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After his start in nursery and greenhouse production and degrees in biology and rural land use planning, Jim has made agriculture development the focus of his career. He served as a Cornell Cooperative Extension agent in upstate New York for seventeen years, and was known as the “Voice of Agriculture” on Finger Lakes Radio. Transitioning to technology and farm business development, he’s seen dozens of innovative projects aimed at enhancing the capacity of farm owners and enhancing the economic power of dairy, field crop, fruit, and livestock sectors in the northeast. Granular gives him the opportunity to put his agriculture development experience to work with more than 20 Granular farms in the US and Canada.

Jim Ochterski Photo

Jim Ochterski

How do you define farm succession planning?

Farm succession planning is as important as crop planning, and in many respects it is similar. Yet, farm succession planning, which I define as cultivating growth in the capacity and accountability of a management team to take over, receives far less daily attention. Maybe it just doesn’t feel rewarding, or we don’t see it as important. Or maybe, we just don’t know how to put farm succession actions into place.

Why, and how, is farm succession planning critical to the long-term success of a farm business?
Managers who have led their farms to new levels of success are obligated to ensure that this aptitude will carry on. From accountability areas to asset ownership, farm succession planning puts in place small actions every day to cultivate the professionalism of next set of farm owners. Seriously, every day? Yes. Every day of farm management provides an opportunity to teach, to enable others, and to send a message of confidence to the succeeding team of leaders.

If you are looking for ways to start or improve your farm succession planning, here are five ideas to get you on the right track:

  • Organize your farm succession planning activities into three main categories: 1) Transferring physical asset ownership (land, buildings, equipment), 2) Establishing new account ability roles (i.e. delegating specific aspects of management), and 3) Re-assigning business relationships (e.g. updating the point of contact with customers, renters, suppliers, etc.)
  • Avoid delegating responsibility without giving authority. You can’t expect a junior manager to be responsible for crop decisions if the decisions have to be approved by a senior manager or consultant. Reward responsibility with accountability and authority. If a succeeding team member does not have the authority, do not expect them to succeed with the responsibility.
  • Record what you do. Management activities should be fully sharable and traceable. Tools like Granular can make sure that your land agreements, equipment data, inventory, field activity, regulatory and historical who-was-doing-what records are all in one centralized, secure, and disaster-proof place. The onboarding process for these tools is often a way to orient and introduce the fine details of farm management to a broader team.
  • Look beyond family members to your overall farm team as possible future leaders. Many farms have benefited from fresh blood and better perspectives in a new hire. Adopt a business structure that allows non-family employees to ascend to earned ownership and leadership roles, even while certain family employees remain in lower-level positions.
  • Every day, act to ensure the results of your sacrifices and decisions will be sustained. Do one small thing every day to cultivate growth in the skills and accountability of your younger potential management team. Make sure the next farm generation is better prepared than you were when you took over.

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Succession in a family business is hard work – perhaps harder than the normal, daily work required to run the business itself.  Transferring the senior generation’s years of experience and knowledge, and developing skills and strengths in the next generation, all while managing the emotional dynamics of family members working together, is flat-out overwhelming. Add to that the transfer of ownership among on and off-farm heirs, the consolidation of the industry, and the current economic climate, and more than a few families wonder if the effort is worth the reward.

For those who choose to continue the business legacy through engaging in succession planning, technology offers a host of compelling benefits, both from a business management standpoint, and family dynamics. I’ve listed a few for your consideration:
1. Modeling business scenarios as a way to objectively evaluate decisions. With all of the systems that capture data, it is becoming easier to take last season’s financial, market, agronomic, labor and weather data to create models, budgets and scenarios of how future years might look. While agriculture is an unpredictable endeavor, you can more easily evaluate potential future outcomes, and begin to add a sense of certainty and objectivity into the planning process. This also offers a glimpse into how different generations might try to solve problems or take advantage of opportunities, leading ultimately to greater confidence and a sense of direction in the business transition process.
2. Analyzing data to understand the factors that really drive performance. In prior decades, knowledge of what drives performance was often handed down from prior generations as a set of guidelines or best practices. But with software like Granular, the data generated and collected helps to institutionalize – and even sometimes refute – knowledge handed down from parents and grandparents. Analyzing the data together formalizes and furthers the goal of transmitting knowledge from the senior generation’s head into the minds of future generations.
3. Communicating across geographies to keep people on the same page and gather input. When you consider the people who have an interest in your farm, the numbers add up quickly. Family members, employees, land owners, vendors, and advisors all have an interest in knowing what’s going on on your farm. Through constantly evolving communication and reporting platforms, it becomes easier to share news, financial information, crop progress and even instructions. A robust communication process leads to a more seamless transfer of knowledge between parties, which in turn smoothes the succession process.
In the world of family business succession and planning, to “facilitate” means “to make easier.” Technology, while not always easy to adopt at the beginning (and change the behaviors that go with said successful adoption), can be a tremendous facilitator once implemented. Consider how you might be able to take advantage of new technologies to advance succession in your ag family business.

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A recent Granular blog post aptly mentions that most of today’s large farms “are complex organizations run by fathers, mothers and their relatives trying to leave the business in better shape than they received it.” This family stewardship ethic takes shape in the context of a progression of the business from “survival mode,” where owners were literally surviving from year to year, living almost hand-to-mouth, to a more stable and profitable business where the owners and managers are working to increase the professionalism of the organization.

Several indicators highlight the path to professionalism in the family farm. In the financial arena, people begin to see financial information not as a requirement to get a loan or file a tax return, but as a critical tool in understanding their business and measuring the results of their management efforts. Moving to accrual based accounting, determining the key financial ratios critical to success, engaging or hiring a CFO with specialized training in finance and accounting, and moving to a reviewed or audited financial statement are all signs that the business is moving to the next level in their organizational life cycle.
In the area of human resources, business owners and managers systematize their approach to recruiting, hiring and managing talent. They may use internships or take advantage of career placement services at agriculture colleges. They develop policies around compensation, they design bonus systems, they increase the frequency of feedback, they institute individual development plans, and they consider additional and unique benefits to reinforce their values and culture.
In production, family farmers becoming more professional see their role as a coordinator of resources and activities. They begin to plan one or two (or more) years ahead, knowing that a successful growing season involves solid agronomic intelligence, the right inventory of seed and other inputs, the appropriate equipment, an effective and growing staff, an articulated capital improvement and expenditure philosophy, and a system by which to capture, organize and use their production and financial information – which is where Granular can make a big difference.
The path to a more professional organization requires long-term perspective, a personal willingness to learn and grow, additional people and skills, and new technology platforms and tools. How do these elements factor in your plan for growth?
 

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I joined Granular earlier this year for a number of reasons, but I was primarily excited about the opportunity to partner with the world’s best farms to make them even better through better farm management software, and strengthen the entire industry. In my mind, partnering with the “Fortune 500” of farming meant working with large, hierarchical and industrial organizations, owned by shareholders managing the farm remotely. I was wrong – most of the successful, high-growth and technologically advanced farms are still family businesses.

The USDA has reported that up to 96% of farms today are family owned. Farms may be growing, incorporating and adopting leading-edge technologies to become more professionalized, but family ownership is not disappearing. While our customers might not fit the public’s romanticized view of agriculture (small and artisanal farms sitting quietly on an idyllic countryside), they are complex organizations run by fathers, mothers and their relatives trying to leave the business in better shape than they received it.
Why is it that family farms often defy the common notion we have of family businesses? I see three primary reasons:
1. The industry demands and rewards scale. Most people know that agriculture is a risky endeavor, and that it takes a large capital investment to be able to generate a somewhat steady income year after year. A 1,000-acre farm (which by many standards could be considered a small farm), can barely produce a family income, but yet sits on roughly $10 million worth of land.  Add to that other fixed costs like equipment and labor, and it becomes clear that scaling is required to be profitable throughout generations. As a farm grows, so does its ability to buy in bulk to lock in lower input prices. Size also brings better access to credit. More credit means more means to expand, and so on.
2. Family farms remain devoted to agriculture across generations, and this commitment pays off in real terms.   If you’re a farmer it pays off, literally, to remain in the same place for a long time. Take, for example, a family settled in Iowa in the late 1800’s to start a typically-sized 40-acre farm. An average 5% annual growth rate would mean that this same farm would be roughly 32,000 acres today, five generations later.  An intimate understanding of soil conditions, weather and other agronomic factors results in productivity gains year over year. Longstanding relationships with suppliers result in more favorable terms relative to market and community newcomers.
3. Technology helps farms overcome the challenges inherent in managing and transitioning family businesses.  In every industry, each generation struggles to not only to retain the next to join the family business, but to set them up for future success. In agriculture, this issue is particularly salient. Technology can help generations pass down knowledge on the land, agronomic practices and management decisions. It can help attract young talent to learn and take over the businesses. The right software can generate data that uncovers critical efficiency gains to improve processes that have been in place for years, and helps younger generations make smarter decisions in increasingly competitive ag markets.

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Karl Wozniak, Role
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Karl Wozniak, Role
  |  
September 11, 2017

Our Continued Committment to Independence and Data Privacy

Karl Wozniak, Role
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September 11, 2017

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