The man helping farmers plan for the next generation

NINA MOINI: Planning for the next generation to take on the family farm can be a huge stressor on farmers, according to a recent analysis by Farm journal, nearly 15% of American cropland is projected to change hands by 2030. And yet, many producers have no formal succession plans in place.

Over the winter, the Minnesota Department of Agriculture, along with the University of Minnesota Extension and Minnesota State colleges and universities, are helping farmers with that transition through retreats. Joining me now is Jim Molenaar. He works with farmers on succession planning and presents at these retreats. Thanks for being with us, Jim.

JIM MOLENAAR: You're welcome.

NINA MOINI: Jim, to start with the basics, can you describe for us just what some of the more common options farmers have when it comes to succession planning?

JIM MOLENAAR: Of course, it's all over the board because no two farms are the same. One of the things we suggest to farmers that are wanting to make a transition is to form a team, to help them navigate the process.

NINA MOINI: So do the options, maybe range from family members taking over? Which family members take over to perhaps not continuing on within the family, this tradition, and in this work of farming? What do you see in terms of those different options? Because I imagine that's what makes these conversations difficult, right?

JIM MOLENAAR: I would say the highest percentage of transitions are to a family member 50 years ago, it was almost always a male. But we are seeing a lot of women who are transitioning to be the primary farm operator. And we do have some where the farm is transitioned to a non-family member. But the highest percent is family members.

NINA MOINI: And so you say you at the retreats encourage the whole family to come. And I imagine that's part of the reason why, just kind of wanting everybody at the table. Why is that so important do you think?

JIM MOLENAAR: The reason we call it a retreat is that it's not just information being presented. We give the families time to talk over their plans. And since they're at a location away from the farm, it minimizes distractions. Like, we encourage people to turn their phones off. Let's focus on this topic, and I think people really appreciate that.

NINA MOINI: What are some of the challenges you see with families that you meet when it comes to succession planning?

JIM MOLENAAR: For a farmer, they're making a transition, one thing they need to plan is what happens next to me if I'm transitioning out. Farmers never retire. So we don't use the word "retire."

But life may be different. And what are your plans? What are your goals? The second thing in the plan would be, what can I do during my lifetime to help my next generation get started? And then people need an estate plan. What happens with my assets when I pass away? So those are really the primary hurdles that we try to address.

NINA MOINI: What are some of the tools that you provide to farmers to be able to address some of those areas?

JIM MOLENAAR: I think that forming a team is really a good start. In terms of the next generation, I think it's just getting them to stop and think about their goals. And when they understand what they want to do, we can help them figure out a plan.

But the finances of transitioning a business are a big part of it, and there are tools-- that the Minnesota State colleges has farm advisors, farm Management, teachers to help farmers do the financial planning. And so that's a big part of it.

NINA MOINI: I'm wondering too. In the state of Minnesota, or with the farms that you see in the families see, it sounds like a lot of people are maybe in their 50s, 60s, and that's not really, really old, by any imagination nowadays. But it's also you're saying, time to start doing some of that planning just because the generations are getting older.

JIM MOLENAAR: The time to start planning is when you're young enough so that there are options open to you. For health care, long-term health care is a real problem for almost anyone, not just farmers.

But when you're young, you may be able to qualify and afford long-term health care insurance or a life insurance plan, can also be really useful in making a transition. And I guess when you ask me about tools, I think I'm coming back to that.

Communication is just so important that you are able to communicate between the two groups, and you can't assume that the children understand the parents or the parents understand the children. So you've got to have-- we encourage families to have regular business meetings with an agenda and specific topics that everyone knows.

This is what we're going to talk about. And unmet expectations are a real problem in firm transitions. So one generation is expecting one thing to happen and the parents are expecting something else. So communicating about those topics really is one of the things we try to help them do, is to talk about their plans, their goals and what their options are.

NINA MOINI: And these are themes, I think, you might see across any family business type of a setup. I wonder what you consider building off of that to be a successful farm transition. Is it one where finances are in order, and there are no hurt feelings?

JIM MOLENAAR: You have to remember there are also non-farm family members. And so one of the things that we do say is in your estate, let's say, equal is not always the most fair thing you could do if your goal is that the farm would continue.

So communicating about that with the non-farm children or heirs is really important. And I guess for me, in the end, I would say if the family is intact and can still have Thanksgiving dinner together and speak to each other, I'd call that a success. If families don't plan, sometimes that's not the case.

NINA MOINI: Yeah, this is such important stuff to talk about, and it's probably difficult at times to talk about. But what you're describing there-- everybody being able to be together-- is certainly really important to a lot of people. So this must be really rewarding work, Jim, helping families just define their legacy and set up their legacy. Why do you continue to do this work? What do you love about it?

JIM MOLENAAR: Well, I was an educator of farmers for 45 years. And this is a retirement job, and it is probably the most rewarding, enjoyable job that I've had in my career. It really feels good when you can help people.

And I love farm people. I was a farm boy surrounded by farm people my whole life, and I am trying to mentor some other people to do this after. Maybe I'm not doing it anymore. That's our team approach.

NINA MOINI: Yeah, passing along the generations and also the resources among generations. Just lastly, Jim, since we have you and we have this audience, if there is anyone listening who feels timid or nervous about bringing up this type of planning within their family, perhaps it's a farm family or not, do you just have any advice about how to approach this topic?

JIM MOLENAAR: I mentioned, earlier forming a team. But the Minnesota Department of Agriculture does have a website. It's called FarmLink, L-I-N-K. And there's just a world of resources there to help connect farmers with advisors such as myself.

The University of Minnesota Extension Program also has great resources in this topic on their website. But what I enjoy is meeting with people individually, and it is free to the farm family as long as they understand that I'm not an attorney or an accountant. I'm just someone who is experienced and can help them with-- giving them advice, helping them get started.

NINA MOINI: All right. Thank you so much, Jim, for coming on and sharing about your work. Really appreciate it.

JIM MOLENAAR: Oh, you're so welcome. I appreciate the interview.

NINA MOINI: Jim Molenaar works in farm succession planning.