The Farm and Ranch Family Business

Provided by

Texas Cooperative Extension

The Texas A&M University System

Made possible by funding from:

The Farm Credit System Foundation, Inc.

The Altria Shared Solutions Agricultural Contributions Program

Pioneer Hi-Bred International

The G. Rollie White Charitable Trust

Whether it’s a marriage, the practice of medicine or a multiple-party business arrangement, we firmly believe in the adage that “an ounce of prevention is worth a pound of cure.”

Are you a son or daughter thinking of joining your parents’ farm or ranch operation in the near future? Is your child(ren) considering moving home to work for the family operation within the next few years? If this sounds like you, it would be wise to consider all of the financial and relationship risks associated with bringing family members into the farm/ranch business. The objective of the “Planning the Return to the Farm/Ranch Program” is to discuss the issues and alternatives that need to be considered and resolved before finalizing the commitment. It is essential for the son or daughter (along with their significant other) and their parents to attend this seminar. Planning for the future is key for a successful business and this program will benefit a family whose child is planning to return to the farm or ranch within one to two years.

There are many challenges a business face including financial problems and failure. Families and their businesses have been torn apart or ended up in legal battles over issues that could have been avoided with the use of better planning and communication. The use of appropriate agreements and business arrangements will also help to overcome these challenges. In addition to these topics, this seminar will also address:

• Improving awareness of the issues that need to be addressed initially as well as problems that often arise later on. Most issues could be avoided if they are addressed in a proactive fashion.

• The benefit of looking at your situation from multiple perspectives and learning about alternative approaches that have been used successfully by other family farms/ranches.
• Improving communication and understanding among the parties involved. The result should be fewer relationship and financial problems.

Even in those cases where the business arrangement later dissolves, the resolution should be smoother, more amicable, and less dependent upon legal actions.

“Planning the Return to the Farm/Ranch” program is a cooperative effort of the following Texas university agricultural programs:

Educational programs of Texas Cooperative Extension are open to all people without regard to race, color, sex, disability, religion, age or national origin. Issued in furtherance of Cooperative Extension Work in Agriculture and Home Economics, Acts of Congress of May 8, 1914, as amended, and June 30, 1914, in cooperation with the United States Department of Agriculture. Edward B. Smith, Associate Vice Chancellor and Director, Texas Cooperative Extension, The Texas A&M University System.

Topics and Issues

• Can the farm support an additional person or persons? What happens when they get married and have a family to support?
• If the business has to expand to accommodate additional people, what are the expansion plans and what are the additional financial and other risks involved,?
• Is there a long term business plan and a shared vision for the future of the business? Does it include an exit strategy?
• Have job responsibilities been discussed and determined? How will decisions be made?
• Does the current ownership/senior management have a plan for development of the younger person with provisions and a timetable for succession?
• If other siblings or relatives have already or will be returning to the business, what is their arrangement and how will management succession be determined? Will a younger sibling who demonstrates the talent and ability have the opportunity to move above an older sibling in terms of management responsibility?
• What provisions for ownership/wealth transfer are there to complement the succession plan?
• Has there been consideration of and provisions for dealing with the 4 Ds - death, divorce, disability and departure - as well as other major contingencies?
• How will children who are not active in the business be treated in regard to distributions, having a say in the business, wealth transfer, etc?
• How will in-laws be socialized and treated?
• As the business is transferred, what if heirs who are not in the business want to sell assets or rent to someone else?
• Is there a buy-sell agreement between the current owners and their spouses that will be amended as new owners come onto the scene? Do these agreements address buy-out provisions and terms, how value is to be determined, rights of first refusal, voting rights, restrictions on ownership transfers, etc?
• What are the characteristics of successful family businesses?
• How will compensation, performance evaluation and distributions be handled? What can realistically be expected? Will different jobs or responsibilities be paid differently?
• Have alternative business structures and different forms of equity and debt instruments been considered and evaluated as they relate to achieving business and family objectives?
• How will conflicts and disagreements be resolved?
• What if unreconcilable differences develop and the partners can no longer work together?

___________________________________________

Registration - Enrollment is limited. Applicants will be selected on a first come, first serve basis. To register, complete and return the registration form along with the registration fee to:
Planning the Return to the Farm/Ranch Program
Texas Extension Education Foundation
P.O. Box 946
College Station, TX 77841-0946

Registration Fee - The fee for the total program (includes parts I and II) is $750.00 per family up to 4 people. The fee includes one copy of the book “Building Effective Farm Management Systems,” which sells separately for $150. Additional participants are $100.00 per person. Materials, breaks, and lunches throughout the program will be provided.

Please make your check payable to:
“Texas Extension Education Foundation.”

Registration Deadline - The deadline for registration is December 18, 2007

Cancellation - In order to cover contract guarantees, a $150.00 cancellation fee will be assessed against the amount refunded. There will be no partial refunds for attending only part of the program.

Lodging - Hotel reservations should be made directly with the Radisson Fossil Creek in Fort Worth, Texas. The rooms are blocked under the group name of Texas A&M/”Returning to the Farm/Ranch Program”.

Radisson Fossil Creek
2540 Meacham Blvd.
Fort Worth, Texas 76106
817/625-9911
The rate is $85 per room, per night.
Reservations need to be made by December 18, 2007

________________________________________________________________________________________________

APPLICATION FOR 2008 RTTF PROGRAM

The following will be attending from our business:

Participant Name Relationship
__________________________ ________________________
__________________________ ________________________
__________________________ ________________________
__________________________ ________________________
__________________________ ________________________

Farm/Ranch Name________________________________________________________
Mailing Address___________________________________________________________
_______________________________City________________State________________Zip
Telephone Number_______________________E-Mail___________________________

If the potential successor is still in college, what university are they attending?
_____________________________________

The Following Information Will Be Kept Confidential:

What are the principal enterprises on your farm/ranch?
______________________________________________________________________________

What are the approximate annual gross sales of your business from farming/
ranching activities? ______________________________________________________________

How many people, including yourself, are actively involved in the management
of your farm/ranch business?
_____ Family (both relatives and immediate family members)
_____ Non-family

How many employees (below the management level) are involved in your
farm/ranch business?
_____ Full-time _____ Part-time/Seasonal

How would you describe your business organization?
_____ Sole Proprietorship _____ Partnership
_____ Public Corporation _____ LLC or Private Corporation
_____ Other (please specify)

Signature ______________________________________ Date __________________

__________________________________________

Portal to the Internet

Links to 16 websites containing information relevant to managing the family farm/ranch business:

http://www.wittmanconsulting.com R.L. "Dick" Wittman is author of the book A Guidebook & Strategies for Building Effective Farm Management Systems. Dick is a consultant who practices what he preaches. He has worked for the Farm Credit Syste, is CEO of a 17,000 acre multiple family member farming operation, has consulted with family farm bysinesses for over 25 years, is a past president of The National Farm Financial Standards Council and a faculty memger of The Executive Program for Agricultural Producers.

http://www.centrec.com The Centrec Consulting Group is a management consulting and training firm that works with agribusinesses and commercial farmers to develop management strategies, to address changes in the marketplace, growth challenges and specific organizational issues. Check the resources section for a number of thought provoking articles about management issues and the future of commercial agriculture.

http://www.fambiz.com/home.cfm   Fambiz.com is a non-profit organization hosted by one of the world's most respected family business educational institutions, Northeastern University's Center for Family Business .

http://www.umass.edu/fambiz/relatedlist.htm   The University of Massachusetts Family Business Center, Related Matters, "Treat Your Business Like a Business and Your Family Like a Family."

http://www.familybusinessonline.org/   The Austin Family Business Program excels as a pacesetting family business resource to help family businesses balance the well-being of the business, the family and individuals, as they address the challenges and opportunities which inevitably arise, day to day and during succession. Its objective is to foster healthy family businesses -- through innovative tools, hands-on learning opportunities and honest talk.

http://www.farmcentre.com/english/products/index.htm   Contains over 4,000 pages providing fast and easy access to leading-edge information on how to successfully start, operate and grow a modern farm in today's fast-paced globally competitive environment.

http://www.efamilybusiness.com    Whether you are seeking information about succession planning, ownership transfer, sibling teams, shareholder relations and communication, governance, conflict resolution, estate planning and asset protection, business plans, executive compensation, management and leadership training or any number of family business issues, you will find it here.

http://www.ffi.org    The Family Firm Institute (FFI) is an international professional membership organization dedicated to providing interdisciplinary education and networking opportunities for family business advisors, consultants, educators, and researchers and to raising public awareness about trends and developments in the family business field.

http://www.aspenfamilybusiness.com    Insights from five of the world's leading authorities on family businesses: David Bork, Founder , Leslie Dashew, M.S.W. , Dennis T. Jaffe, Ph.D. , Sam H. Lane, Ph.D. , and Joe Paul, M.S., who work independently for clients and collaborate when it is in their client's best interest.

http://www.extension.iastate.edu/bfc/homepage.html    The Beginning Farmer Center developed from a series of discussions with Legislators, Extension personnel, and others concerning what could be done to encourage new farmers. These discussions led to the conclusion that it was necessary to have a center to focus exclusively on the needs and issues facing beginning farmers. It was also determined that this Center should facilitate the matching of beginning farmers with existing farmers who wanted to transition their farm businesses to the next generation.

http://www.extension.umn.edu/topics.html?topic=4&sutopic=32    The University of Minnesota's Agriculture, Food and Environment programs address issues including business management and marketing, environmental stewardship, food systems, agriculture policy, and science and technology.

http://www.transitiondynamicsinc.com    TDI provides transition management products and services to multi-generational business families, universities, foundations, volunteer organizations and professional and trade associations.

http://tcre.org  The Texas Center for Rural Entrepreneurship is for anyone involved in starting or growing a rural business, in rural economic development, or in providing technical assistance, educational programs, or other forms of support to rural business owners in your community.

https://secure.agriculture.purdue.edu/store/catalog.asp?catid=20   Purdue University, The Education Store. List of various publications pertaining to business management in agriculture.

http://www.farmdoc.uiuc.edu/fasttools/index.html    The goal of the Farmdoc (farm decision outreach central) Project is to improve farm decision-making under risk through education and research. To meet this goal, the farmdoc website provides Illinois farmers with comprehensive and integrated risk management information and analysis. Publications, decision tools and databases related to a variety of risk management issues are found throughout the site.

http://www.ruraleship.org    The primary goal of the Center for Rural Entrepreneurship is to be the focal point for efforts to stimulate and support private and public entrepreneurship development in communities throughout Rural America.