Neighbours here are so competitive for land, that never happens anymore.”
So are you cultivating harmonious relationships with the landowners next door, or are you just hoping they will read your mind and know what your farm vision is for expanding your land base with your successor?
Some proactive farmers are doing a “retiring producer needs assessment” with older farmers and planting the seeds of an ongoing conversation. They ask questions about the annual income stream that is needed, if there is a plan in place and whether or not the farmer has an “exit plan.”
Retiring farmers are typically concerned about having a plan to exit, but in reality there is no plan. Sometimes this conversation can last five years. It should not be a “hostile takeover” kind of talk, but one led by the aging farmer, with grace and respect.
Are you working at introducing your successor to the landowners you deal with? Farmers like to know who is going to be caring for their land. They want great stewards to farm their land well.
The retiring farmer also wants to do business with someone who is transparent, honest, trustworthy and pays his or her bills on time. The renter should want to make sure the landowners feel like they are “well taken care of.”
Do you know who your “best prospects” are to rent or buy land from? Keen negotiators are talking to their best prospects at least monthly. They are talking to them every chance they get and also trying to create chances to talk with them.
This is relationship selling, mostly done on the phone, sometimes by text. The aging farmers at community meetings for the school, curling club, fair, 4-H, farm groups and church are also not left unnoticed.
The transfer of land can be a sensitive topic for retiring farmers. Be aware of the following cautions when approaching the topic:
- Be sensitive to what the aging landowner is going through. Some people do not want their land to change hands until they die.
- Pick the right “tailgate time” to have a casual conversation about the farmer’s future plans for the land. This is not community news; it is a confidential talk.
- Custom working the land gives you an opportunity to show how well you farm and care for the earth.
- See if there are economic enticers, such as helping the aging farmer sell some of his equipment or get it ready for auction.
- Consider finder’s fees for those people who understand the relationship-selling process who can give you workable referrals.
- Beware of people “pretending” to be dealmakers when they really don’t want to have conversations about renting or selling. Be sure that the farmer has the ability to make a rental or sale decision.
Here are some tips to help the process go smoothly:
- Start with a list of prospects with whom you would like to form relationships.
- Good solid relationships with retiring farmers may take years to build.
- Help solve the retiring farmer’s problems by selling outdated equipment or do custom work for them.
- Preface your comments with “when you feel ready to retire …”
- Have your agreements in writing. (I recall a farm family with many elderly landowners who didn’t like paper contracts, but the new generation of young farmers made written agreements a condition of renting, clearly just their business policy.)
- Make sure you have all of the substantial conversations with all of the important decision-makers present at the same time.
- Set the expectations ahead of time for the assessment survey: “I’d like to ask you a set of questions that may sound ‘hokey,’ but they are important for all of us to be clear what everyone needs out of this land rent process.” The assessment survey is created by the buyer or renter to get a clear understanding of what the retiring farmer needs.
- Look inside yourself. Are you a good manager? Do you have great management capability and empathy with a heart to care about your neighbours’ well-being?
- Sometimes an outside adviser like an accountant or agronomist may have the facilitation skills to bring the interested parties together for a “social” discussion of the possibilities. This works if the parties have similar values and can say, “I like the way you think. You think like I think.”
- When the terms of agreement are put together, seek out separate legal counsel and get the deal done.
- Many retiring farmers are happy when they know they have put their land into the care of good hands. Some exiting farmers take a salary for five years and are happy to be driving equipment in the busy times of spring and fall. Other retiring farmers may take on the role of “landlord relations” for the farm team.
Some people are so attached to their land and their “iron” that they are not capable of letting go or making new agreements with new tenants or owners.
There is a huge issue in agricultural circles with “avoidance behaviour,” so if the fellow that you want to buy or rent land from crosses the street when you approach, you likely have damaged the trust relationship.
Here’s some homework for the winter months:
1. Define the vision for your farm growth for the next three years.
2. Determine what is your real net worth.
3. If you are planning to exit farming, do some tax planning.
4. Ask what will your life be like when you are no longer the main farm manager.
5. Figure out which neighbours you want to continue building a relationship with because you truly care about their total well-being, not just their land.
6. Copy this article and share it with your retiring farming friends. PD
Elaine Froese, CSP, CAFA, CHICoach helps farm families talk and act on tough issues.
