Tackling obstacles: Transitioning the family farm
“Forty-two percent of young people in South Dakota today aspire to be in agriculture,” said South Dakota Governor Michael Rounds at the First Annual Agriculture Development Summit held on June 30, 2010 in Sioux Falls, SD. Yet, despite their youthful enthusiasm and best concentrated intentions, sometimes obstacles push young people away from rural America and to jobs in big cities.
One of the big reasons so many young people turn away from careers in production agriculture is because of the lack of opportunity, and sometimes, even when the perfect opportunity is there, families don’t plan far enough in advance to secure the future of the operation for the next generation.
Arkansas beef producer John Steen knows a thing or two about that. While he always planned to take over the family cattle business, he took a job with Tyson two hours away from the ranch. He figured things would work themselves out eventually, but what he didn’t plan on was his father’s losing battle with cancer, which finally ended two years ago, leaving the ranch to his step-mom, Linda, and himself.
Of course, a will gives the best intentions of the recently deceased; however, it doesn’t always answer the tough questions for how these assets will be transferred to the ranch heirs. Having gone through this, Steen hopes to help producers across the country facing similar situations. His goal is to assist others going through a difficult time and to encourage producers to make a plan before it’s too late.
“I’m sure there are a lot of producers all across the U.S. in the same boat as me,” said Steen, who raises Charolais and Limousin on a 700-acre ranch. “I never looked far enough ahead to make a concrete plan with my dad. He asked what my intentions were from time to time, but we never sat down to work things out. Then, it was too late. When my dad passed away, there it all was for me to face. I had to start making those big decisions that we should have made together.”
Steen didn’t have an accountant. He didn’t have a lawyer. He didn’t know he had to get an appraisal on the operation in order to pay taxes. He didn’t know how to obtain the equipment needed to keep the place running. And, he was worried about living two hours away from the ranch, maintaining a full-time job and trying to save his family’s business, too.
“After my dad passed away, there were 100 things I had to do all at once,” said Steen, who is in the process of writing a book offering producers advice on the estate planning and transition process. “A will is just a starting point, but just because you have a will, it doesn’t mean you have a plan. I have had to keep plugging away to save something that has been in my family for generations.”
Steen admitted that the questions he had were overwhelming at times. Who gets the money from the first calf crop? Is there enough money to keep operating? Will we have to sell the business? Who gets the equipment? What is the next step?
“If you can have answers to the tough questions before it’s too late, it can help out immensely,” explained Steen. “I was in a fog for the first year after my father died. I felt kind of lost. Of course, I leaned on God to help me get through it. Even in tough times, you’ve got to have faith it will all work out.”
Steen said that nobody ever wants to plan for what happens after parents die, but it’s a conversation that ranchers have to have. His best advice is for families to put together a legal, binding document that puts everyone on the same page for what will happen to the operation. Once that is established, the tough questions for how it’s going to happen will start to be answered.
“Find somebody who is objective and present your situation to them, so you can get advice from the outside looking in,” advised Steen. “Look at your options and keep yourself grounded. Know the cost of production, and be prepared to handle numbers that may be overwhelming to deal with at first. Remember, you’re not the first person to transition a family farm. You aren’t alone in the process. Others have succeeded and continued on.”
Steen’s book project will focus on the issues families face in having the conversation, making a plan and handling things after a death in the family.
“If there is one thing I would like to accomplish, it’s that I would like to spare others from having to go through the fight I have had to fight over the past two years,” said Steen. “Save your family members the grief and make a plan today; don’t wait. It’s a conversation worth sitting down for.”
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A pasture or lot with plenty of grass or bedding and windbreak is important when calving in the cold.