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Volume 16: Issue 5 September 2014

BOTTOM LINE Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

An overview of farm succession planning Page 8 Projecting the true cost of production and breakeven

Page 14 Managing dairy debt in this economy

Page 22 Build your team

ALSO IN THIS ISSUE: Texas Dairy Tour ..............4 OSHA’s Impact .............. 10 Dairy Technology Tours ..19

Most farmers want to transfer their farms to involved children or employees, and many even tell their neighbors that they have met with an attorney, accountant or consultant to develop a succession plan. While farmers want to do the right thing, few, however, truly understand the meaning and benefits of establishing a formal succession Troy Schneider plan. Many farms have continued to survive under the leadership of a second, third and even further generations. However, for every farm that successfully transitions to the next generation, many more stumble.

Putting these pieces together for a farm succession plan increases your farm’s chances for long-term success and creates a legacy for generations to come.

Identifying the right people means choosing the appropriate people to be the successors. Sometimes in family farms, the qualification of being a future owner means having the right last name. The successors to the farm, however, should be judged based upon business qualifications instead of family qualifications. The family inherently stresses its core values, such DEFINING SUCCESSION as unconditional love, emoPLANNING tional support, loyalty, accepThe online dictionary tance and inclusion within Wikipedia defines succession the family. Because family planning as the “process for values hold the ongoing identifying and developing family relationship as most internal people with the important, mistakes, bad potential to fill key business conduct and underperforleadership positions in the mance are often overlooked company.” The two key eleor tolerated. ments in that definition are Conversely, business 1) identifying the right people values are based on results and then 2) developing the with business decisions right people. and actions being carefully

assessed and often challenged. Business values view effective effort, pro-activity, teamwork and flexibility as healthy. Job performance and conduct are evaluated. Underperformance or poor conduct is not overlooked and has consequences. Developing the right people means providing development experiences to the successor or successors. The senior generation must change the farm’s environment from that of a dictatorship to that of group planning and delegation of authority and responsibility. A succession plan should establish a formal method of development, motivation and training of the successors. CORE CONCEPTS In order for farm succession to be successful, See SUCCESSION, on page 2

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PDPW Dairy's Bottom Line September 2014  

Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

PDPW Dairy's Bottom Line September 2014  

Sharing ideas, solutions, resources and experiences that help dairy producers succeed.