With each new generation, every family farm is going to grow in a different direction. The question is: How?
It’s natural for a son to want to grow a farm in a different direction than his father or grandfather would. It really doesn’t matter what the son grows or how the production parameters are different. The question that matters is: Are the same principles which made the previous generation successful being applied? Or are they being forgotten, resulting in an 80 percent probability of failure?
I once had a father/son situation in which it would be impossible to be a better hog operator than the father. He had immigrated to Canada with nothing and had built a sizeable multi-site hog operation.
One of the reasons he had achieved this success was by always working out his mistakes with a pencil first. The father had never made any investment which didn’t return at least 7 percent ROI on paper first. Granted, there were a few times investments didn’t pan out as expected, but overall, he had been extremely successful.
His son was an extremely hard worker, and I simply could not speak enough praise for his character. He shared many of the traits of his father. Yet he wanted to be the opposite of his father. He complained he was tired of being inside a concrete barn all day. He wanted to spend more time outdoors and farm holistically. He had a vision of raising clean, green Dexter organic beef cows.
Now there was absolutely nothing wrong with his son’s vision, and niche marketing is definitely a trend. However, his son wanted to instantly jump into things and do it in a big way without thinking. He was passionate about his vision, and it was very emotional for him. He wanted “just to do it” and didn’t care about the details. He wanted instant results.
This is because the son was born with a silver spoon in his mouth and had never starved.
For several months, I worked with the son to formulate a business plan, and we looked at it from multiple perspectives. It simply didn’t cash-flow and didn’t make sense whatsoever. Yet the son wanted to do it that spring anyway. He didn’t care about what worked on paper; his gut told him it would work out.
The son never knew what it was like to fail and starve. Thus, he had romantic visions of taking risk. He spoke to me of risk as if he was reading a motivational poster, not as a man who had experienced it.
The son wanted to rent prime cash-crop land at $300 per acre per year from the neighbors over five years to pasture 20 beef cows. He spent $30,000 on a custom fencer to build a permanent perimeter fence around 80 acres because the son “didn’t have time to do it himself.”
We interviewed a beef farmer who had successfully marketed his beef at a 300 percent premium, but the son failed to comprehend the work and strategic branding that went with it. He just thought it was a matter of pasturing cows on grass, then charging a premium. He expected folks would drive an hour from the city to buy freezer beef at 300 percent mark-up with nothing more than a sign at the end of the gravel road.
The son didn’t want to go through the fuss of value-adding the beef with certified organic certifications. He planned to sell the beef from his dad’s conventional hog operation, with the cows being pastured “down the road” out of sight. He wouldn’t let kids onto his farm to play with the barn cats or animals due to liability. He simply didn’t get the concept of marketing to the green urban consumer.
Yet the father wrote the check to “finance his son’s dreams.” On one hand, anyone would have to admire the father for supporting his son’s dreams, no matter the reservation. However, the question is: What is going to be the end result? That farm could risk $200,000. Yet when that capital was lost, would the father continue to support his son’s dreams?
The bigger issue was that the father was passing on capital, not wisdom. The most valuable lesson the father could have passed onto his son is this: “If it cash-flows and your assumptions are reasonable, we’ll do it. If it doesn’t pencil out, go back to the drawing board until it does.”
For another family at the same time, they faced similar challenges. Yet the parents had up-front developed a list of 10 commandments which had dictated the farm’s success in the past. One of these commandments was, “Work your mistakes out on paper with a pencil before you spend a nickel.”
By having a list of “family values,” the parents had an out. They could say no to their son’s dreams without being discouraging. In fact, they encouraged the son on his first draft of the business plan and told him to “sharpen his pencil and go back to the drawing board until the numbers worked out realistically.” The son came back to the father with various revisions, and after draft 4, they invested.
So what am I saying? Don’t support your son’s or daughter’s dreams? Absolutely not.
What I am saying is: Figure out what 10 things made you successful and chisel those values in stone. Really spend six months thinking about 10 commandments, and for six months, carry them in your pocket on a slip of paper. Then, frame it and share these values with your kids openly.
To get examples, email me and I’ll send you free samples.
This process might seem nerdy, and frankly, it is. Yet it will prevent many family arguments and you having to say no to your kids’ dreams. It allows you to point to a rule and then encourage your son or daughter to structure dreams around the framework of what has made you successful.
More importantly, these core values, once written in stone, will be around forever. Your great-grandkids might never meet you, and your wealth might have petered out by 2050, but the values that made you successful might be something they hang on their walls someday.
Wisdom is worth more than money to pass on … PD
Andy Junkin is an author and facilitator for farm families. He specializes in consulting with Generation Y farm families prior to farm succession and also working with Generation X siblings and cousins who are co-managing family-owned farms. You can reach him by phone at (800) 474-2057.
Andy Junkin
Ag Facilitator
