Dealing with retiring farmers to create landlord relationships

Elaine Froese
Wednesday, 12 June 2019
By Elaine Froese
I am extremely grateful for the three neighbours who showed up with three extra combines to harvest on the last sunny Saturday of September; it really made a huge difference in reducing the stress on our farm. When I relayed this story to an easterner, he said, “Wow, they still do that out there! Neighbours here are so competitive for land; that never happens anymore!”

So, are you cultivating harmonious relationships with the landowners next door, or are you just hoping they will read your mind and know what your farm vision is for expanding your land base with your successor?

How are you doing with “landowner relationships”?
Some pro-active farmers are doing a “retiring producer needs assessment” with older farmers and planting the seeds of an ongoing conversation. They ask questions about the $ /year income stream that is needed, if there is a plan in place, and whether or not the farmer has an “exit plan.” Retiring farmers are typically really concerned that they know they should have a plan to exit, but in reality there is no plan. Sometimes this conversation can last five years. This is not a “hostile takeover” kind of talk, but one lead by the aging farmer, with grace and respect.

Are you working at introducing your successor to the landowners that you deal with? Farmers like to know who is going to be caring for their land, and they want great stewards to farm their land well. The retiring farmer also wants to do business with someone who is transparent, honest, trustworthy, and pays their bills on time. The renter also wants to make sure that the landowners feel like they are “well taken care of.”

Do you know who your “best prospects” are to rent or buy land from? Some keener negotiators are talking to their best prospects at least monthly. They are “talking to them every chance they get, and also trying to create chances to talk with them!” This is relationship selling, mostly done on the phone, sometimes by text. The aging farmers at community meetings for the school, curling club, fair, 4-H, farm groups, and church are also not left unnoticed.

Cautions:


  • Be sensitive to what the aging landowner is going through. Some folks do not want their land to change hands until they die.
  • Pick the right “tailgate time” to have a casual conversation about the farmer’s future plans for the land. This is not community news; this is a confidential talk.
  • Custom working the land gives you an opportunity to show how well you farm and care for the earth.
  • See if there are economic enticements such as helping the aging farmer sell some of his equipment or get it ready for auction.
  • Consider finder’s fees for those folks who understand the relationship selling process who can give you workable referrals.
  • Beware of people “pretending” to be deal makers when they really don’t want to have conversations about renting or selling. Be sure that the farmer has the ability to make a rental or sale decision.

Process:


  1. Start with a list of prospects with whom you would like to form relationships. Good solid relationships with retiring farmers may take years to build.
  2. Help solve the retiring farmer’s problems by selling outdated equipment, do custom work for them. Preface your comments with “when you feel ready to retire…”
  3. Have your agreements in writing. (I recall a farm family with many elderly landowners who didn’t like paper contracts, but the new generation of young farmers made written agreements a condition of renting, clearly just their business policy.)
  4. Make sure you have all the substantial conversations with all the important decision makers present at the same time.
  5. Set the expectations ahead of time for the assessment survey, “I’d like to ask you a set of questions that may sound “hokey” but they are important for all of us to be clear about what everyone needs out of this land rent process.” The assessment survey is created by the buyer/renter to get a clear understanding of what the retiring farmer needs.
  6. Look inside yourself. Are you a good manager? Do you have great management capability and empathy with a heart to care about your neighbour’s well-being? Sometimes an outside advisor like an accountant or agronomist may have the facilitation skills to bring the interested parties together for a “social” discussion of the possibilities. This works if the parties have similar values and can say “I like the way you think, you think like I think.” When the terms of agreement are put together, seek out separate legal counsel and get the deal done.
Many retiring farmers are happy when they know they have put their land into the care of good hands. Some exiting dads take a salary for five years and are happy to be driving equipment in the busy times of spring and fall. Other retiring farmers may take on the role of “landlord relations” for the farm team.

Some folks are so attached to their land and their “iron” that they are not capable of letting go or making new agreements with new tenants or owners. There is a huge issue in agricultural circles with “avoidance behavior,” so if the fellow that you want to buy or rent land from crosses the street when you approach, you likely have damaged the trust relationship.

Here’s some homework for the winter months:
  • What is the vision for your farm growth for the next 3 years?
  • What is your REAL net worth?
  • If you are planning to exit farming, have you done your tax planning?
  • What is your life going to be like when you are no longer the main farm manager?
  • Which neighbours do I want to continue building a relationship with because I truly care about their total well-being? (not just their land!)


Editor's Note: The original post first appeared on Elaine Froese's website and has been re-published with permission. 

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