The information below has been supplied by dairy marketers and other industry organizations. It has not been edited, verified or endorsed by Hoard’s Dairyman.An aging owner, health issues, family dynamics or other circumstances can force farmers to confront the critical issue of business succession before they are ready.
Farmers, financial advisers and attorneys are trying to raise awareness about the need to be prepared well before a life-changing event by making succession a normal part of a business plan.
The Dairy Business Association and Edge Dairy Farmer Cooperative are dedicating the groups’ co-produced Dairy Stream podcast to the issue. A three-part series, “Success in Succession Planning,” kicked off in February and will wrap up later this month. The series examines such aspects as getting organized, financial consulting and legal support. The second episode was published this week.
“Interest in this topic continues to grow among our members,” Tim Trotter, CEO of the two organizations, said. “It is our priority to help our farmers navigate this critical part of their businesses.”
Each farm succession plan must be individualized, said Steve Bodart, senior dairy consultant with Compeer Financial, who is featured in the first episode and whose company is sponsoring the series.
“There’s no one carbon copy for every farm. Every family is a little bit different,” he said.
Jamie Witcpalek, co-owner of Pagel’s Ponderosa Dairy in Kewaunee, Wis., is also featured. Witcpalek’s family confronted the challenge after she lost her father, John Pagel, in an accident. He had started planning for transitioning the business, but many things needed to be addressed, Witcpalek said.
“We had to work through everything under a lot of emotion and a lot of stress,” she said.
Bodart said it is important to realize that the process, even under the best of circumstances, takes time and careful consideration.
“Succession is not an event; it needs to be a journey,” he said.
(Use of audio clips is encouraged with attribution to “Dairy Stream, co-produced by Dairy Business Association and Edge Dairy Farmer Cooperative.”)
Episode 1: How to get organized, featuring Steve Bodart of Compeer Financial and Jamie Witcpalek from Pagel’s Ponderosa Dairy in Kewaunee, Wis. Listen here.
• 1:14 - Experience in succession planning
• 4:17 - Who should be involved and in what role
• 11:14 - Role of a S.W.O.T analysis
• 14:29 - Impact of a solid vision, mission and values
• 19:43 - Challenges
• 25:35 - Key components
• 29:45 - Working through the details
• 31:26 - When to loop in key managers and other employees
• 35:21 - Resources and tools
• 37:00 - Final pieces of advice
• 1:05 - Experience in succession planning
• 4:11 - The first step in analyzing the business financials
• 8:40 - Debt analysis
• 10:19 - Available loan programs and what is recommended?
• 11:52 - Understanding wills and estates
• 16:48 - What to consider if there are multiple heirs that are farmers and/or non-farmers
• 20:33 - Minimizing tax burden and implications
• 23.33: - Role of gift-tax exemptions
• 27:04 - What to know about social security
• 29:38 - What a senior leaving the farm needs to consider for long-term care, investments, etc.
• 33:23 - Tips to ensure clarity and transparency
• 35:33 - Final pieces of advice
Episode 3 (March 30): Legal and mediation