Farm Succession Conference 2002

What about farms with no successor? U.S. programs try to link new farmers with viable farm businesses
By: Kathy Ruhf and Cathy Sheils

Click here to view Ms. Ruhf's original PDF presentation
Click here to view Ms. Sheils's original PDF presentation
Click here to order the conference CD

Many farmers are preparing for retirement, but do not have an obvious successor. As a result, non-ownership tenure models are being developed in the U.S. to link people who want to farm with available farm properties.

Barriers to ownership

Kathy Ruhf, Co-Director of the New England Small Farm Institute in Belchertown, Missouri, told conference delegates that 400 million farm acres will change hands in the next 20 years in the United States. But much of it may end up in the hands of developers. That is unless new farmers can be found to take over.

She admitted it's not going to be easy. A recent study in Wisconsin found that only 20 per cent of dairy farms were passed on to the younger generation. (The conference also heard statistics on family businesses in general in which only 30 per cent make it to the second generation, 15 per cent make it to the third and five per cent, the fourth).

There are many hurdles preventing people who want to farm from actually doing it. Among them:

Lack of education and up-to-date information. (Ruff was alarmed to learn that many high schools in the U.S. actually discourage farming as a career).
Lack of access to capital and credit.
Expensive land and equipment.
Lack of access to markets.

Ruhf added that new farmers often face a lack of family and community support, and in some cases, communities can be outright hostile to new farmers.

Yet, family-owned farms are vital: "We are really talking here about the future of agriculture, an industry with multiple values such as the rural quality of life, a sense of community and land stewardship. If we care about agriculture, we want as many family farms as possible."

Programs to help

In the United States, there is an attempt to develop support programs for new farmers and one of the main features is "land linking" in which existing farms with no successor are matched with unrelated prospective farmers. The service is not involved in real estate sales, but rather, a match-making service in which both sides are introduced to each other. Such programs under the "National Farm Transition Network" began in the early 1990s and now exist in at least 22 states.

"Not everyone can afford a farm and even if they could, farm ownership is not necessarily a good investment in some areas," said Ruhf. One option is therefore the tenure model in which the owner retains the title of the property but the farm business is owned and managed by someone else, leasing the property from the owner. Long term leases, some up to 50 years, are being explored where ownership is either not possible or does not make economic sense.

While under criticism for a variety of reasons, Ruhf said the U.S. Farm Bill does have some good news in federal government guarantees of contract sales and incentives for farm land ownership. She added that some states are introducing tax credits for land owners who choose to lease out their farms.

Leasing can be a viable option not only for people wanting to run a farm but also owners who may have trouble selling their farms in areas not under development.

Number one question

What is the number one question asked by people who want to enter farming? "They ask us if they can learn the business on a real farm," responded Ruhf who said many farmers leave their businesses without ever passing down their knowledge and experience.

Mentoring is therefore a key area of investigation for the Farm Link programs. But there are far more people thinking of getting into farming than are leaving the business. In fact, Ruhf said the ratio is 10 to 1.

But the appetite to learn the business is great which is why the linking programs try to do much more than match people with farms. Education is a vital component. A case in point is the Farm Link program at Cornell University.

Visit the web site of the National Farm Transition Network at:
http://www.extension.iastate.edu/nftn/homepage.html

The Cornell experience

Many Farm Link programs in the U.S. are similar to that operated out of Cornell University in New York State.

Cathy Sheils, Program Director of New York FarmNet and administrator of the New York FarmLink project, said the Cornell initiatives started in 1986 as a crisis intervention program to assist farmers in financial stress. Today, it is a referral and consulting source, directing both new and retiring farmers to the information they need.

While most phone calls to the program's 800 help line are specifically related to financial problems and personal stress, farm succession issues are a close third.

The program has its own consultants, 35 people most of whom work from their own homes. Half of the consultants are accountants retired from agriculture lending institutions while the other half are family counselling experts.

Clients of the program pay a flat fee of $40 for the consulting service. The consultants themselves only receive $20 an hour. Sheilds explained they are dedicated people who, "really want to do this type of work." The challenge isn't so much in finding people willing to work for the limited wage but in finding consultants who specialize in, or at least understand, the farm culture. "As a result, we do a lot of training for the professionals," said Shields.

The program cannot exist on client fees alone. Funding comes from private companies and the public sector with the university lending its facilities and resources. Still, funding is always a critical issue and Shields said the program has had to focus on people who are serious about farming because it cannot be all things to all people: "We get calls from people with just a casual interest in farming but we cannot help them. Programs like this need to define the audience and spend limited resources to assist a specific group of people."

Visit the web site of the Cornell program at:
http://www.nyfarmlink.org