Animal Science Department

 

Date of this Version

2011

Citation

Presented at Range Beef Cow Symposium XXII, November 29, 30, and December 1, 2011, Mitchell, Nebraska. Sponsored by Cooperative Extension Services and the Animal Science Departments of the University of Wyoming, Colorado State University, South Dakota State University, and the University of Nebraska–Lincoln.

Abstract

Introduction

The University of Nebraska began educating farmers and ranchers in the area of farm business succession planning over 25 years ago. During that period over 1,000 Nebraska farming businesses have received assistance transferring their farm business from one generation to the next. Early efforts focused on the farm financial aspects of the transition process, however, because of farmer evaluations, educational efforts have shifted focus to communication skills and the importance of the business succession planning process.

Trends in United States agriculture over the past 25 years indicate the importance of farm business succession planning and the urgency created by increased concentration of land ownership in fewer and older hands. According to the U.S. Agricultural Census taken by the National Agricultural Statistics Service, the average age of U.S. farm operators has increased from 50.5 in 1982 to 57.1 in 2007 (United States Department of Agriculture 2009). While the number of total farm operators has only decreased by 36,184 or 1.6%, operators over the age of 65 have increased by 256,058 or 64%. Therefore, the over 65 age group as a percentage of all operators has increased from 17.8% in 1982 to 29.7% in 2007 (United States Department of Agriculture 2009). During this same time period there were 237,533 or 66.7% fewer farm operators under the age of 35, which, as a percentage of all operators, indicates operators who are under 35 years of age have decreased from 15.9% in 1982 to 5.4% in 2007 (United States Department of Agriculture 2009).

Dr. Michael Duffy, Director of the Beginning Farmer Center at Iowa State University, has researched the concentration of Iowa land ownership by those 65 years of age and older. His data, published in “Farm Succession in Iowans”, 2000 indicates land owned by those 65 and older has steadily increased from 12% in 1920 to over 55% 2007. Similar trends have occurred throughout much of the Midwest United States.

There are several barriers preventing younger people from entering production agriculture in the U.S. including the high capital costs of land, machinery and other farm assets, the increased mechanization of farming, U.S. tax policy, tight profit margins for many sectors of agriculture, ease of operation of modern farm equipment, pride of ownership, love of the land, the “no one can do it as well as I can” attitude of current farm business owners, deficiency in communication skills, lack of retirement planning by the current farm operators, and lack of planning for a successor (Ahearn 2009) Although many barriers exist, interest from younger “want to be” farmers remains high. Many U.S. states have linking services that match farm owners with prospective successors, e.g. International Farm Transaction Network: Fostering the next generation of farmers at: http://www.farmtransition.org/ and the Center for Rural Affairs Land Link program. at: http://www.cfra.org/resources/beginning_farmer/land_link , and all linking programs indicate the number of younger potential farmers is several times larger than the number of older farm owners willing to participate in the linking programs.

A farm/ranch business is more than only the farm assets. The farm business includes people, the assets and liabilities of the farm business finances, the day-to-day operation, the marketing and purchasing as well as the labor, management and decision making aspects. Owners of a farm business make either a conscious or an unconscious decision regarding whether or not to actively pursue a successor for their business. Many farmers do not consciously consider the question, “Do I want my farming business to continue after I am gone?” They simply go on day after day doing their work as best they know how. One day simply turns into the next which turns into a week, and then a month and eventually fifty years have gone by and the question is asked, “Where has all the time gone?” Without thoughtful planning for succession, the unintended consequence is that there are fewer and fewer young farmers entering the business and ownership of land becomes concentrated into fewer and older hands.

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