Farmers & Ranchers

Bob and Jean Nixon have spent a lifetime trying to make the right decisions for their 2,500 acre wheat farm near Junction City in the fertile Willamette Valley. But all the right choices and good luck in the world would mean nothing if they weren't able to keep the farm in the family. With plenty of planning and clear communication within the entire Nixon family, they are beating the odds and seem to be successfully passing the farm down to their grown daughter, Betty.

"You can have all the desire in the world, but it won't do any good without the planning," says Jean Nixon. Finances, tax laws, and the increasing complexity of modern day farming all conspire to make it very difficult to keep the family farm within the same family. "A typical family business going from first generation to second only has a one in three chance of surviving," says Patricia Frishkoff, Director of the Austin Family Business Program at Oregon State University. "Going from second to third generation, about half of the family businesses survive that succession hurdle. I believe the odds aren't even quite that good for farming because it is such a challenging industry in which to survive in the first place."

The Austin Family Business Program offers courses and holds workshops that help Oregon families do the things necessary to keep the business in the family. Many of the "clients" are farmers and ranchers. A series of succession workshops held around the state have taken place. "The biggest problem is that the farmers — and other businessowners — just don't take action," says Frishkoff. "Succession involving your kids and your farm or company is a very emotionally and financially charged issue. A lot of people avoid it because they don't want to talk about issues like money and death. So, they don't do the kinds of homework necessary in order to have a succession plan in place."

Betty Marguth, the Nixons' daughter who now is involved in running the farm with her husband, was one of the program's successful succession clients. "We had the desire to operate the farm, my parents had the desire to turn it over to us," says Marguth. "But all of us were quite naive thinking it would be smooth." Marguth is still concerned about the succession turning out the way everyone wants. Estate planning and tax laws are tall hurdles to clear. Even though taking one of OSU's courses has helped, some of the knowledge has come too late.

Farm parents often dream that their son or daughter will take over the family farm. But it gets complicated right off the bat when there is more than one child. Will both children be able to stay on the farm? Is the farm financially successful enough to support two or more children, their families, and the parents? Perhaps most importantly, are the children capable of managing a farm in the 21st Century?

"It's not only going to take a lot of agricultural skills, but also a lot of basic business and marketing skills," says Frishkoff. "I think the future generations will have to be far smarter than their moms and dads, their grandmas and grandpas. There is always the risk of having a young person who likes to get their fingers in the dirt, but really doesn't have the overall business skill to take over the farm." All this is assuming the children even want to stay in the agriculture business.

The solution to all the frustration and complication of succession is good communication and planning. That is what the workshops teach. "There are two things a farm family needs to do," says Frishkoff. "First, they have to take time from their day-to-day business to sit down around the kitchen table and have some real heart-to-heart discussions about what family members want and what they have to do in the future. Second, they need to commit the time and the dollars to do the formal planning that will help them keep the farm as a farm, and keep it in their family if that's what they want. The tax laws associated with inheritance are stacked against them and, in order to take advantage of the few opportunities they have, they need to be very proactive in their planning."

The succession "success" stories nearly always involve a family that has done the communicating and planning, plus had a little luck thrown its way. "Families need to talk about what is going to happen when dad or mom dies," says Frishkoff. "That's not an easy dinner table conversation. The workshops bring together a group of businessowners and begin asking those questions. We help families learn not only that it's okay to talk about these things but how to do it."

Work books distributed at the workshops provide a series of "need-to-be-asked" questions so that when the family goes home, it knows exactly what needs to be discussed. There is no single answer to each question. The family also comes away understanding the consequences of not answering those questions. The succession workshops, sponsored with the help of U.S. Bank, are held in Medford, Tangent, Portland, Pendleton, Bend, Salem, Eugene, and Newberg. While they are open to all family businessowners, it is expected that many participants will be farmers and ranchers.

The average age of farm operators in Oregon is 54 years old and getting older, a problem agriculture leaders are trying to solve. "It is critically important for the younger generation to get very active and involved, become more than a kind of hired help on a family farm," says Frishkoff. Hopefully, efforts such as the succession workshops will help.