Before Starting a Farm Transfer: A Farm Family Pre-Agreement

By Steven Richards

Often, when speaking to groups of young farmers looking to return to the family farm, the first question I am asked is, “What is the best way to start a farm transfer?”  In most circumstances, I typically recommend a trial period for both generations. Instead of jumping into a farm business partnership, the junior generation (future owners) and the senior generation (current owners) must agree on how they will work together and how rapidly the farm transfer process will progress. This is something I refer to as a “pre-agreement.”

A pre-agreement should contain at least three parts: how to work together, how to develop the junior generation’s skills, and how long a trial period is necessary. Keep this agreement simple; it is not a legal agreement but a precursor to one. Treat this like an internship opportunity, where both sides must work together to improve the skills and employability of the junior generation and benefit the business for both generations.

How to Work Together

Get both generations’ expectations out on the table. It is better to air one’s concerns ahead of time than have difficult situations result. These “working together” guidelines should include basic things such as pay, time off, and when people are expected to show up and leave work. It is also wise to discuss how much autonomy or decision-making authority each person will have: will decisions be shared, or will the owner be the sole decision-maker?  Also, both parties need to be realistic about working together, even discussing how to part ways amicably if things don’t work out during this pre-agreement process. 

How to Develop the Next Generation

The next generation rarely has all the necessary skills and management ability to run the farm immediately. It is also just as rare that the senior generation will have all the necessary skills to be excellent trainers and teachers. The solution is to craft a development program that assesses the skills the junior generation needs and places the training responsibility on the senior generation. If training the next generation is too tricky, don’t be afraid to look to outside sources for farm manager training, such as college degrees, cooperative extension programs, trade schools and associates degrees, and Farm Bureau young farmer and rancher meetings.

How Long of a Trial Period

The junior and senior generations must agree on how long this pre-agreement trial period will last. At the end of the trial period, plan to make a decision: continue farming together; modify the working relationship and progress the farm transfer process; or part ways in a friendly manner. Both parties must always be open to voicing and hearing concerns.  For longer agreement periods, it’s a good idea to schedule routine checkpoints (at least annual, if not more frequent) to discuss how each generation is living up to their side of the bargain.