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Communication big key in farming, White tells cattle group
By JANE W. GRAHAM
DUBLIN, Va. (April 18, 2017) — Members of the New River Valley Cattle Producers Group were led through a financial “To-Do List” for the rest of the year and a passionate discussion of transitioning the farm during its April 11 meeting here.
Dr. Alex White, a member of the Virginia Tech Department of Dairy Science, stressed to the group that a lack of communication is the main problem many farm families have in dealing with the economics and transitioning of the farm from one generation to another.
He opened his presentation discussing the financial outlook for 2017 and offering guidelines for actions to take in “lean times.”
“It doesn’t look great,” he said of the 2017 farm outlook. “It doesn’t look terrible.”
White told the group he doesn’t see the slightly improved milk price increase that some are predicting coming.
He sees beef prices being relatively flat due to supply, noting there is a lot of beef being imported into the United States.
He devoted much of the evening’s message to transitioning the farming business and stressed repeatedly that farmers need to talk about this and not procrastinate.
The transition can either be with the “warm hand” way-before death- or the “cold hand” way-after death, White told his audience. He said he prefers the “warm hand” route.
One of the big issues in this way is not in transferring ownership as much as it is transferring management responsibility, he said. It is hard for the older farmer to let go and let younger farmers be in charge.
One reason for this is it involves change and a young person wanting to try new things.
Tools in before-death transitions include gifting assets, purchase, co-ownership and sweat equity. This changes after death when such things as wills, estate planning tools or “forced” sales become the reality.
He stressed thinking and talking about the transition process. He said the talking is hard to do and family members, both older and younger, can be very successful in changing the subject when it is broached.
White also suggested getting outside opinions to create a team to help in developing a long-range plan. This team might include a facilitator, an attorney, and accountant, a financial planner, a lender and consultants.
He stressed that partners, spouses, in-outlaws and “out-laws” should be asked to participate in the transition process. Advantages of this are it prevents hurt feelings and gives them the choice of being part of the process or not.
Early in his presentation, White reviewed a number of financial moves farmers can make in “lean times” to make survival more likely.
First on his list is refinancing term debt. He followed this by saying that having access to capital is key.
“Pay the bills on time!” was his advice.
Knowing production costs, making changes in production, looking for new ways to generate revenue, having a business plan and cash flow chart and being creative are among the tools to use in such times, White said throughout the evening.