We hear the phrase, “You can’t take it with you,” referring to money and possessions, but the same can be said for farming and ranching operations. Having a plan for farm or ranch succession is crucial to ensuring the enterprise stays in the family another generation. Coby Buck, director of strategic accounts at AgriWebb, spoke on the topic of succession on a recent webinar and explained his family’s ranch, Wray Cattle Co. in eastern Colorado, has prepared for succession over the last two decades and how others can take steps to protect the legacy of their operation.
Buck said his family’s ranch is comprised of 800 cow-calf pairs on 10,000 acres. His parents, who are in their 50s and 60s, own and operate Wray Ranch and have raised four children on the operation—one works fulltime on the ranch and the others have pursued outside careers.
“My parents are pushing against that time when you start to think slowing down might be better for your health,” Buck said. “When we as a family looked at succession and considered the end result that we wanted, the end result is to continue ranching and having that as a primary livelihood of our family base and continue that legacy we are very proud of.”
Buck said when his family analyzed their goals and priorities, maintaining strong, loving and happy family relationships was first on their list.
“When land comes up for sale, it’s largely because there was a major life event within a family or a situation where no one knew how to move forward in the family design, as opposed to someone simply going out of business,” Buck said. “By prioritizing family relationships, I think that helps minimize the biggest risk to succession and to the continuation of your operation.”
Next, the family wanted to ensure operational economic viability and maintain a healthy livelihood for the family.
“Your legacy at the end of the day doesn’t matter if the ranch can’t stay in business or people cannot draw incomes from it.”
It was always important to prioritize the needs of the previous generation and maintain their well-being into retirement and provide good health insurance, housing, travel and a grandparent lifestyle.
“At the end of the day, succession is effectively inheriting the assets from the previous generation,” he said. “With their dedication, hard work and wherewithal, succession isn’t a problem and that is something we should all remand conscious of.”
Finally, Buck said his family was working toward an end result of continuing the livelihood and legacy of ranching.
How to plan for succession
“We unofficially started succession planning in the mid- 2000s when my siblings and I became teenagers,” he explained. “We do annual check-ins, in-depth reviews every five years and after major life events, such as births, marriages, or profession changes.”
Buck said he recommends planning for succession as soon as possible. It does not have to be a formalized plan, but ranchers need to be able to write down goals and create management plans.
“Looking back, in 1995, my family had four small children and my parents ran about 350 cows on 4,500 acres,” Buck said. “My family could draw a livelihood off of that size operation during that time, but for the next generation it might be economically unviable to split it into quarters and have a little over 1,100 acres and 75 cows per family. If the operation can’t support multiple families, it’s something to take note of and look for ways to adapt.”
Buck said one thing he believes is crucial is the value of education— which can be formal or informal education. He encourages parents to allow each child to grow their skill sets and have access to education to open up different professions if they choose to pursue outside employment.
“My parents have this policy where every kid had to leave the operation for a minimum of five years to work for someone else, pursue an education and if they come back, they know why,” Buck explained. “The ones that don’t come back to the ranch are an asset as well, and it avoids the stress of having multiple families draw income from one ranch.”
Buck also encourages ranchers to have an expansionary mindset and to take risks that can pay off big in the long run.
“We work very closely with our bankers to see if it’s a risk we can manage over a longer time span to expand our operation to hopefully decrease the succession pressure as far as continuing to ranch.”
Buck said it is important to remember ranching is not just physically intensive, it is also knowledge intensive.
“Successors have to have the desire to do the work, intimate knowledge of the industry and a deep understanding of how the property has been managed,” he said. “Ideally, there should be overlap with the previous generation to build confidence, trust and transfer of operational knowledge.”
Additionally, the generation that is ascending into ownership needs to understand fair is rarely equal, but fair should not be easy. The most difficult situation is when most or all of the next generation aspires to return, but then the operation cannot support everyone, which is why it is incredibly important to make plans and discuss the future of the farm or ranch.
“Without a succession plan, it is likely that you are turning an asset into a liability for the next generation,” Buck said.
Lacey Vilhauer can be reached at 620-227-1871 or [email protected].
