INTRODUCTION: Alabama is home to increased numbers of socially disadvantaged beginning farmers. Twenty-three (23) of the sixty-seven (67) counties in the state are characterized as Strike-Force communities with persistent poverty and chronic health problems. Residents in these communities often lack basic knowledge about production requirements, enterprise diversification or farm succession planning. They also lack financial, marketing and risk management skills to start, operate viable farm businesses. We believe these producers must be assisted in understanding farm risk and various strategies or tools to mitigate it. This poster focuses on two elements of risk management – Farm Succession Planning and Farm Business Planning. It’s an outline of activities planned for a project funded by ERME-SRMEC. The project addresses the unique needs and challenges of underserved agricultural producers, some of whom are transitioning or converting to urban agriculture. We believe that lessons from this project has educational value, and the expected results will be significant and useful in directing delivery of outreach and training assistance to the target audience, comprising of underserved agricultural producers with a focus on veterans and minority farmers in Strike-Force communities. The target audience is largely African American, Latinos or Hispanic Americans and other minority groups, less educated and who manage small farms, often with limited resources. These groups usually are responsive to material assistance appropriately adapted to their specific individual needs.
FARM BUSINESS PLANNING: A Business Plan is an essential roadmap for business success. It usually projects 3-5 years ahead and outlines the route a farm business must take to grow revenues. A business plan is a formal statement of the business vision, mission, goals and plans for reaching these goals. A farm business plan may target changes in perception and branding by the customer, taxpayer, or larger community. While it is important to know how to develop a business plan, it is equally important that the owner knows how to use it. This is the part that our training emphasizes. When an existing farm business is to assume a major change, a 3-5-year business plan may be required, since bankers will usually look for their return on investment in that timeframe. Thus, a business plan is one’s compass. It will help you map out a new course, and navigate through unchartered territory. Whether a farm owner is writing a business plan for the first time or fifth time, it does not have to be hard or long. In fact, if you write a lean plan or one-page pitch first, you may find you actually enjoy doing it.
FARMLAND SUCCESSION PLANNING: Succession Planning is the process of formally transitioning management and ownership of an agricultural business from one generation to the next. There is no single plan that every family or every business should use. Some plans involve an outright sale of the family farm to the younger generation (or to a third party). Other plans rely primarily on gifting or on life insurance. Some simply involve the formation of business structures that will help make a transition possible in the future. Others involve expanding an operation to help support more families or dividing a large operation into discrete parts to support different families. Farmland succession planning helps ensure that dreams become reality; and the farm continues operating with sufficient economic viability to support multiple generations. Succession plans work hand-in-hand with retiring generation’s estate plans. By creating succession plans, a family’s vision and intentions for their farm are addressed and implemented purposefully. Most successions fail due to the lack of a good estate plan: A Common Belief! Estate Planning is about how assets will be transferred to all heirs while as Succession Planning involves discussing a lot more including the following:
1. Estate planning – Don’t put off your estate planning
2. Establishing the business philosophy rights
3. Leadership, management and workload rights
4. Determining how the partners will work and communicate together
5. Succession feasibility
CONCLUSION: Succession Planning and Business Planning go hand in hand for a successful farm business operation. But what are the challenges? This will be the discussion of our next presentation and publication. REMEMBER, if you fail to plan, you’re are planning to fail.
|Conference||2018 Extension Risk Management Education National Conference|