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Planning is critical as farms transfer to new generations

Issue Date: June 1, 2022
By Lisa McEwen
Alison Main and her siblings sought help in farm transition planning as they looked to take over her parents’ vegetable, fruit and flower farm in the Capay Valley near Sacramento.
Photo/Courtesy Good Humus Produce
Jeff Main checks on crops at the Good Humus organic farm.
Photo/Courtesy Good Humus Produce
Siblings Claire and Alison Main, from left, are photographed with the farm matriarch, Annie Main.
Photo/Courtesy Good Humus Produce

At Good Humus Produce, a small organic farm in the Capay Valley northwest of Sacramento, members of the Main family built a local agricultural tradition with seasonal harvests of more than 200 varieties of flowers, vegetables and fruit.

The farm was started by Jeff and Annie Main in 1976. It became a staple in Yolo County, serving as a cornerstone for the Davis Farmers Market and providing produce boxes that feed hundreds of area customers monthly through community-supported agriculture.

Nearly 46 years later, the Main family children—Zachary, Alison and Claire—are poised to take over the reins of the farm. They are finding that planning for its future is just as important as raising and harvesting its crops.

Transitioning farms from one generation to the next is a crucial task for California agricultural producers and is an often-overlooked part of operations. More than 40% of California farmers are 65 or older, and the average age nationally is 57.5, according to the U.S. Census of Agriculture.

The stability of California agriculture is largely dependent on a successful change of hands, and the Main children realized that the process isn't easy.

"We have 30 acres, and we hire two or three people to help us. Our family is the labor force," Alison Main said. "We realized quickly we had no time to deal with any of it. There was a lot of stuff that needed to be hashed out that we really didn't even know how to do or where to start."

Across California, a variety of nonprofit partnerships are providing resources to new generations taking over family farms and ranches. They're offering guidance and training to ease transition planning—or succession planning—so family agriculture traditions can continue.

Recently, the Mains joined a cohort of other farm families that enrolled in a 12-month course on transitioning agricultural properties to new generations. The program—called "The Regenerator: A Year of Farm Succession Planning"—is organized by California FarmLink.

Its course covers aspects of farm transition, including tax and estate planning, business structure and valuation, as well as financing strategies.

Planning for the future of California farms is critical for many reasons, said Liya Schwartzman, a senior program manager for FarmLink. Rising costs for the retiring generation, the high price of land for new generations, and less equity in the land and farming business are all factors affecting transitions, she said.

"It is increasingly challenging to pass the farm to the next generation," Schwartzman said. "Our local communities, economies and food systems are built on the strength and stability of small and medium-sized local farms. It is essential that farmers start early and do the planning needed to transfer management and ownership so that farms can sustain our local economies and communities."

Curt Covington, senior director of institutional credit at AgAmerica lending, said agricultural lenders want to see a proper estate plan in place for farm transitions. Not having one is a lending risk.

"This is an issue from the perspective of a lender," he said. "Farmers think they are invincible, but it is a growing problem."

In a lecture at the World Ag Expo in Tulare in February titled "Who's In and Who's Out: Elements of a Successful Succession Plan," Covington outlined three types of plans that farmers should have:

• Continuity planning, as in who to trust to run the farm, sign checks and keep the doors open in the instance of sudden death or incapacitation.

• Estate planning, a legal and tax accounting step to preserve wealth.

• Succession planning, which addresses anticipated timing of handing over the farming business to a successor.

"It's easy to say, 'I want my kids to be in farming,'" Covington said. "But, in reality, the steep cost of entry will keep them out. It will be difficult without the support of their parents."

A common error in succession planning is not realizing that retirement is closing in quickly. Many can also wrongly assume that a will is all that is needed, or that all assets should be distributed evenly among heirs, or that the entire process can be done by the farmer, Covington said.

Not seeking professional assistance is a huge mistake, he said. Farm families may need a financial or estate planner, a moderator to help with family discussions, a banker to assist with financial resources, an accountant with income records and business projections, and a tax attorney.

"Succession planning is not once-and-done," Covington said. "Start early and keep it regularly planned."

The lengthy process of planning for the future can be overwhelming amid daily tasks of farming. Alison Main said getting advice through the FarmLink farm succession program helped ease the anxiety.

"We were asked to outline our roles, and we couldn't even do it. We just didn't have the time," she said. "With this format, we meet once a month for eight hours, no distractions. We had to sit there and start dealing with it. It's a struggle to do in the midst of everything else, but we do feel like we're moving, we're doing. As hard as it is, it will pay off and save us a huge amount of trouble later."

Annie and Jeff Main started the process several years ago by placing the Good Humus farm in an agricultural easement as development crept in. At the time, they did not know if their children were interested in farming. But the easement made owning the farm a financial possibility for the next generation.

As their children decided to return to the farm, it became apparent that they had different visions for its future. A facilitator helped guide family members through necessary, sometimes difficult conversations.

California FarmLink is partnering with the California Agricultural Mediation Program, which provides free mediation and facilitation services for farm families such as the Mains.

Annie Main, who feared potential tensions among her children, said the process has been "a game changer."

"As parents, we are the glue, and once we remove ourselves, my desire is that my three children will be able to communicate and work together and not go separate ways," she said. "It would not only be the end of the farm but also a distancing of the relationship. That was a surprise to me, but it's very clear how important it is and continues to be."

Attorney Mary Campbell, a CALAMP mediator, said farming is not just a business; it is a family conversation.

"These are tough talks to have, but they are necessary," she said. "Every family has a challenge. That is the nature of families. Mediation is the coolest thing that nobody knows about. We are there to support everyone's voice and can help you have the family conversations needed."

CALAMP also assists with agricultural debt issues, leases or other financial challenges that can feed into concern around succession planning, Campbell said.

At Good Humus, as they produce spring crops such as strawberries, apricots, beets and leeks, members of the Main family continue efforts to plan for the future.

"Everyone in our community will benefit from a smoother transition," Alison Main said, "and they won't have to wait five years for me to figure out how to turn the tractor on."

(Lisa McEwen is a reporter in Exeter. She may be contacted at mcewenlisamarie@gmail.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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