How do you prepare a successor to take over the family farm?

To prepare a successor to take over the family farm, hand over real decisions season by season, introduce them early to the lender, the landlords and the key buyers as the person who will be making calls, agree with the parent which decisions are already theirs, and talk openly with siblings who live off the farm. Farming skill is rarely the gap. Standing with people usually is.

Most farm successors grew up doing the work. They can run the equipment, read a field and price a load. What they often have not done is sit across from the loan officer alone, renegotiate a rental agreement with a neighbour who has known them since birth, or overrule their parent in front of the hired hands. That is what this article is about.

Why is a farm succession different from other family businesses?

A few things make it its own case.

You work beside the parent every day. In most family companies the founder has an office down the hall. On a farm, parent and successor are often in the same pickup at six in the morning. There is no distance in which the successor’s authority can grow on its own.
The calendar does not move. Planting, harvest, calving and marketing windows arrive on time whether the handover is ready or not. A decision delayed for a family conversation can cost a season.
Much of the business sits in relationships. Rented ground, a handshake with a neighbour, a long account with a grain buyer or a co-op. Many of those were built personally by the parent, sometimes over decades.
Land is also the family’s wealth. Siblings who left the farm may still expect a share of it, which turns operating decisions into family decisions.

Who has to accept the successor?

The lender

For many farms the lender relationship is the most important outside relationship there is, whether that is a Farm Credit association, a local bank or the Farm Service Agency. The loan officer has usually dealt with the parent for years and trusts their judgement through bad years as well as good ones.

Bring the successor into those meetings early, and not as an observer. Let them present the operating plan, answer the questions about the balance sheet and explain the marketing plan in their own words. If the parent answers every hard question, the lender learns who still runs the farm. Our article on why the bank still wants the founder covers this pattern in more detail.

If the farm has loans with the Farm Service Agency, the rules on who can take on that debt are set out in federal regulation. They describe, for example, when a relative can assume an FSA loan on the same rates and terms, and the person taking over still has to apply. Any change to who owns or is liable for farm debt is a question for the lender, a farm attorney and an accountant, not something to settle at the kitchen table.

Landlords

On many operations a large share of the acres is rented, and rental arrangements can be informal. A retired neighbour may rent to the parent because they went to school together. Nothing in writing obliges them to rent to the next generation.

The successor should be the one visiting landlords before the handover, not after. Bring the rent cheque in person, walk the fields with them, explain the plans for the ground. The aim is for each landlord to think of the successor as their tenant well before the parent steps back.

Buyers, suppliers and neighbours

Grain buyers, co-ops, packers, seed and chemical dealers, the vet, the custom operator. Each has a person they call. A useful exercise is to list every outside relationship the farm depends on and write down who that contact calls today. Over two or three seasons, move each name across. Winning over stakeholders loyal to the founder describes how that transfer tends to work.

The hired help

On farms with employees, many have worked for the parent for years and may have taught the successor to drive a tractor. Their acceptance comes from watching who makes the call when something goes wrong at harvest. If the successor says one thing and the parent quietly changes it, everyone notices.

How do you hand over decisions when you work side by side?

Working together every day makes it easy to share everything and hand over nothing. A clearer approach:

Divide by area, not by task. The successor owns the marketing plan, or the cattle, or one block of ground, fully. The parent does not second-guess those decisions in front of others.
Agree how disagreement works. Decide in advance where you argue (in private, not in front of the crew or the landlord) and who has the final word in each area.
Use the off-season. Winter, or whatever the quiet months are on your operation, is when to review the year, agree the next handover step and meet the lender together.
Write it down. A short note of who decides what, updated each year, avoids the familiar situation where everyone thinks they agreed something different.

Our piece on handing over decisions, not just the title explains why the order of handover matters.

What about siblings who do not farm?

This is often the hardest part. The on-farm successor may feel that years of low wages and long hours have earned them the farm. Off-farm siblings may feel the land is a shared inheritance. Both views are understandable.

What helps is separating three questions that tend to get mixed together: who runs the farm, who owns the land, and how the family treats fairness over time. The first is a leadership question. The second and third involve estate planning, and the family should work through them with a farm attorney and an accountant. The USDA’s National Agricultural Library keeps a list of legal resources on farm succession and estate planning that is a reasonable place to start.

What the successor can do is be open with siblings about the plans and the numbers, and not let the farm become a subject nobody discusses until it is too late. Siblings and the successor covers those conversations.

What should the parent stop doing?

Answering for the successor. At the grain elevator, at the bank, at the co-op meeting.
Making the quiet phone call. If a landlord or buyer calls the parent about something the successor decided, send them back.
Keeping the books private. A successor who has never seen the full financial picture cannot speak confidently to a lender.
Setting no date. “When I am ready” gives nobody anything to plan around.

In short

On a family farm, skill with the work is rarely the gap. Standing with lenders, landlords, buyers and the crew usually is.
Bring the successor into lender and landlord relationships early, as the person making decisions.
Divide decisions by area and agree how disagreement is handled, because parent and successor work side by side.
Separate who runs the farm from who owns the land, and involve a farm attorney and accountant for the second.
Use the quiet months to review the year and agree the next step of the handover.

If your successor is close to taking the lead and you want to see how the preparation would work around your farm’s calendar, you can read about the Second Chair™ method.