Three ways to advance farm transition planning

Farm family coach, author and speaker Elaine Froese has a clear message for farmers who are not actively working on transition planning.

“Stop procrastinating and avoiding conflict,” she says. “To create solutions, you have to talk about tough issues.”

Froese recommends three key topics for discussion that will create clarity within the family and move the planning process forward. What are the income streams? Where are people going to live? What does fairness look like?

Why it matters: Farm transition can be a difficult subject for many farm families but it needs attention.

She urges farmers to analyze their financial data to determine what they require for family living and then hire a fee-for-service financial planner to examine their income stream for the next three decades.

“I want there to be financial transparency between farm founders and the younger generation and between partners of the same generation,” she says.

Housing is a unique issue in farm families because someone’s home and the main yard for the farm business are often co-located. Froese advises families to discuss where people are going to live and when, and what the housing expectations are as the founders age.

She reminds young farmers that when the founding generation is being clear, they are being kind.

“If you talked to your father and he said he’s not moving off the home farm, that means your house is going to have to be somewhere else.”

If a new home will be needed, the discussion should include where the cash flow is going to come from and whether the farm business will be involved in funding the purchase.

Froese says it’s important to define what fairness looks like within the culture of a family business.

Fairness should mean helping everyone be successful, she advises.

It is likely not realistic for farm successors to buy the family’s farmland at today’s market value. While there are situations where founders want to give land to their non-farming children or the non-farming heirs are asking for land, keeping the farm intact may be best for the future of the business.

Froese explains that farm litigation is exploding, especially in the Prairies, because people are not talking about expectations.

“The crux is that your farm is not a piece of pie. Fair is not mathematical so you need to get clear on what it looks like to you.”

Transition starts with conversations, and making the first move is a positive planning behaviour, Froese advises.

“I see farming parents waiting to see the passion in their sons and daughters, and children who say they have no idea what their parents are thinking because nobody will make a move, but this is not chess.”

Expressing emotions in a healthy way, delaying responses to calmly collect thoughts and being adaptable are also positive behaviours.

“Agriculture needs a huge shift in its thinking,” Froese says. “We need to get back to understanding the culture, which is the invisible glue that keeps our farms and families together.”

She teaches farmers that there are three aspects of culture — what you believe, how you behave and how decisions are made.

Froese was a speaker at the 2023 Ontario Agricultural Conference in January.