers running just about every type of farm operation there is.Here goes:
1.Farm Structure:The sooner a famer can structure their farm as a legal enti…
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Will your farm be in the 97% club or the 3% club?

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Will your farm be in the 97% club or the 3% club?


One of the overriding goals that farmers have is that their farm operation continues on to a successor.  Then why is it so difficult to get farmers to put a succession plan in place?    A recent statistic stated that only 33% of all farms in this country will pass to the next generation.  That number does not seem shocking.  Of the farmers that are over 60 years old, representing the “current generation”, it is entirely plausible that only 1/3 of the farms transfer to the “next generation” (i.e. people aged 30-60) over the next 15-20 years when the current generation retires.
The same statistic source went on to say that of the 33% of farms that transfer to the “next generation” only 10% of those will pass to a third generation.Whoa.Let’s take a second and do some math.We have roughly 2 million farms in this country.If only 1/3 transfer to the “next generation”, then that means we drop to 660,000 farms in the next 20 years or so.If only…
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