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Farm Legacy Opportunities: Partnering with a Non Family Member

Date: 
Author: 
Dr. David Kohl
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Grain, Dairy, Swine, Beef, Young, Beginning Farmers, Specialty Industries, Women in Ag
Home > Education & Events > June 2017 > Farm Legacy Opportunities: Partnering with a Non Family Member
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Hi! I'm Dr. Dave Kohl, Professor Emeritus, Agriculture Economics at Virginia Tech, Blacksburg, Virginia. Crisscrossing the country recently, I had a major question. “How do I partner with a low equity non-family member?” Very interesting. About 20% of the farms and ranches in the United States today have no next generation to take over. This means they're looking for someone outside the family. Of course, we've got a number of millennials that are very, very interested in possibly owning and operating an agricultural business in the future. 

How do we marry both of those? First of all, it starts out with goal setting from both entities. In other words, putting different sets goals in writing: business, family and personal goals. One-, three- and five-year goals are very important for not only the younger generation, but the older generation that might be thinking about phasing out. That's step number one. 

Step number two is to develop roles, responsibilities and accountabilities with both generations. In other words, what are all the ways — from production to management to finance — that roles and responsibilities are going to transfer over the years? Think about starting the younger generation out with a specific enterprise where they are actually in charge of budgets. Give them experience meeting with the lender to obtain money. This is very critical in developing those business, production management and marketing skills, where — again — the older generation can be a mentor, but they are on their own. They have to be accountable to another party. 

Additionally, make sure everything is in writing. It's very important because you not only have to think about the plan of entry, but also about the possible plan of exit if situations change. 

Finally, one of the things that can be very helpful is to have that third party facilitator to ask the critical questions and occasionally come back and make sure everybody is accountable in their tasks and responsibilities. 

There's going to be a lot of opportunity in agriculture. It may lie outside of family members. Hopefully, this little macro clinic blog could be helpful in assisting you if that situation should arise. 

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Comments
Duane Olson
Can we develop any public programs or policy, maybe relative to tax breaks, to assist in this transfer of agriculture. Your points are business sound and apply regardless of family ties. Lets keep the ideas moving so we can see actual change.
11/5/2017 7:21:22 AM
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