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Why Transitioning A Farm From One Generation To The Next Is Trickier Than Ever

Mar 25, 2019
Originally published on April 1, 2019 5:14 am

Family structures—and farms themselves—are much more complicated than they used to be. Today, farm transition and land transfer are now among the hardest conversations families face. (This story was  produced in collaboration with The New Food Economy.)

At the end of December 2005, Margie and Dan First were at the movies when Dan began to feel ill, really ill. His head pounded, then he vomited. A friend recommended they call an ambulance immediately. Dan was rushed to the hospital, where they learned that he had suffered a brain aneurysm.

The events of that day, traumatic as they were, were much more life-changing for the family than anyone in the First clan could have predicted. Like many people, Dan, a 60-year-old Michigan dairy farmer, had never really thought about his own demise. And while his 15-year-old son Josh had dreamed of taking over the family’s farm, the rough plan had been for him to go to college first before deciding if running the dairy was in his cards. Now, suddenly, things were different.

“He was still in high school, he didn’t even have his driver’s license yet,” Margie says, her voice cracking with emotion. “But Josh just took over that farm. I would have been lost without him.”

Dan’s illness and subsequent confinement to a wheelchair meant a lot of stress for the family. And although Josh had dropped everything to help, he and his mom started to butt heads over farm decisions. Something had to be done, and the Firsts decided that meant transitioning control of the farm to Josh. But they had no idea where to start.

“We were going nowhere without Roger,” Margie says.

Roger Betz is one of the many state agricultural extension agents. But Betz and others like him are much more than just numbers-obsessed economists to the people they serve. They become close confidantes and facilitators of conversations about farm transition and land transfer. These are some of the hardest conversations families face because they involve delicate and emotionally fraught issues of money, land, relationships, and death.

“It took us a while and there were a lot of tears shed and yelling, but Roger was right there with us the whole time,” Josh says as we sit together in the family’s dining room, much as they did with Roger almost 10 years ago. “We would sit at the table from 5 in the afternoon until 12 o’clock at night trying to make a plan that worked for everybody. And Roger told me, ‘I have full confidence in you.’ I remember that to this day because it was a lot for someone 20 years old to take on, assets in the seven figures. It wasn’t just a lemonade stand.”

I find Roger Betz where he often is, sitting behind a laptop in a nondescript room of one of Michigan State University’s Agricultural Extension branch offices. Beside him sits a farmer, one of many he has worked with over the years, who matter-of-factly answers questions about the hundreds of thousands of dollars he spent on feed for his dairy cows or how he priced his milk for sale to the cooperative. The numbers are grim, and losses this year are in the six figures for some.

But the mood, while serious and even morose at times, is also familial and freeing. It can be a lot like therapy for these farmers, an opportunity to be brutally honest with Roger about their operations, while trusting he will help them come to conclusions about what needs to be done.

“We say that when you meet with Roger, it is breakfast, lunch, dinner, and sometimes a midnight snack,” one dairy farmer told me. Roger will spend three, four, five hours with just one family, helping them think through every facet of their operation, from the cost of veterinary bills to the more thorny interpersonal issues between parent and child, as he did with Margie First.

Betz has worked for the last 37 years at Michigan State University in agricultural extension, a national system started in 1914, in which “land grant” universities receive funding from the U.S. Department of Agriculture (USDA) to provide outreach and education to the public. As an agricultural economist, Betz knows his way around spreadsheets and farm business plans. But he has also learned firsthand how to facilitate the difficult conversations that come along with farm planning.

“Whenever we are working with people and doing business analysis there is always story,” Betz says. “Why are the numbers doing what they are doing? Every family has different issues, and so part of what we try to do is try to help people be grounded in some of their decisions.”

The changing face of extension

While much of the applied research that comes out of agricultural extension offices is focused on output-related issues like maximizing yields and rotating crops, extension specialists and others working with families like the Firsts have seen a radical shift in the nature of the farm family in recent years.

A generation ago, farm families functioned very differently than they do today. Farmers worked smaller, less valuable plots of land with much smaller, less expensive equipment. Farm boys (and the occasional girl) grew up and took over the farm, working with dad in the fields before inheriting the land, often informally, as it passed from one generation to the next without question or discussion.

Now, family structures — and farms themselves — are much more complicated. Farm families are often sitting on extremely valuable, and costly to run, assets and debt. Machinery, while expensive, also gives farmers the ability to work large tracts of land alone, until much later in their lives. Offspring leave to go college hundreds of miles away and take more lucrative jobs in urban centers. Sometimes, a number of siblings, both male and female, will want to take over the farm. Other times, no one does.

This new paradigm means transitioning a farm from one generation to the next is a far trickier business than it once was. Along with the sheer value of land and equipment comes an inheritance of big financial implications. Siblings may see the land for its sale or rental value, while others may want to farm but can’t cobble together the money to buy out everyone else.

“The way to think about it is the price of poker has gone up,” says Allan Vyhnalek from the University of Nebraska Extension. “What was simply, ‘We’ll let little Jimmy stay on mom and dad’s farm and he’ll just pay us rent,’ now that rent check, instead of being $150 an acre, is $300 an acre. And so that gets to be a big paycheck.”

Which means that people like Roger Betz have their hands full.

Getting to know the family

Unfortunately, not all states are willing or able to provide extension specialists who can spend hours with families drumming up the perfect farm transition plan, as Michigan does. Instead, most have moved toward offering classes on land transition to farmers and aspiring farmers, as Nebraska, Vermont, and Arkansas now do.

Mary Peabody is a community economic development specialist at the University of Vermont Extension. While at the beginning of her career she spent the majority of her time in the field on farms, she now teaches classes each spring to a cohort of women beginning farmers who hope to start their own operations.

Peabody says that working with that cohort is somewhat easier to do in a classroom than it may be with other demographics.

“Women will share very personal information in a group and will form a strong sense of trust with each other,” she says. “They share their financial hopes and dreams with each other.”

But Peabody also sees limitations to working with farmers in a classroom setting.

“I can talk to a group about the mechanics of land transfer, about lease agreements and all the paperwork,” she says. “But the bottom line is, at the end of the day, every case has a different spin. I think it is a huge value to have the time and resources to sit down with people one on one.”

Working with families individually, says Peabody, also allows extension agents to find the root causes of a farm problem, which might be lurking behind the numbers.

But not everyone in the profession agrees. Many of Peabody’s agricultural economist colleagues don’t want to get sucked into the difficult conversations that unfold over farm transfer, she says.

“[They] don’t want to get into it all—mental health issues, illness, divorce,” Peabody tells me over the phone. “If someone calls them in to work on cash projection, they say, ‘That is what I do. I don’t want to know about alcoholism in the family, or the battles between kids.’ But how can you give good advice about dairy yields if there is rampant alcoholism in a family?” she asks.

Ron Rainey teaches risk management classes as an agricultural economist at the University of Arkansas Extension. He says that although he tries to help with emotional family issues, he also understands that if he doesn’t know the family well, he may miss some of the cues.

“As an economist, I think I have emotional intelligence. But I am thinking of numbers,” Rainey tells me.

“I may or may not be aware of communication issues, or be able to ask the right questions,” he continues. “Unless I have close a relationship with the family, it’s very difficult to have those discussions.”

Like the women farmers Peabody advises, Rainey works with African-American farmers, another group with unique concerns. After generations of well-documented discrimination against black farmers, during which they were denied loans and access to USDA programs, many black-owned farms have sunk into debt. Land, too, was passed down informally, often without wills, because proper legal channels were difficult to access.

Now, some of that farmland has an unclear title called “heir’s property,” in which multiple heirs — in some cases, as many as 100 — need to work together to try to hold onto a farm. An estimated 80 percent of the land once owned by black farmers that has been lost since 1910 was lost at least in part to heir’s property laws. This means the black farmers and their families who still own land today often need professional legal help when making plans for the future, help many extension agents just can’t give.

“There were parts of the law I did not want to go into because of the high emotional level, like divorce law,” says Monica Rainge, a lawyer with the Federation of Southern Cooperatives, a group working with mainly African-American farmers in the South. “So I got into heir’s property.

"But I didn’t realize that it is even more contentious than divorce. You are dealing with people’s lives, and often I am at a table with people crying. It’s really emotional.”

Rainge works in one of the 41 states that allow outside “certified mediators ” to work with farmers. State mediation services (paid for by USDA) have been used for years to settle disputes between neighbors, lenders and creditors, and within USDA programs. But the 2018 farm bill, signed into law by President Donald Trump in December, made funding available for “ state mediation programs ” to work with families specifically on “family farm transition.”

This means that, for the first time, farmers can access free legal advice and family mediation, even in states where extension specialists are not available to work one on one. The farm bill also made it possible for those without a clear title, like those with heir’s property, to be able to apply for USDA loans and programs.

“The South has always largely been an agrarian community,” says Rainge. “Land and farming is all they have known. And a lot of farmers want to die on their tractor. So they are extremely emotional conversations to have.”

There is help

Simply starting the conversation with one’s family is a critical piece of the puzzle, and a handful of nonprofits also want to help families get going. The Practical Farmers of Iowa, for example, is trying to jump-start those conversations by commissioning Map of My Kingdom , a one-woman play about farm transfer, written by Iowa’s Poet Laureate, Mary Swander.

The group follows up the play with a “legacy letter” writing workshop in which participants are asked to write a letter to future generations about their most powerful memories of the farm and how they would like it to be maintained after they are gone. “Often people go to classes and start with the spreadsheets,” says Worley. “But then they say, ‘What am I trying to achieve?’

They don’t know what they want to accomplish. The play and the letters set the landscape to address what is important to them.”

But as I sit and watch farmers bare their hearts and souls to Roger Betz at their yearly business analysis meetings, it is clear that while classes and plays might help spark the conversations that need to happen, there is nothing like having a guide you know and trust to facilitate the really hard conversations.

Margie First doesn’t even recall reaching out to Roger Betz after Dan’s aneurysm.

“I just felt like he was always there,” she tells me. Roger worked with the family before, and had helped Dan calculate the farm’s finances. But like the rest of the family, his role changed once Dan fell ill.

“I have so many emails I sent, and some of them were not about the farm, they were about my relationship with Josh and how to handle that. I needed help in that aspect, too. [Roger] was more than an extension agent to us, he was also a friend.”

Beth Hoffman is a freelance journalist, and teaches at the University of San Francisco. She can be reached at iowa-farm.com.

The New Food Economy is a nonprofit newsroom investigating the forces shaping how and what we eat. Read more at newfoodeconomy.org.

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