Planning is critical as farms transfer to new generations
Alison Main, left, and her siblings sought help in farm transition planning as they looked to take over her par- ents’ vegetable, fruit and flower farm in the Capay Valley near Sacramento.
By Lisa McEwen At Good Humus Produce, a small or- ganic 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 pro- duce boxes that feed hundreds of area customers monthly through communi- ty-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 ag- ricultural producers and is an often-over- looked 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 real- ized quickly we had no time to deal with any of it. There was a lot of stuff that need- ed 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 plan- ning—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 agri- cultural 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 tran- sition, 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 communi- ties, 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 plan- ning needed to transfer management and ownership so that farms can sustain our local economies and communities.” Curt Covington, senior director of in- stitutional credit at AgAmerica lending, said agricultural lenders want to see a proper estate plan in place for farm tran- sitions. 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 ac- counting step to preserve wealth. • Succession planning, which addresses anticipated timing of handing over the farm- ing business to a successor.
See TRANSITION, Page 9
June 1, 2022 Ag Alert 3
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