Passing the torch to the next generation of farmers
It’s a warm day in early September. Corn fields stretch into the distance, the only sound is the rustling of the stalks in the breeze. The silence is broken by three dogs barking as a reporter crosses the gravel driveway to greet Mark Seib, one of four partners at Seib farms in Poseyville, Indiana.
Mark, his brother Wayne, and nephews Carl and Matthew recently completed two years of planning a line of succession for the family farm.
“If it's all in one person's name, and then something happens to that person, then there's a scramble to try to get everything covered,” he said. “And we don't want that, we wanted to have everything with transition and allow for the nephews to work their way into the farm.”
Passing a farm to the next generation is quite the undertaking, much more complicated than a simple will. Farmers must share detailed financial records, family history, and goals with a third-party business that specializes in succession planning.
The Seib farm has been in the family for over 100 years. It was established in 1898 by Mark’s great-great grandmother. She handed it down to her son, who handed it to his son, and then eventually to Mark and Wayne’s parents.
It can be a tall order to be open about all the personal details.
“It was a little scary, you know, but we finally sat down, talked together,” said Matt Seib. “If we're gonna do this, we need to let them in. And like, they're part of the family, we need to be 100% honest with them, we basically need to tell them everything about us.”
Why planning is important
Succession planning is important to every business, but in rural areas, it’s not always common. Carl Seib, the ‘on-paper’ manager of the farm, says it can be tough work for farmers on top of existing responsibilities. “I think for a lot of people I talked to at least, the general assumption is, ‘yeah we need to do it’,” he said.
Much is at stake if that planning isn’t done. Owners may be left scrambling to find a buyer of all their assets if their kids don’t want to be involved in the farm. They might have to lease out the land to be worked by someone else, eating away at the take-home income of the owners.
Mark also says getting started in the farm industry today is next to impossible. “You can't start from nothing. And being in farming it's too much of an investment. You've got a combine that’s a half a million dollars, and that only does harvesting, period. You can't take it to town and take the family to church.”
Common issues in planning for the future
Specialized help is available. For example, Art Littlefield and Dennis Henks, estate planning specialists at Lincoln Financial Advisors, focus solely on agribusiness services. They both covered the Seib’s succession planning process.
Henks says a common issue is that farms aren’t typically set up as a business from the get-go. Simple family operations make up a vast majority of farms, and that makes it difficult when a family has to separate its way of life from its business endeavors.
The process looks straightforward on paper: Gather financial data, understand the goals of both generations, and then build the plan. But as Henks puts it, things aren’t always so easy.
“There just tends to be a lot of conflict and lack of communication in families that, as a result, cause the succession planning to be difficult,” he said.
Even a smoother-sailing deal is time consuming, and every hour spent working on this is an hour spent not working on the farm.
This can be especially harmful to smaller farms that may not have the workforce needed to handle everything simultaneously.
As Littlefield puts it, “many of the issues that we need to address include planting and harvest, that we only have a limited window that farm families will be available.”
Cost is determined by the size of the farm and the complications that arise during the process. Littlefield stresses that they view it as an owner’s investment into the future of their farm.
Family farms in Indiana
Farms like the Seib’s make up a rich tapestry of family legacies throughout Indiana that continue to exist.
The Indiana Department of Agriculture recognizes farms that have been in one family for at least 100 years. These accolades, or Hoosier Homestead Awards, are a way for the state to underline the importance of family-run agriculture.
“What I have found in Indiana is our farmers, they want to take care of the land, they want to do the right thing when it comes to things like conservation, and in making sure that land is available for somebody to have in the future,” said Bruce Kettler, department director.
When asked about what happens to farms that don’t properly plan succession, Kettler said there’s a bit of a difference between succession planning and estate planning, though both are closely tied.
“I think there's two pieces to that to kind of think about, one is succession planning. How is the farm going to plan to have succession of either ownership or management or both? And what does that look like? The second part of that is estate planning. So they're certainly, of course, closely related, but they're not exactly the same thing, ” he said.
For example, on the estate planning side, a farmer could choose to leave everything to children, but that doesn’t solve the issue of how the farm continues to operate. “There's also a component of, do we want to have somebody that manages the farm? Is that a family member? Is it somebody else? And the succession of how we make sure this is a continuing entity and a continuing farm, what does that look like,” Kettler said.
Kettler sees an opportunity to involve a younger generation in agriculture. “What I appreciate about current and younger generations is they tend to have a pretty entrepreneurial mindset. So sometimes they'll come back and say, okay, this farm, we used to raise crops, we used to raise livestock, I'm going to find a way to get back involved in that business,” he said. “And I like that, because I appreciate that some people want to continue to kind of a lifestyle.”
As one generation passes the torch, growing pains emerge.
The Seibs got a taste of that during their planning process. “I guess the biggest thing I can say is that change can be scary,” said Matt Seib. “But don't be afraid of it because it could possibly be a good thing.”
So what convinced the nephews to continue working the farm? Carl answered, “It's in your blood. I feel like more than anything, you know, even the days you don't like doing it you find a reason that you want to keep doing it. It's what you love and what you know and what you want to see continue. And I think for me more than anything, looking at the legacy that's already here, and wanting to say that I've been able to help continue is important to me.”