Broker Check

It Takes A Farm To Feed A Nation

The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) reports that family-owned farms remain the backbone of the agriculture industry. 97 percent of the 2.1 million farms in the United States are family-owned operations.Family owned businesses are central to the U.S. economy: 90% of U.S. businesses are family owned, and they contribute 64% of the U.S. gross domestic product, and 78% of new jobs created.1

Yet only 30% of these businesses survive into the second generation, and only 12% will still be around by the third.2

Why Are Survival Rates So Low?

Why Are Survival Rates So Low?

One obvious reason is family conflict. But a second reason is perhaps even more influential: failure to design a proper succession plan.

Farm owners are typically so busy with day-to-day challenges that they often have little time to think about who will take over the business once they’re gone. But the consequences of having no plan in place could be catastrophic to the family, workers and others who depend upon the farm. For instance:

  • Will the farm have to be sold in order to pay estate taxes?
  • If a co-owner dies, will there be a conflict between the surviving owners and
    the co-owner’s family?
  • Will the children of the owner wish to continue running the farm? What if they don’t?
Beat The Statistics

Beat The Statistics

What a succession plan can do for you.

At its most basic, a succession plan is a documented road map for your business associates, future heirs, and successors to follow in the event of your death, disability or retirement. It can also be used to orchestrate the sale of your business interest and may even help establish the value of your business interest. It may also help:

    • Establish who would run the farm if you retire or pass away.
    • Set policies for distribution of assets.
    • Set schedules for debt retirement.
    • Encourage key employee retention.
    • Protect the farm should the owner decide to take his or her share and leave.
    • Prevent family conflict from forcing the sale of the farm.
    • Pay estate taxes without sacrificing the farm or causing an undue burden on running the farm.
    • Provide a way to take advantage of unexpected expansion opportunities.

1 “Debunking Myths About Mom and Pop Shops,” Small Business Trends, https://smallbiztrends.com/2017/03/family-business-statistics.html, March 29, 2017.
2 “Planning Is Key When Passing the Family Business onto a New Generation,” The Denver Post,https://www.denverpost.com/2017/04/16/ family-business-new-generation-planning/, April 16, 2017.