On April 3, 2028, the owner of a 2,400-acre spring wheat and sunflower farm in North Dakota retires after 41 seasons. His daughter has run the machinery and the crop plan for nine years. On April 20 her first seed and fertilizer order comes due, $214,000 of it, and the operating loan that pays for it has only ever been negotiated by her father. If the lender will not deal with her by then, $214,000 of inputs does not reach the field. (The farm and every figure in this scene are invented for the example.) A written succession plan prevents that morning. The family writes down eight farm decisions and, for each one, who makes it today, who will make it and from what date. Give the money decisions the earliest dates, because left alone they pass last. Fill in the eight rows this month.
The people who make these decisions are getting older. In the 2022 Census of Agriculture, 38.4% of US farmers were 65 or older, up from 33.9% in 2017. That is the sum of the groups 65 to 74 and 75 and over in Table 52, which counts up to four decision-makers per farm.
In what order do decisions pass to the successor?
The technical decisions pass first and the money decisions last. In 2008 Uchiyama and colleagues compared surveys of farm owners in England, Canada, the United States and Japan who already had a successor. Each owner scored every decision from 1 (the owner decides it all) to 5 (the successor does). In every country except Japan, the handover began with the technical decisions and ended with the financial ones. In Japan the gap was too small to confirm the order.
Lobley, Baker and Whitehead compared nine regions in 2010: England, Ontario, Quebec, five US states and Australia. Deciding when to pay the bills was the decision the older generation held onto most in eight of the nine regions, and finding and negotiating loans and finance came second, also in eight. Deciding when to pay the bills sets the farm’s cash flow: which payment goes out first and which waits. The authors call the order the succession ladder, first described in Ireland in the 1970s. The successor climbs from the daily work to the money decisions at the top.
A 2019 survey of 739 Iowa farmers shows the same order. Of the farmers who answered, 71% decided alone when to pay the bills and 66% decided alone how to find and negotiate loans. A grown successor changed little. Where the successor was 35 or older, the owner still decided alone when to pay the bills on 59% of the farms and how the jobs are done on 37%.
The survey covers one state and one year. It still points the same way as the international surveys: the owner holds on longest to the money decisions, even with an adult successor working alongside.
Why do the money decisions go last?
The research suggests four reasons: the owner lives on the farm’s income, may not trust a younger person with it, keeps the land until the end, and rarely talks about the handover.
On income, Iowa farmers who will draw income from the farm in retirement mostly expect between 50% and 75% of all their retirement income from it. Sappey and colleagues, in an Australian study from 2012, suggest the slow handover of management may be because farmers are still dependent on farm income to some extent. Uchiyama and colleagues add that the owner may not want to entrust his or her pension to a younger family member. Handing over the date of the bills hands over control of the income the owner will live on.
On land, Sappey and colleagues record that in Australia full legal ownership is often not transferred to the successor until after the death of the farmer. Control of the money and of the long-term direction of the business can then be held up for years.
On the conversation, 66% of the Iowa farmers had no formal succession plan, and 22% had not discussed their plan with anyone. In the same survey, 40% had identified a successor, 31% had not, and 29% said it was too early to say.
What does it cost to leave the handover for the end?
Most of the handover is squeezed into the last years, or into one day if the owner is suddenly gone. Uchiyama and colleagues measured how much was left to hand over five years before the planned retirement. In the English, US and Japanese samples less than half had been handed over, and only in Canada more than half. The authors call what follows the last spurt: the successor rushes up the rungs still left. They warn that it may threaten the farm’s continuity when an inexperienced successor jumps straight to the top.
If the owner were gone suddenly, there would be no spurt at all. The successor would take over everything in a day. The first loan negotiation of a lifetime would fall in the family’s hardest week, with a lender who until then had dealt only with the owner. That is the morning in the opening scene.
The owner’s age is a poor reason to wait. In a 2023 survey of 403 US farmers, Lippsmeyer and colleagues found that having a written succession plan was largely unrelated to operator age. Farms with a plan also more often kept other practices on paper: 68% of them used written lease agreements, against 52% of the farms without a plan. The authors say the data cannot show which causes which.
What does a succession plan settle that a will does not?
A will settles who owns the farm. The plan settles who decides on the farm while the owner is alive. Sappey and colleagues keep the two apart. Succession planning is the development of a business plan prior to the death or retirement of the existing farm owners, as distinct from inheritance planning, which usually takes the form of a will. They cite a framework by Andrew Errington, of the University of Plymouth in England, with three stages.
A will, a trust and a company structure move the assets, and setting them up is work for a lawyer and an accountant in the reader’s own jurisdiction. The decisions are different: the family hands them over one at a time, with the owner still there. One of them passes even if nobody decides it. Whoever takes over the farm also takes over its way of filing taxes, without having chosen it and often without the papers that explain it. A separate article, on recording the way of filing taxes and who chose it, shows what that choice locks in.
Which decision changes hands first, and on what date?
For each decision: who makes it today, who will make it and from when. The rows follow the grouping of the Uchiyama and Lobley surveys, technical decisions at the top and money decisions at the bottom. The middle rows change order from one region to another. A row counts only with a name in the third column and a date in the fourth.
A name goes in the third column even if no successor has been chosen. Each decision can go to a person the owner trusts: the spouse, a sibling or the farm manager. A decision nobody on the farm can take on becomes a job opening, filled through a written hiring process with the requirements set beforehand.
| Decision | Who decides today | Who will decide | Starting when |
|---|---|---|---|
| The day’s plan and how the work is done | |||
| Which inputs to use and when to do each operation | |||
| The year’s plan and which enterprises to keep | |||
| Hiring and supervising workers | |||
| When to sell and negotiating the sale | |||
| Investing in machinery and improvements, buying or selling land | |||
| Finding and negotiating finance | |||
| When to pay the bills |
Two practices help keep the dates. The first is handing the successor a whole enterprise, with its money: one rented farm, the replacement heifers or the marketing of one crop. With its account, its purchases and its profit and loss in the successor’s hands, it is the first money rung to climb with the owner still alongside. In the Uchiyama survey, successors were given more decisions when they ran a business of their own within the farm, though the survey cannot show which came first.
The second is a family meeting every few months, where someone reads the table aloud. If nobody checks, the date passes and the decision stays with the owner. Checked at every meeting, the handover becomes part of routine farm management, alongside the operating budget and the sale of the crop. To count in a minute how many decisions still rest on you alone, take the succession mini-check.