Ken Olson: Generational transition on family ranches
February 3, 2012
A lot of attention has been given to the statistics that indicate that farmers and ranchers are getting older in the U.S. The national average age of farm and ranch operators in the U.S. is over 57. I have read that the average age in South Dakota is even higher. I imagine the same is true for surrounding states.
Last August I wrote a column last about how this, and the overall economic picture in beef cattle production, creates a lot of opportunity for beginning producers.
Additionally, the USDA recognizes this as a problem and provides incentives to help beginning producers get started. They provide a low-interest loan program through FSA. They also have a Beginning Farmer and Rancher Development Program (BFRDP) that provides grants to organizations that can provide assistance to beginning farmers and ranchers. Several South Dakota State University (SDSU) extension personnel have received a BFRDP grant and are using it to provide educational programming for beginning cow-calf producers.
Another important aspect of successfully transitioning the next generation onto the ranch is ensuring good communication and careful planning. This helps multiple generations work well together successfully. We have all heard the horror stories about failures that have led to unsuccessful transitions and broken families. No one wants this to happen. If all generations of the family want a transition to occur so that they live and work together and are both successful and happy, why do these horror stories happen?
I’ve recently heard two presentations on this topic: Ron Hanson and Dave Goeller, both from the University of Nebraska. I would like to bring out a few of the important conclusions that can be drawn from their presentations. The keys are – planning and open communication must start immediately and be ongoing.
When the topic of transition planning is brought up, many of us think about estate planning. That is very important, but it is an early step in a complex and ongoing process. A key word in that last sentence is process. A transition plan is not an event that is completed at some point. It is a process that is ongoing as long as there is more than one generation on the ranch. Consider that many ranches have three generations involved. People live and work longer, which means that the grandparent generation and parent generation can be coexisting, with a new “crop” of beginners in their 20s or 30s that want to join them. Don’t be surprised if there is no end in sight for the transition plan. This makes it even more important that a working plan is in place. This plan has to be a living entity that adjusts and adapts as the members of each generation age and mature.
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Communication is extremely important. For a transition plan to work, everyone in each generation has to know it and be involved in carrying it out. For many ranch families, this is the hardest part. Many ranch people struggle with how to talk about the hard subjects. No one wants to create conflict or is comfortable with how to resolve conflict that is likely to arise in creating and working the plan. However, it is important to consider that not tackling these subjects head on actually increases the likelihood of conflict as opposed to dealing with them as they arise through open, honest and mature conversation.
Communication about the transition plan really needs to include everyone with a stake in the game, all the way from the beginning of the discussion and onward throughout time. This should include all children, both those that return to the ranch as well as those that go on to live off-ranch. It also needs to include in-laws. Not including all parties leads to poor and broken communications. This in turn carries the risk of leading to distrust. If this happens, success and happiness for all generations is unlikely.
I hope I have made a few things obvious in today’s column. First and foremost, transition planning is a complex and ongoing process. The complexity of the total plan is beyond this column. Books have been written on the topic. Key to dealing with this complexity is communication. If a plan for you ranch isn’t already in place, or at least started – the sooner it is started or put in action as a working process, the better. The legacy of your ranching operation and family depend on it. Start visiting and acting on it today.