Todd Stacy, of Stacy Family Farms, was at Ohio State University’s Agricultural Technical Institute in 2012 when he got a call from his dad, Bill Stacy, asking if he was coming home for the weekend.
He said not that weekend — he was busy with school and work. His dad told him he’d better make sure he came home to visit soon: A property on state Route 7, in Marietta, Ohio, was up for sale, and it looked like exactly what the family farm needed to expand.
Todd always knew he wanted to take over the family farm someday. The Stacys went to see the property and talked about it. It had what they needed: space, some structures and sandy ground that would be great for growing strawberries and some other crops.
So, they bought it. It would let them grow the farm and make sure that it could eventually support another generation and be viable in the future.
It wasn’t until about eight years later, in 2020, that Bill Stacy, 66, and Todd Stacy, 30, started diving into their farm transition.
“I knew I had to lay out a plan and go from there,” Bill said. “I’m showing my age … You can’t manage it from the grave.”
Not everyone gets around to making that plan in advance. After about 20 years of helping farms with generational transitions, Marty Clark, of Washington County Career Center Adult Technical Training, has folders in his office from farms that started working on a succession plan, but never finished.
He recalls what an Ohio State University professor, who has helped him with farm transition workshops, used to tell farmers.
“He said, ‘Ninety percent of you, I’ll never hear from again, ’cause you don’t want to do anything,’” Clark said.
There are plenty of reasons for that. Family farm transitions aren’t easy.
“There are a lot of issues, which could be family issues, not farm issues, that affect the farm succession plan,” said David Marrison, of Ohio State University Extension.
Fair
Farm transitions aren’t a new issue. But, Marrison said, the value of farmland in Ohio has gone up significantly, which can inspire more conflict.
The key to a good transition is communication.
When Venae Watts, one of the fifth generation owners of Minerva Dairy, came back to the family business after college, she and her brother, Adam Mueller, the other fifth generation owner, kept butting heads. They fought over little things. They tried to fire each other three times.
“Any brother and sister close in age — we fight,” Watts said. “That’s just what we do.”
But over time, Watts, now 46, and Mueller, now 44, grew out of their arguments.
“The big picture, we were on the same page,” Watts said. “You want to be part of something that’s bigger than yourself … You’re always working for the next generation.”
Even with good communication though, transitions can be tough. Farms can rarely be divided equally.
“It won’t be fair, and not everybody will be happy,” Bill said.
Letting go
It can take years to transition a farm. Ideally, it’s a slow, planned process. But the reality is, sometimes, it’s a death or disability that gets the process started.
“I think most farmers desire for a future generation to take over, but … it’s really, really hard for a farmer to be in complete control and then wake up the next day and not have control,” Marrison said.
Guidance
Letting the next generation take on leadership roles is a key part of any transition. Older generations can help younger generations learn by being around as mentors and letting the transition happen gradually, over several years.
Stacy Family Farm used to sell vegetables for the wholesale market, shipping many of its crops up to Cleveland. Now, the farm has switched to 100% direct sales. And that’s not the only change on the farm.
Farming, markets and technology are always evolving, and the Stacys have had to evolve with them. Even with all the changes he’s made since he took over the farm, Bill has relied on generational knowledge to manage the farm.
“We had to figure out what fit for us … there’s always a learning curve,” he said. “That’s what helped me, just listening to the previous generations and how they solved problems … Nowadays, I’m the old one in the family.”
At Minerva Dairy, Watts’ father, the fourth generation owner, comes in to work every day for a few hours, mostly to help them as a mentor. It’s been a smooth transition, since Watts and Mueller took over leadership in 2000.
“I think it helps, with a family business … when you’re young, you get a lot of responsibility that you normally wouldn’t be given at another company,” Watts said.
Working together means finding a balance between the way things have always been done, and letting younger generations explore ideas for the future.
Tax credits could encourage farm transitions
Tax credits could encourage farm transitions. Ohio legislators have introduced a bill that includes a beginning farmer tax credit program, modeled after a similar program in Minnesota.
The program would offer an income tax credit to people who sell or rent land, equipment, livestock or buildings to beginning farmers. It would also allow beginning farmers to get a tax credit by attending a financial management program.
The program would include farmers who are selling or renting assets to family members.
“We found that including family in the program helps meet that goal [of getting young farmers into agriculture],” said Jenna Reese, director of state policy for Ohio Farm Bureau.
Reese added that in addition to beginning farmers having trouble getting into the industry, retiring farmers sometimes have trouble getting out of it.
“Farmers are being incentivized to hold onto assets till the time of death,” Reese said.
Providing a tax credit for those who rent or sell to beginning farmers could help older farmers pass on their assets during their lifetime, she said.
It’s hard to know, however, how many people will take advantage of programs like this. Pennsylvania currently has a beginning farmer tax credit program. But in the first year of the program, only five beginning farmers expressed interest, and only three applied, a spokesperson from the Pennsylvania Department of Agriculture said.
In other cases, farmers say, tax situations make transitions harder.
Federal legislation under consideration, like the Sensible Tax and Equity Promotion, could also affect some farm transitions.
That bill would tax capital gains on property that people transfer either during lifetime or at death. During life, the first $100,000 would be exempt, and at death, the first $1 million would be exempt.
Some worry the bill could make things more difficult for farming families inheriting land and other assets. The American Farm Bureau Federation has publicly opposed proposals to tax capital gains at death and eliminate stepped up basis.
Planning
Planning for retirement income is an important concern for the older generation in a transition. While some older farmers have a good amount of savings, many have most of their retirement in assets like land, equipment and buildings.
Bill worked off the farm when he first took it over. Building up his 401K has helped ensure that he’ll have some retirement income.
Todd is currently working off the farm at a coal fired power plant, relying on that job to pay the bills while he starts to take on more responsibility at the farm.
They work well together. The biggest challenge so far is dealing with the legal and tax implications of transitioning the farm.
They’ve made sure they have a good lawyer and accountant to help them with that. They’ve also been keeping an eye on legislation introduced in Congress, like the Sensible Tax and Equity Promotion Act, which would tax property transfers on net gains. The Stacys worry those types of taxes could make it difficult for some farms to transition or to make major investments in the farm.
“Paying a little bit, most of us are fine,” Todd said. “When you basically have to repurchase the entire operation, that’s a hard one to swallow.”
Passing down
There are plenty of young people out there that want to farm, whether they are first generation, or fifth generation, farmers.
While young people tend to be interested in continuing a legacy on a profitable farm, Marrison said, there are a lot of part-time farms in Ohio. Even on larger, full-time farms, families have to consider whether there is enough income to support another generation.
In some cases, it may be easier for grandparents to pass down a farm to grandchildren, rather than from parents to children. Many other types of business owners — accountants, plumbers, insurance agents — don’t transfer their businesses to their children, but instead transition to people outside of the family.
“I think the No. 1 obstacle to that is the reaction of family members,” Marrison said. “But mechanically, I think a transition is a transition.”
Not from scratch
Taking over a family farm isn’t easy, but it’s still very different than starting a farm from scratch. A generational farm might need investments in infrastructure, but for many, that’s a less daunting task than finding and buying all the land and equipment needed to get started.
“I can’t imagine my son going out and acquiring all the equipment and everything to start,” Bill said. “That’s not to say it can’t be done.”
Some of Todd’s friends from college went back to farming their family’s land, but their parents weren’t farmers and had rented out the land until they were old enough to take over. They had to buy equipment and pay rent to their parents.
“You have one bad year, and you’re in financial trouble real quick,” Todd said. “I’m lucky enough that we’ve been stable enough to not have to go through that.”
Pressure
With the stability of an established business comes pressure though, whether internal or external.
“[Todd is] going to be going into the fifth generation, but I don’t want the generational aspects to be a pressure on him to keep it going,” Bill said. “It takes a lot of courage and determination to say ‘this isn’t working.’”
Todd’s brother, Tyler Stacy, is also interested in returning to the farm, eventually. The plan is for him to take over the original farm property, while Todd takes over the newer one.
Todd also has a 2-year-old daughter and is already thinking about the next generation.
“Sometimes, I think about what am I going to leave to her,” he said.
(Sarah Donaldson can be reached at 800-837-3419 or sarah@farmanddairy.com. Rachel Wagoner contributed to this story.)
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