GO
Loading...

How to Build the Next Generation of American Farmers

One recent sunny morning at a 200-acre farm in McDonough, Ga., an Atlanta suburb, three young girls sit at a table shucking just-picked corn. Nearby, a woman collects money from visitors for the corn and for pick-your-own blackberries. In the distance, workers tackle other farm chores.

Martin Poole | Digital Vision | Getty Images

It's an idyllic setting, just 30 miles south of the city, and Jimmy Carter, who is not related to the former president from Georgia, is in his element: His grandfather bought the farm in 1938, and Carter grew up here, then came back home to run it in 1975.

"Farming is something that's instilled in you that a lot of people don't understand," says Carter, 65. "There's something about nature, and the soil, and how the good Lord blesses us, to create a beautiful atmosphere to raise a family."

Now, Carter is working to ensure that his son Jake, 31, can carry on and keep the farm in the family. Seven years ago, Jake became partners with his father in this farm, just as Jimmy Carter had done a generation ago with his father.

"What we've done so far is we've formed a corporation," Jimmy Carter says. "We're 50-50 in it. That is the entity that runs the farming operation. At this time, the land is still owned by me. The goal we have this year is to decide what to do going forward with the land. We have the opportunity to purchase some adjoining land to expand the operation. We've made an offer. So we have to figure all that out."

It's called succession planning — laying out a road map for the future so that property passes from one generation to the next without a debilitating tax bite that could prevent children from taking over the family farm.

It's a critical matter for a nation trying to prepare the next generation of farmers.

According to the Department of Agriculture, family farms account for about 98 percent of all farms in the USA and for 85 percent of the nation's total agricultural output. About 70 percent of the nation's farmland will change hands in the next two decades, and recent surveys show that about 89 percent of farmers don't have a farm-transfer plan, according to the USDA.

If farm families fail to plan for succession, the farm is more likely to go out of business, be absorbed by larger farms or be converted to non-farm uses, according to the agency.

"It (succession planning) is extremely important," says Siva Sureshwaran, national program leader for USDA's National Institute of Food and Agriculture. "The average age of a farmer in the U.S. is 57. In any other industry, that would bother everyone."

The USDA also supports Land Link programs around the nation, such as California FarmLink, which connect retiring farmers and beginning farmers. The agency's Beginning Farmer and Rancher Development Program, started in 2009, trained more than 5,000 new farmers and ranchers in 2010, the most recent year for which data are available, Sureshwaran says.

"The next generation of people entering agriculture needs to be trained so they can be profitable and sustainable," he says.

But figuring out how to keep the family farm rolling — and in the family — is not just a one-and-done deal.

"Succession planning is something that is done over time," says Van McCall, chief lending officer at AgSouth Farm Credit, part of the national Farm Credit System, a cooperative network of lenders that serves agriculture in rural America. AgSouth Farm Credit provides financial services in South Carolina and Georgia.

"It's something that a (potential) lender does assess," he says. "If something happens to the business continuity, can someone come in to take over that operation?"

From Father to Son

Lee Watson, who grows about 2,000 acres of corn, soybeans and wheat near Bellevue, Ohio, is planning for his son, Dusten, to take over the operation. Lee Watson started farming with his father in the early 1970s. He's 59 now, and about five years ago, he started researching how he could pass the farm on to Dusten, 35.

"I'm in the process of transferring shares of the farm to him," Lee Watson says. "It's important to do for inheritance tax purposes. It can be a large amount of debt for a person to start out with on their own. I've always worked for this. I'd like to see that land and the operation stay within the family."

In their case, creating a succession plan is relatively simple because Dusten is an only child. "Other families sometimes have to deal with, 'How do you make it fair?' " Dusten says. "There may be some kids that want to keep farming, and others want no part of it. For people that have two, three, four, five children, it can get pretty complicated."

The Watsons say they met with an estate attorney and an accountant to work out their plan and are transferring the operation of the farm from father to son.

"It's probably more difficult for my father," says Dusten Watson. "For 40 years, he's been calling the shots. But some day, I hope to be doing this for my son."

Sureshwaran says succession planning should begin five to 10 years before retirement.

Pursuing Agri-Tourism

Spanning Generations

Eric Tanouye, whose family grows tropical flowers and plants for their Green Point Nurseries in the upper Puna district on the Big Island of Hawaii, wasn't sure which of his three sons might one day take over the business.

"One of my responsibilities was to get one of my sons to come into the family business, if I could," he says.

His middle son, Jonathan, 23, graduated from the University of Hawaii with a degree in horticulture and decided to follow his father into the family business. "I wanted to maintain that legacy," he says.

When Jimmy Carter's grandfather bought land here in 1938, it was a dairy farm. Carter, who had gone away to school, served a stint in the Army and worked as a lobbyist for farmers in Atlanta and Washington, D.C., came back in 1975.

"I formed a partnership with my dad and my uncle," he says. "In 1979, I bought them out of the partnership." He sold the dairy operation in 1986, raised beef cattle and produced hay and other animal feed.

In 2005, Jake, who had followed his father around the farm since he was old enough to walk, realized that farming was in his blood, too.

But Henry County, which had been largely rural farmland when Jake was growing up, had changed. Starting in the late 1980s, the county had been swept up in the real estate boom that sprawled across metropolitan Atlanta.

"A lot of the farms got developed," Jake says. "We saw an opportunity in agri-tourism. More and more people were moving into our community, and we saw an opportunity to share our farming heritage with the community."

They incorporated as Southern Belle Farm. Visitors can learn how farmers once milked cows; buy pick-your-own strawberries, blueberries and blackberries; or wander through a corn maze in the fall. The farm hosts 70,000 to 80,000 visitors each year, including about 20,000 schoolchildren on field trips.

"Growing up here on the property, I always wanted to be a farmer," Jake Carter says. "Now, I'm able to do that and teach people about farming. People come here, and they feel like they are going back to their roots."

Contact Franchising

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More