INVESTING CHECKOFF DOLLARS
3 THINGS TO KNOW ABOUT FARM TRANSITIONS (HINT: IT’S MORE THAN JUST HANDING OVER THE KEYS.)
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n overwhelming majority of farms in the U.S. are family-owned, and most of those operations are transferred from one generation to the next. But passing on the reins to a farm operation is far more complex than giving the keys for the old family sedan to your oldest child. It takes a fair amount of strategic planning and legal knowledge to execute a transition smoothly and set the next generation up for success. Evan Schoenfelder, a 28-year-old producer from Dimock, South Dakota, can testify to the importance of approaching a transition with a proper amount of care and consideration. He farms with his father, Doug; his uncle, Ron; and his brother, Riley. They’re still in the midst of transitioning the operation, but they have learned many valuable lessons along the way. Here are three things you can do to plan for and execute a smooth transition of the family farm:
1. PLAN AHEAD FOR THE TRANSITION A singular event transpired 25 years ago and helped set the course for the Schoenfelder family operation: Donald Schoenfelder, then only 62, decided he was ready to retire from the day-to-day business of farming. His early retirement left the operation in the hands of his two sons, Doug and Ron, much sooner than had either had anticipated, but it also gave them an opportunity. The Schoenfelder brothers were forced to figure out the business of farming together, borrowing much wisdom from their father while putting some new practices and procedures in place. Sometime within that process, they set up Schoenfelder Ag LLC to manage business operations, including commodity sales and expenditures. Years later, this limited liability company would provide a good framework for integrating Evan and, more recently, Riley into the operation. “We thought the LLC really simplified the transition and buying-out process,” says Evan, who now owns a minority share in the family operation and continues to buy additional shares each year. “The day-in and dayout of how the farm operates probably didn’t change that much. Everybody still talks to each other; all decisions are made as a group.” Sometimes life events happen without warning, and you’re forced to just roll with it. But if you do have the good fortune to plan out how a transition will take place, take advantage of it.
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Winter Issue 2021
SDSL
