Senior Fellow, Farm Transfer
Teresa Opheim helps farmers explore ways to transfer their farms and businesses to the next generation. This work focuses on farmers and farmland owners telling about their journeys, and advice from the experts who will help them get there. She is the editor of The Future of Family Farms: Practical Farmers’ Legacy Letter Project (University of Iowa Press 2016), which features more than 25 PFI members.
Teresa served as Executive Director of Practical Farmers of Iowa from 2006 to 2016. She has served as Executive Director of the Midwest Sustainable Agriculture Working Group and has worked for the Iowa Environmental Council, the Environmental Law Institute and the U.S. Environmental Protection Agency. Teresa has journalism and law degrees from the University of Iowa. She and her family reside in Minneapolis.
Peoples Company of Clive has just released a new guide on farmland transfer–and the guide is peppered with quotes, photos and tips from PFI members.
In “Your Farmland and the Future: Setting Goals, Taking Action” we hear from:
- Rick and Jane Juchems of Plainfield, who communicate often with their son and daughter about their legacy plans. “Our children need to know what is going on,” Jane says. “We are trying to get everything on the table so that no one’s expectations are inaccurate.”
- Bob and Linda Lynch of Gilmore City, who share their strategies, such as life insurance and gifting of land, designed to ensure that their son Jay will be able to stay on the land and continue as the fifth generation of Lynches to farm.
- Susan and Rob Fleming of Carlisle and Philadelphia, Pennsylvania, share how they have used their farmland for income, for conservation and to provide land for beginning farmers.
The Van Der Pols tackle farm transitions (Part two of a three-part series)
When Jim and LeeAnn Van Der Pol began farming in 1977 on his family’s Central Minnesota farm, they added pigs to the operation. When their son Josh and his wife Cindy joined the farm in the mid-1990s, they expanded the pasture farrowing. “And then we hit 1998 and the $18 hogs in October and November. That really knocked Josh and Cindy around, because we didn’t have any hogs on contract. And we lost what we thought was going to be a goodly share of our retirement by that time because of what the hogs did to us.”
A terrific opportunity opened up, though, and Jim took a job building the facilities for a low-input swine facility at the University of Minnesota’s experiment station near Morris. Jim and LeeAnn turned over a portion of his salary to Josh because the farm wasn’t able to pay him much out of the farm budget. LeeAnn and Cindy both worked off-farm jobs too, LeeAnn at a nursing home and Cindy at her parents’ garden shop.
The Van Der Pols recovered from the hog price collapse and expanded their production again, building a new hog house four years ago and adding a couple of hoop houses. They also put a lot of time and energy into starting a meat business, Pastures A Plenty, through which they now sell to stores, restaurants and direct-to-consumer throughout Minnesota. “That meat company is going to provide a lot of opportunity for those who want to work at it and work in it,” Jim says. LeeAnn adds that, while “the farm checkbook sucks money all the time, like most farms do, the meat company has six figures in the checking account. Sometimes we plot about how we can get money from the meat company to the farm.”
“When we started selling pork and later beef and chicken direct, we decided we needed a separate accounting structure for the meat business,” Jim says. “We needed the farm to be selling the farm animals into this other entity, which would pay to have them processed and to sell the products. That way, we could tell if we were making money on the farm or on the business.” They chose a subchapter S corporation, with Jim, LeeAnn, Josh and Cindy all partners in the company.
This is a guest editorial from Steve Bruere, President of Peoples Company, a PFI member based in West Des Moines.
Farming is in my blood. I grew up on a farm in Warren County, Iowa, where my parents farm together with my older brother. My brother will be expected to carry on the farming legacy as the on-farm heir, while I will be an off -farm heir – maybe! So, what does that mean for me when the difficult time comes, when both of my parents are gone and the assets are passed on?
As my dad says to us boys, without a well-thought succession plan, “your inheritance will go to the dog.” I’m not convinced he is joking given the close relationship he has with his Great Dane.
When I got into the real estate business in 2003, many of my first real estate transactions were with farm families I grew up with. I started to observe early on how close-knit and very successful families were destroyed after there was a death and the kids fought over who gets the farm and what Mom and Dad’s intentions were. Oftentimes, these started out as very casual disagreements, but as the value of farmland began to appreciate, so did the tension of settling these matters. Many times, it wasn’t the heirs themselves, but the spouse of the heir, who would begin to stir the pot that led to conflict.
Like many farm families, the Van Der Pols, of Kerkhoven, Minnesota, are in the middle of a farm transition journey. They will share their story at the PFI conference Jan. 21 and also at the MOSES conference Feb. 25. This is the first of a three-part series.
Jim and LeeAnn Van Der Pol are in their 60s and in the thick of farming—and of shifting their roles and ownership on their Central Minnesota farm. Jim’s parents started out with a “team of mules and 600 dollars,” as Jim’s father liked to quip. They were children of the depression and dropped out of school to work. “My dad was raised very rough, malnourished and worked too early and too hard,” Jim says.
- By the time Jim and LeeAnn came back to farm in 1977, his parents owned 480 acres — quite an accomplishment. But Jim’s father had had enough of farming by then, and he and his wife promptly retired and moved to town. Jim and LeeAnn moved into their house. “My dad walked away from management when I came back. He would drive the tractor and that’s all he would do. I didn’t wish he could provide more guidance, but I probably should have. There was never an idea in his mind that he was still running things. He basically said ‘now this is yours.’” The farm was Jim and LeeAnn’s to operate, but ownership proved to be a lot more complicated.
Anita O’Gara and her three brothers grew up “in the shadow” of an old country church and cemetery near Urbana in Northeast Iowa.
“St. Mary’s Cemetery always felt like part of our land to me,” Anita says. “My great-grandparents bought the farm in the 1870s, including land surrounding the cemetery where they were later buried. The farm sustained the family when they came from Luxembourg. During the time my brothers and I grew up there, it was a typical farm of its day. We had hogs and beef cattle. Chickens were running loose, and there was a milk cow and a huge garden. Mom sustained us by canning everything in sight. It was hard work of course, but it was a nice life!”
The family story followed a familiar trajectory: Anita and her brothers Duane (a PFI member), Ron and Richard went on to college and pursued non-farming careers. Through the years, their father, Howard, let go of the pigs, the chickens and the cows. Eventually the crops consisted of only corn and beans. The farm buildings provided storage, or sat empty except for grandkids playing in them.
Howard, who was born on the farm, moved to town in his 80s to be closer to his wife Esther, then a resident of the Lutheran Home in Vinton (of which “the family cannot speak more highly,” Anita reports). He sold two acres that included the house and outbuildings so the homestead could be home to a new family. He enjoyed keeping active in farming, though, through a crop-share arrangement with his tenant neighbor on the remaining 114 acres.
Tips from Fellow Farmland Owners:
- Communicate your charitable giving values to your heirs
- With the tax benefits, donating farmland may make more financial sense than you think
- Talk with a charity about how they will use your farmland before making a donation
Helen Gunderson, of Ames, Iowa, grew up on a farm in Northwest Iowa and knows she is privileged to have inherited some of the land her family had accumulated since 1878, when her great-grandfather and his brother first came to Iowa. She has spent years reflecting on the ethical issues of land ownership and documenting the history of the rural neighborhood where she grew up (see http://www.gunderfriend.com/).
As she thought about the personal legacy she wanted to leave, she recognized that no plan for the future of her farmland was perfect. She also realized the importance of making the best choices possible based on currently available information and acknowledging that how circumstances evolve over the decades and centuries is out of her control.
In light of those factors, Helen concluded a few years ago that it would be best in her estate plans to give to the public and natural good by donating her land to a handful of organizations that had either enriched her life, could preserve her documentary work and/or had the best potential to ensure ethical stewardship of the land. The two main organizations she chose are the Iowa Natural Heritage Foundation and Practical Farmers of Iowa.
Don’t have a farming heir but want to find a family to work your land? Here are some tips and strategies for you:
- Start with your local contacts then use land matching sites
- Decide how flexible you are to working with the tenant or buyer on price
- Consider a long-term rental arrangement, option for purchase or contract for deed
If you do not have a farming heir, it may help to know you are not alone. Fully half of Iowa farmers do not have a successor, according to the Iowa Rural Life Poll. 68 percent of Iowa farmers report they have no adult children who currently farm. For those who have no identified successor, 29 percent don’t know what their future plans will be, 20 percent hope to identify successor.
And yet, for many of us, we want to keep rural communities vibrant and there is no better way to do that than to provide land for a family to farm. At the same time, there is a surge of those wanting to farm. Practical Farmers has 1,600 of these beginning farmers in its network alone.
Jim French, a PFI member who farms in Kansas, says that “if a family member wants to continue to farm and meet our conservation goals, then that should happen.” But his two children are lawyers, so that may not happen, so he’d like to use his land to help another family farm. “I am not as concerned if my children don’t want to come back to farm,” Jim says. “I’m reinforcing those values in the community I live in. I hope I can have a community where kids can ride their bikes, enjoy nature, have clean water. That’s our vision for rural America.”
How do you find a successor if you don’t have anyone in mind? There may be someone closer than you think. Call old contacts in town, as Dale Nimrod did when he first decided on a strategy to pay back his community by finding a family to sell his farmland to. Being part of a network, like Practical Farmers or your county Farm Bureau, will introduce you to new farmers more informally. There also are a variety of land linking sites, including Practical Farmers’ FindAFarmer.net site and Ag Link from Iowa’s Beginning Farmer Center (http://www.extension.iastate.edu/bfc/farm) that may help.
Young Farmers: Do you want to start the conversation with your elders about transitioning the farm? Here are three steps for getting started:
- Think about: HOW do you and the older generation communicate? What are the dynamics of your situation?
- What specific questions do you have for your elders?
- What do your elders need to know about you?
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What to provide land for your heirs to farm? Here are some top tips from your fellow farmland owners:
- Decide which is more important: Treating all heirs financially equally or keeping your farming heir on the land
- Consider valuing the “sweat equity” that the farming heir has provided
- Use non-farm assets to compensate non-farming heirs
This week’s farm transfer leaders are the Bouska sisters, fifth-generation farmers and owners of 435 acres they grew up on near Protivin, Iowa. The sisters—Peg Bouska, Carol Bouska, Ann Novak and Sally McCoy—are using family meetings to begin thinking about the legacy they want to leave behind with their farmland.
The Bouskas’ father Edward, was born on the farm, the third generation on the land. He and his wife, Elmarie, raised their children there; all cherished the farm and family, but none stayed to farm the land. Both Ed and Elmarie died on the farm.
After the Bouska children inherited the farm in 2009, they incorporated it into an LLP, with each sibling owning a share. Their brother, Jack, sadly died in 2014. Their partnership agreement stated that when one partner dies, the other partners could buy out his or her share, which the four sisters then did after their brother’s death. This arrangement keeps control of the LLP with the siblings and limits—for now—the number of partners.
Although all the sisters are healthy, “we are starting to think about the next generation now,” says Carol. “and all that needs to be done on the farm, and how long we will be able to do it.”
Peg, Carol, Ann and Sally had one of their partner meetings at the farm in July, and, along with tackling the details that come with farm ownership, they set one goal for the meeting: “To share individual partner long-term goals for the Highland Farm, and to understand each other’s goals.”