A draft update to Canada’s organic standards proposes allowing struvite, a fertilizer created by crystallizing phosphorus from wastewater, as an approved input on organic farms. The change would open the door for producers to use struvite sourced from municipal water treatment systems, provided it meets strict purity criteria.

“This has been changed to allow struvite as a phosphorus input on organic farms and for farms like my own in western Manitoba, where we don’t have manure readily available,” said Manitoba Organics executive director Marika Dewar-Norosky. “It’s going to be a game changer in being able to buy a renewable source of phosphorus.”

The Canadian General Standards Board leads the review process, drawing from recommendations by a technical committee made up of industry stakeholders. Part of the process includes a 60-day consultation period, which just ended on July 29. The committee will review any suggestions and make any necessary amendments based on the consultation process. Current organic farming rules allow struvite, just not when sourced from municipal wastewater. However, a March 2025 Canadian Organic Standards backgrounder noted there were no commercially available sources of manure-derived struvite in Canada.

The proposed changes would add municipal wastewater to the list of allowed struvite sources — something previously barred.

—> WATCH: What the heck is struvite?

“The hope is that struvite from multiple sources will eventually become available,” it read. “Permitting struvite from municipal waste water provides a source of phosphorus, which is greatly needed for alkaline P-deficient soils.”

Furthermore, the document noted, struvite from municipal waste water is already approved in the European Union.

“This decision was made after extensive study by the Expert Group for Technical Advice on Organic Production and the EU general fertilizer commission, which found this form of struvite to be safe for humans, animals and the environment (subject to purity restrictions),” the document read.

It will also benefit adjacent water bodies, Dewar-Noroski noted.

“This is essentially taking phosphorus out of our waste system that is contributing to things like algae blooms in Lake Winnipeg and allowing farmers to use it in their fields as fertilizer.”

Last year, the City of Winnipeg and fertilizer company Ostara announced that the city waste-water plant upgrades would include nutrient reclaiming technology to generate struvite agricultural fertilizer.

The announcement was pitched as good news for nutrient overloaded Lake Winnipeg, which is a perennial hot button topic in the province and an often-cited schism between agriculture and environmental policy.

Most organic farmers in Manitoba approve of the change in direction, but there is still some hesitation based on possible negative consumer reaction and international trade implications.

“We’re doing a lot of work to really reinforce the education around this being allowed,” said Dewar-Norosky.

Ian Cushon with the Moose Creek Organic Farm Partnership in Oxbow, Sask., is the producer who first proposed bringing struvite to the table. There’s “very little opposition” to this amendment, particularly in parts of Western Canada where low soil phosphorus is a problem, he said.

“There is some concern (about struvite) from Quebec, where there is lots of animal manure available and less issues with low P,” Cushon said via email.

“Quebec and Ontario are unlike the Prairies, where we have a shortage of animal manure for the relatively large amount of organic acres. Of course, that depends on the region and where the organic acres are.”

Prairie soils have abundant phosphorus in some places, but much is unavailable to plants for a number of reasons, he wrote, “and it is a relatively slow process to make P more available without the addition of manure or other outside sources.”

He also pointed to phosphorus trials done in co-operation with the University of Manitoba. Those included struvite, and the fertilizer performed well, he said.

Treated fenceposts to be greenlit

In another proposed change, treated wood fence posts would be allowed as perimeter fencing to keep out wildlife and non-organic livestock. This was previously disallowed based on the toxicity of older wood treatments.

That’s changed somewhat, said Dewar-Norosky. Modern treatments are “far less caustic” than they used to be, and there are also few alternatives for farmers.

“It’s really prohibitive in the Prairies to get non-treated posts such as metal, plastic and concrete,” she said.

“This has been under review for a few years, and this year, (the technical committee) decided that there’s enough evidence to support that fence posts that are treated are allowed as perimeter fencing.… (It’s) going to make installing fencing on organic acres significantly easier.”

The change would only go as far as the perimeter, however. Treated posts would not be allowed for cross-fencing.

Under the draft standards, treated fence posts still cannot come into contact with organic crops, including roots.

“Realistically, your machinery is not going close enough to your fence posts that any contamination in the direct soil won’t be touching your crops,” Dewar-Norosky said.

A slide presented during the virtual Q&A noted that some wood perservatives are still toxic, although less so than the old products.

However, “due to the importance of livestock on an organic farm, and the fact that many organic farms don’t certify their livestock, the allowance for perimeter fencing was made under certain conditions.”

Longer transition period cracks down on organic ‘flip-flopping’

Another amendment increases allowed time for a producer to go back to organic farming after shifting to conventional — from 36 months to five years.

Those who have accidentally broken some organic rules still have 36 months before they can transition back to organic.

“The goal of the system is to have sustainable organic farms that are trying to farm with good, healthy crop rotations — not just gaming the system essentially and threading in and out,” said Dewar-Norosky.

The amendment is intended to make it “a little more difficult” for producers who have gone conventional to regain their organic-certified status, she said.

There are exceptions in cases of accidental non-compliance. Dewar-Norosky would have been among those looking for that exemption at one point.

”I, as a farmer, lost our certification because we were accidentally sprayed. That’s an exception where we waited 36 months. We still had to do the full process, but there was no further penalty. If you intentionally take your crops out of organic, you can’t just wait 36 months and go back to organic.”

The draft copy of the new standards forbids alternating between organic and non-organic management, but with exceptions for “catastrophic” or “uncontrollable factors.”

In these cases, “the operator may take land out of organic management, provided that … the operator submits written notice to the certification body of the intent to alternate and justification of why organic status cannot be maintained, and receives conditional approval prior to the use of substances or methods prohibited by this standard.”

Approval will be based on a written action plan. It must include details of substances and practices to be used, a timeline for transitioning the land back to organic management and a description of how the organic plan will be amended to avoid the issue from happening again, if possible. It also calls for compliance with requirements to transition land back to organic standards.

According to a survey on the exception put out by the Organic Federation of Canada, 59 per cent felt it should be allowed “only in certain situations.” Five per cent thought it should be allowed once and 23 per cent thought it should never be allowed.

Only 12 per cent felt organic farmers should be allowed to switch back and forth between conventional and organic production with a 36-month window in between.

“So generally, the producers that responded to surveys felt strongly that people shouldn’t be moving in and out of organic production,” said Dewar-Norosky.

While the consultation period is over, the draft regulations are available at the Organic Federation of Canada website.

“It goes over all of the changes in another column with rationale explaining why this change was made for every single change,” Dewar-Norosky said.

She also feels consumers and conventional farmers don’t understand how much work and oversight goes into becoming — and remaining — organic producers.

“It includes a field inspection, a grain truck inspection, a signed affidavit that the truck is properly cleaned out by a certified organic holder, so anyone that is holding organic grain also has to be inspected and certified to a processor that is inspected and certified,” she said.

“Every step of the way, everyone that touches that grain has to be inspected and certified to ensure there’s no cross-contamination within our food chain.”

The post Producers wrestle over organic standards draft appeared first on Grainews.

I have talked to many farmers who are keen to learn from others and apply their learning to their land and stock management and farm businesses practices. Successors and founders alike are taking courses, reading, sharing with their peers, going to events and conferences — the types of things that can contribute to farm and farmer success and wellbeing.

Here are some ideas for how to stay curious and maintain a learner’s mindset on the farm.

Engage with next-gen new energy and new ideas

People on your team, often the next generation, will come to the founders and farm partners to express that they want to try something new, or to ask questions about why things are done a certain way. The motivation might be to gain better understanding and contribute to some shifts or improvements to human resources management or staffing, increase profitability or add a new revenue stream, make changes to grazing or crop planning to manage the resource base, work to access new markets, or apply new learning. Expressing an interest in new ideas or trying new things demonstrates a degree of leadership, enthusiasm and interest in the work. Coming forward with new ideas can take courage, vulnerability and trust, especially if new ideas or free thinking haven’t been given space or been received well in the past.

I often talk to next-generations of farmers who feel frustrated there is not enough room or space to try something new. Note, though, it can also be the case that folks assume there is no room for new ideas, and the real issue is one of open communication rather than having an open mind. When people want some influence and agency to try something new, and are faced with “This is the way the grandparents always did it,” enthusiasm and creativity can be dampened. I am first-generation on my farm and while the cash flow challenges of running a startup presented a major hurdle, the independence of getting to try things (and sometimes having them not work out) served to build my entrepreneurial skills, resilience and creativity from a young adult age. Of course, some things have been tried before, and it can be wise to seek advice and wisdom from others via mentorship rather than have to make the same mistakes over again. It’s a balance: open communication and a culture of learning and curiosity and leaning into wisdom, mentorship and traditional knowledge are all very important.

Join (or organize) a peer group

Over the years I have been a part of a number of farmer-to-farmer peer support and learning groups. These have been great spaces to hear about what others are doing on the operations side of their business and also to create space for community. Some of those peer groups have been very family-friendly while others have been more focused on finances and production. Years ago, we hosted a series of peer group meetings in our local hall, and people would drive from hundreds of kilometres away to join. It was a great space to come together, and often share a meal. We would present topics to one another and discuss some of the finer details of managing our cattle, grain and vegetable operations and share and discuss other aspects of working and living where we do in Manitoba. We could ask questions, explore ideas and redefine measures of success for our farms. Our peer groups have changed and morphed over the years, and have contributed to building a web of connections across Canada and the U.S.

Embrace change

Farmers can feel significant amounts of stress when faced with change, especially when a change was not planned or foreseen. Faced with financial difficulty and uncertainty, high debt load, overwork, labour shortages and climate variability, making small changes to a system that seems to be working relatively well can be daunting or unappetizing. Years of experience in a particular way of doing something moves us toward a “right way” and a “wrong way.” Negative emotions that come with unforeseen changes, or hardship related to change, can cause us to miss opportunities for positive change. On the other hand, embracing positive emotions around change, such as hope, curiosity, creativity or optimism, can create a lot of possible options that we might not otherwise see. Exploring change can foster co-operative working relationships with employees, spouses and team members and within farm transitions, and allows us to move from zero-sum to mutually beneficial outcomes as we shift and move.

Calculate your risk and keep an open mind

When new ideas are brought to the table, or members of the farm team go out seeking new learnings and other ways of doing and seeing things, this either may be embraced or may lead to tension at home. Sometimes a desire for change by one party can be interpreted as an identity issue for the other party — say, maybe the next generation thinks the founder was ‘incorrect’ or ‘wrong.’ The culture of your farm will create the space for learners and changemakers to feel comfortable, and knowing that past contributions and future learning are complementary, not adversarial, can lead you toward better outcomes in communication and team building.

Often I hear from founders that successors have not been working on the farm for 30-plus years; they don’t have the experience to understand the potential outcomes and risks of specific decisions, or sometimes it is a spouse saying they do not want to start a new project or engage in major systems changes at this age or stage of life. It is important to know the “why” or the interests behind our desires for change and to keep learning from one another as we adapt, shift and transition.

The post Consider new ideas on the farm with a learner mindset appeared first on Grainews.

Colin Brisebois, vice-president of products and market strategies with FCC, said the new enhanced loan will benefit farmers, given the current financial realities of agriculture.

“I think it’s important now as the industry continues to evolve, the price of assets continues to grow and there continues to be opportunity to do more on the farm transition side — as far as having the next generation take over for those currently involved in the industry,” he said.

Why it matters: Modern farms in Western Canada are big business, making the stakes for farm succession planning equally daunting.

The new terms allow disbursements to the seller over a period up to 10 years. The loan can be used by farms, agribusiness or food businesses who are changing ownership, inside or outside a family.

Sellers have their payments guaranteed by FCC and support the next farming generation, while buyers dodge the need to have enough up-front capital for a down payment, the lender says.

For people looking to start or expand operations, the transition loan allows FCC to finance the full purchase price of the transaction and would allow that new entrant, or someone new to the industry, to potentially build equity faster than a standard loan, assuming they can eat the cost of accelerated principal payment. Or, the new owner can choose a path that prioritizes cash flow, making interest-only payments and using the extra money to invest in other parts of the business, especially if they’re in the early stages of starting their business or farm, said Brisebois.

It gives those buying into the business flexibility, according to FCC.

The loan terms also include access to FCC’s AgExpert farm management and accounting software.

The resources tab on the FCC website includes a transition loan calculator allowing people to run different scenarios in the equity-building pathway or the interest-only pathway.

Farm succession wave

The next few years could be big ones for farm transitions.

Brisbois said there is about $50 billion in assets to be transferred over the next ten years.

“We want to be able to provide solutions to help in the transfer of those assets.”

—Updated July 18, 2025. Earlier version said $50 billion in assets would be transferred in the next five years.

The post New Farm Credit Canada loan option aims to ease farm ownership transfers appeared first on Grainews.

While I waited to board my plane in Kearney, the story appeared again, with a young farmer reaching out for answers as his mom is not aware of the current reality of the farm’s business structure. She is listening to non-farm siblings for their input and not willing to even consider that her dead husband’s wishes — which she wants to honour – may not be the best direction for the farm or the family in the current situation of 2025. Here are some steps to consider:

Education

Educate Mom, and yourself as the successor, with farm financial literacy. You need to understand your best options for structure of the business and navigating expectations. Mom may want the land to be divided to all children, even the non-farm heirs, but what happens now if there are addiction issues, divorce or other new circumstances which destabilize the family? When Dad passed, the farm was at a different stage. You need to observe the new needs of the family and the business.

Forecast and plan

Be clear with Mom or Grandma how much income she needs to live at a given level. It would be wise to have a certified fee-for-service financial planner assess the level of financial security Mom has. Does she have enough income to live well for the next two decades? Does she have long-term care plans? Many women have life estates to stay in their homestead homes — yet, for example, a farming grandson who was promised the home cannot move because Grandma forgot that promise, and a non-farming child is telling her to stay put. Grandma: you have friends in town, will be closer to medical care, and can still come out to the farm often to pick raspberries and watch the cows. What is best for the whole farming family?

Know the tax load

The problem here is with avoiding paying tax — that is to say, pushing the taxes forward with the capital gains on the land, among other accounting/tax issues. Lawyer Katie used an example of great-grandparents, grandparents or parents rolling land to the next generation — but they did not know or were not able to predict a future of very high land values, nor the tax burden on the next generation who had other plans for the high-value land. Katie’s recommendation was for lots of scenario planning so you can truly understand the consequences of your decisions. This is where being stubborn and not paying some of the tax as you go may hurt the succeeding generations.

Conflict resolution

Don’t allow conflict triangles to solidify. It’s not uncommon for folks to share that non-farm heirs have been spending a lot of time at Grandma’s house and creating discord. In conflict resolution we encourage folks to directly go to the source of the tension and have courageous, respectful conversations with the parties involved to create solutions. Grandma is hurting the family when she takes sides, or when she is not honest about the tension points, or avoids conflict resolution talks altogether.

The deal is done, sister

Say, for example. sisters got payment for land six years ago and were happy then — but are not happy now as land values have risen. The mindset of “we deserve more now” is the mindset of greed and entitlement which is fragmenting farm families. Grandma is terrified of family conflict, so she avoids the hard discussions. She also needs to be clear that the farmland is to be kept intact, and the siblings who are non-farm heirs may have access to land but there will be long-tern rental agreements in place, with the farm heirs holding the right of first refusal.

Asset-building

Buying out siblings who are doing just fine financially is a scenario that can fragment families even after they are bought out. We bought out three quarters of land when my husband’s sisters were in their 30s. This would be a real hardship, though, if we had to do this now, when the land value has gone from $67,000 to $450,000.

The real issue here for Grandma is she wants all of her children to get some form of assets or cash, but she has little cash or liquidity because she comes from the generation that survived high interest rates in the ’80s but also put more wealth back into the farm business and did not save or use personal wealth strategies to give her liquidity on the personal side.

The lesson here is, don’t avoid saving, whether in TFSAs or other investments, for your golden years. Look at other financial plans to help you have more options to share and cascade wealth to your family. Again, seek the expert scenario insights of a financial planner.

Seek help

A farm management specialist can help all parties understand the cash flow reality of the farm and look for opportunities to grow income. These folks are also good at current-reality checks on what a farm can manage to pay out the partners wanting to leave the business or on how to buy out Grandma’s shares.

Don’t procrastinate

Dementia for Grandma may be knocking on her door. I met a woman in Nebraska whose aging folks are what Katie the lawyer calls “No Plan” — that is, they have no plan in place, and they both have signs of dementia. Planning is a very important activity, but heart attacks, cancer, accidents and other sad stories in the neighbourhood just don’t seem to motivate sane folks to focus and execute a transition plan.

Choose to act

You can stew and get mad at Grandma for taking sides, or you can get professional facilitation to create a better understanding of the financial realities of living costs for Grandma, the farm business team and non-farm heirs to navigate expectations, create solutions and celebrate the next birthday party together. What is your next step toward harmony through understanding going to be?

The post Grandma, stop hurting your family’s farm transition appeared first on Grainews.

Olga, a new widow at 80, was cleaning her underwear drawer, which she had lined with my column. In her grief she picked up the phone to call me and was surprised I answered. We had a lovely visit and a great connection to talk about her next steps.

Lois from Edmonton would send handwritten three-page letters to comment on her experiences of staying on the farm for a whole year in Saskatchewan when she was a young single woman. She lamented how things in agriculture were changing but also had new ideas for the next column.

The Frasers took my encouragement to use a matchmaker to heart, to find a suitable farm partner in marriage — and they invited me to their wedding.

Gerrardo Reimer, an ambitious young dairy farmer in Mexico, was reading my column and encouraged his wife Crisol Gonzalez to connect with me to explore coaching. They drove in their VW wagon for two days to visit us in person at the farm. Crisol is now one of our coaching team.

Michael ran up to me at the Convergence conference in Regina in February, wanting to express his deep appreciation for the many years of practical tools. This heartfelt connection makes my heart sing, every time I meet a Grainews reader in person.

Young farmers are now the managers, and their moms are still clipping my column for them to consider, even though they can now read everything from Grainews.ca online.

Letting go of this communication channel is a transition for me, as I now have successors: five next-generation coaches who are willing to put thoughts online and continue to do great coaching facilitation which is conflict-aware at www.farmfamilycoach.com.

I am activating what Shine’s author Gino Wickman calls the 10-year plan.

I book Fridays for family time and transition time to support what is going on at our farm.

In 10 years my first granddaughter will be graduating and her sister will be driving. Their brother will be 14 and hopefully sharing the combine seat with his grandfather, my husband Wes. March 18 is my husband Wes’s 68th birthday, so letting go of deadlines is my gift to him.

Wes has graciously supported my travel to speak across North America — which equates to peanut butter sandwiches, and suppers alone. Grainews has helped feed content into my five books, and our new membership site where group coaching has scaled our ability as coaches to make a wider impact with farm families.

When you let go of things you need something to move toward. I will hold on to the great relationship with my editor Dave Bedard who is kind, accommodating and very funny in his emails. We have worked together twice over the past three decades and I am grateful for his faith in the next generation to do good work.

I am moving toward the work with my podcast at www.farmfamilyharmony.com which I can do from my farm office, virtual membership coaching three times a month, and speaking at farm conferences where I can do coach on call in the hall after I present. I also enjoy teaching Sunday School and wee church with my grandchildren who are changing quickly and will be launching in the next 14 years which will go by quickly. Celebrating connection to community is important to me, especially in this season when friends are passing on.

For long-time readers who appreciate I am a woman of faith, I leave this encouragement to put your plans in place now, with great advisors, and family communication facilitation.

Hope deferred makes the heart sick, but a longing fulfilled is a tree of life. — Proverbs 13:12.

Young farmers Google succession planning and then call me. They are struggling with low compensation, widowed parents who are not business decision-makers, and fragmented family dynamics which are keeping the farm transition stuck. They text me, call me and show up on membership calls to ask for the steps to get folks to the table to ACT. When hope is present, folks can continue. When hope is deferred, mental wellness suffers, and suicide ideation rears its ugly head. Thanks to the Do More Ag Foundation and the National Farmers Mental Health Alliance for their mission to provide solutions for better mental health for all farmers.

The mind of man plans his way, but the Lord directs his steps. — Proverbs 16:9.

Many of you reading this have no plan, some have the wrong plan, and some are underplanned. Whatever judgement you have for your current lack of action, the only person who can change your circumstance is you. You get to choose to act.

Where there is no guidance the people fall, but in abundance of counsellors, there is victory. — Proverbs 11:14.

It is wise to have many advisors. After 40-plus years of working with farm families I know a lot of good people who do good work. Reach out to your successful neighbours and hire great advisors who are aligned with your values and those of the next generation.

You do not have because you do not ask. — James 4:2.

Asking for help is not a sign of weakness. Betterhelp.com will get you a therapist on zoom. I am glad to see more men and women in agriculture declaring, publicly, counsellors and therapists are helping them navigate their journey in ag.

You will reap what you sow. — Matthew 13/Galatians 6:7.

Sow harmony in your farm family and be careful to work in alignment with your cherished beliefs and values. Behave well with one another with kindness and compassion. Make decisions collaboratively with the common interest of having everyone’s needs met and considered.

Do not merely look out for your own personal interests, but also for the interests of others. — Philippians 2:4.

As an aging farmer who may be fearful of transition, you don’t need to make plans on your own. You can trust the good intentions of your next generation and become a mentor to create an amazing legacy of sound management and wealth transfer through progressive ownership.

Above all, keep fervent in your love for one another because love covers a multitude of sins. — 1 Peter 4:8.

Your marriage and family relationships take time and attention. When I die, I want to be rich in relationship toward God, and rich in relationship with people. I look forward to more time currency for connection in my small town — especially young women who are mothering, working off-farm, and building new opportunities for their precious families.

Your handwritten letters and cards are a precious gift of affirmation to me at Box 957, Boissevain, Manitoba, R0K 0E0. My love language, not surprisingly as a writer, is words of affirmation.

Blessings on your journey.

The post Get great transition plans in place now and make my heart sing appeared first on Grainews.

Jared and Leanne have 8.5 quarters of land with a value of $6,500 per acre. Of the 8.5 quarters — that’s 1,360 acres — 760 acres are held personally, and 600 acres are held by their farming corporation. Although they have successors for the farm operation, they want to ensure their sons are treated with an efficient transition of control.

Jared and Leanne approached Nathan Heppner, a chartered financial planner and chartered life underwriter and Erik Forbes, a registered financial planner, each with Forbes Wealth Management Inc. at Carberry, Man., to develop a plan.

Jared and Leanne have done an admirable job of building up off-farm assets, with $550,000 in RRSPs and $150,000 in TFSAs. In addition to the land, machinery and inventory inside the corporation, they have $1,100,000 of cash inside the corporation which is not needed for operations. Their ideal solution would be to have as much of the farming assets as possible go to Josh and Craig and all the financial assets, including the cash inside the corporation, go to Shawn. The question then becomes how to get the cash out of the corporation efficiently and fairly.

There are several ways the cash could be taken out of the corporation. The most straightforward way would be to draw down the cash via salary or dividends over the coming years and into the parents’ retirement. This would generate taxable income for Jared and Leanne. However, the corporation is already in a position where there are concerns about its status as a qualified farm business, due to the amount of passive assets in the farming corporation.

A more efficient option would be for Jared and Leanne to sell land they now hold personally to the corporation, for a value equal to or greater than the cash they want to strip out. Doing it at a greater value would give them a shareholder’s loan that they could use in future if more cash is built up.

Selling land to the corporation would also allow Jared and Leanne to utilize whatever lifetime capital gains exemption they have. They have never used any of it and after recent changes effective June 25, 2024, they should each qualify for $1,250,000 of exemption. It is worth noting that by moving land into the corporation, it can make it hard and costly to get it out later.

Assuming they take $1,100,000 out of the corporation and put it into their personal names, they can max out their TFSAs and put the rest into a joint non-registered investment account. They have $1,850,000 in personal financial assets they can use to sustain their retirement.

With the cash out of the corporation, Jared and Leanne want to pass the corporate farming operation on to Josh and Craig. This can be done whenever Jared and Leanne deem appropriate, by executing an estate freeze. Jared and Leanne would exchange their common shares in the farm for fixed-value preferred shares and have new common shares issued to Josh and Craig.

Josh and Craig both have their own farming corporations. Therefore, it would be best to have Jared and Leanne’s corporation shifted into Josh’s and Craig’s corporations. In practice it would work as follows:

Valuation and agreement: Obtain accurate third-party valuation for the assets being transferred. An agreement must be reached on the allocation of these assets to ensure each shareholder’s proportional interest is maintained.

Asset transfer: Transfer assets from Jared and Leanne Inc. to Josh and Craig’s own farming corporations. This transfer should be structured to defer taxes. It is important to make sure assets are transferred proportionally to share ownership.

Share exchange: Josh and Craig exchange their shares in Jared and Leanne Inc. for shares in Josh Inc. and Craig Inc. respectively.

Documentation and elections: Prepare and file the necessary documentation — that is, board resolution, shareholders’ agreement and tax elections.

Wind up: The distributing corporation is wound up or its shares are redeemed, completing the split.

With all corporate assets apportioned, cash is stripped out. All that remains is the personally owned land. After what has already taken place, Jared and Leanne believe it would be fair for Shawn to receive one quarter of personally owned land. The remainder would then be split between Josh and Craig. This transfer of ownership can be done at any time between now and the last of Jared and Leanne’s passings. The land can also be passed down at any value between the book value and the current market value. If Jared and Leanne have any lifetime capital gains exemption left, they should use it when passing land on to their sons.

Regardless of the value assigned to the land upon transfer, the parents should put a promissory note structure in place. Doing this will help to protect Jared and Leanne’s interest in the land, should the boys find themselves in financial difficulty or facing an estranged spouse.

Before a creditor or estranged spouse could stake their claim on the land, they would have to pay out Jared and Leanne’s interest. Another benefit of having a quarter of land transferred to Shawn is that it would allow him to utilize his lifetime capital gains exemption if or when he disposes of any land he may acquire.

The post Parents retiring, leaving farm to two sons appeared first on Grainews.

Appraisal

Start with determining the FMV by using a certified appraiser. If you want to find a local appraiser you can ask your lender for referrals, and/or you can search up “agricultural appraiser.” One of the members on our membership site gathered two appraisals for her farm, so she was confident she had a good number to start the conversation of transition with her successor.

What is the nature of the farming operation and its size? Is it a large, highly profitable enterprise or a smaller family operation with marginal profitability? This is a viability question and relates to our coaching queries about how many families the farm’s cash flow or income stream can support.

What is the nature of the assets being purchased — is it actual farmland, equipment and buildings (infrastructure), or shares in a farming company? This is where a current asset list is helpful. Some folks are visual learners and to make good decisions they want to see data and facts. How much of the actual farmland is for crops or pasture? What kind of market value does the equipment have? Do the buildings need a lot of upgrading? How many shares in the farming company are available for purchase? By when? Are the shares growth shares for the next generation? Are the founders wanting preferred shares for future income? Do non-farming siblings have access to farm shares?

Family discount

The successor needs to prepare a business plan that can be presented to the finance company as part of an application, when determining how much the finance company is willing to provide toward the purchase.

There is always going to be a collateral requirement, which could be in the range of 20 to 25 per cent of the FMV. This may dictate just how much it is practical to expect as a family discount. As a young farmer, what kind of collateral are you bringing to the table?

Often discounts have a very wide range based on family dynamics; however, it’s not uncommon for the discount to be in the range of 15 per cent, which can lead to a shortfall of five to 10 per cent of the amount that may be available from financing. There are several ways that shortfall might be addressed, depending on the specific circumstances. For example, it may take the form of a promissory note to make up the difference. Due to the extremely high price of farmland, there is often a gifting component to enable a successor to take up the operation.

The other issue: what protections are there for the seller (founders), in the event of an early sale by the successor? One of several options may take the form of a graduated retention by the successor, in which they receive no advantage if they sell within one year, increasing as the agreement reaches maturity in 10 to 20 years (as determined by the parties).

ALSO READ: How to reduce the tax load on a farm succession

Lawyer Mona Brown in Manitoba has used the term “poison pill” to describe legal agreements which prevent the successor from farming for just a few years and then selling out. Brown uses a pro-rated agreement that protects other non-farm heirs from having a sibling who “cashes out” a farm in five years.

Remember, it likely took the parents 40-plus years to achieve what they have built up and it is not unreasonable for the successor to be looking at a long term for the purchase. (Keep the expectations realistic.)

For more on these topics, visit the Country Guide website for its November 2023 digital edition, called “This New Land: The Challenge of High Prices.”

Show your work

See the relationship manager at your local FCC, bank or credit union to share your current net worth statement, find appraiser referrals, and build your business plan for your vision of the farm. Advisors want to see your farm family succeed but they cannot “do the pushups for you,” as Stu McLaren, my mentor for our membership site, has said.

Doing the work of having emotionally laden conversations about buying land and equipment can be hard, but you can do hard things with facilitation, using experienced coaches who know how to keep the conversations safe and respectful, to create solutions that are win/win for each generation.

As we mention above, family dynamics play a role in the agreed-upon discounted prices. Make sure you keep financial transparency with both your farm heirs and your non-farm heirs. When folks understand why certain decisions are made, they are more likely to come to peace with the outcomes.

Your discussions about fair family price and expectations about not using fair market value will set the tone of relationships for harmony in your family and business. You get to choose to be cowardly and not do the work on appraisal, asset lists and debt servicing expectations — or you get to embrace the tools mentioned and have peaceful sleep at night.

ALSO: Roster changes

Elaine writes: Many folks on our weekly group coaching calls appreciate Glenn’s years of wisdom from all the farm scenarios he has seen in over 30 years of advising farm families. Glenn is going to be missed when he retires from our coaching team in January, so we have welcomed Alyssa Brown, CPA, from Olds, Alta., who will continue to take on coaching queries related to farm accounting and transition in our breakout rooms on Zoom.

If you would like to be part of our group coaching three times a month, sign up at www.elainefroese.com/membership. Learn from our coaches and each other as farmers in transition. Your whole family is welcome to be part of the learning journey.

The post How to talk about ‘fair family price’ for land, other assets appeared first on Grainews.

There’s a great article by Kells McPhillips on the Well+Good website, calling out these conversation stoppers as “thought-terminating clichés.” Here’s her list:

• “It is what it is.”
• “So it goes.”
• “It could be worse.”
• “Time heals all.”
• “Someone out there has it worse than you.”
• “What doesn’t kill you makes you stronger.”
• “It’s always darkest before the dawn.”
• “This too shall pass.”
• “It’s all about balance.”
• “Try to look on the bright side.”
• “The sun will come out tomorrow.”
• “The only way out is through.”

Words really matter. Our thoughts become words and words spur on action — or the lack of action. What we believe to be true is part of how we craft the culture of our farms.

The first such cliché in McPhillips’ list above, “It is what it is,” sounds so defeatist to me. As coaches we embrace the power of choice. You get to choose your response to the circumstances of your family and farm situation. Are you going to be proactive and make some decisions for a better outcome? Or are you just going to throw the shovel hard on the ground and believe “Nothing is ever going to change around here”?

“It could be worse” aligns with the misery you’ve witnessed of neighbours or others in the ag community whose farms have disappeared due to unreasonable estate land transfers, divorce, or siblings in litigation. These sad stories of transition gone poorly are not helpful, nor are they motivating folks to act and improve the communication and conflict resolution in their own farm business. Failure of others is not a strong motivator for you to change. You need to draw on internal factors of motivation to do hard things.

You can do hard things. You also don’t have to do them alone!

“The only way out is through.” I just said you can do hard things, but who agrees that transition through facilitated communication doesn’t necessarily need to be hard? We’ve bought into a mindset that conversations cause explosions, so the best thing to do is just avoid the hard conversations about income, compensation, fairness, and letting go of management. I disagree.

Conflict resolution can be a process of discovery, lifting a huge weight of tension. Facilitated conversations, in which folks are prepared before the meeting to express what they truly want, can be transformational. If you’ve put your energy into your farm business for the past 40 years, you might want to be kind to yourself and take time to process the shift of labour, management and ownership over the next several years.

READ MORE: Agriculture community invited to ‘talk it out’ about mental health

The list of 12 clichés above can damage mental health. If you are struggling with your mental health right now as you read this, I encourage you to reach out to your doctor for a checkup and find the local mental health worker in your area. If you are walking alongside a very depressed sad farmer, I encourage you to sign up for the Mental Health First Aid course.

“What doesn’t kill you makes you stronger” was the title of Dr. Nikki Gerrard’s research (2000) on stress in farm families. She found three keys to coping better were:

• Communication
• Celebration
• Connection to community

However, when you say “What doesn’t kill you makes you stronger,” you are not offering support or solutions to those struggling with mental health. “Pull yourself up by your bootstraps” is another conversation-killing phrase.

How can you be more vigilant about what comes out of your mouth?

Think before you speak

Listen to understand more, not to formulate your next response. Two ears, one mouth.

Be curious. Come to the conversation with kindness and genuine curiosity about what is truly going on for the other person.

Ask better questions without a spirt of judgement. What do you need in this moment? What is frustrating you the most? How do you want me to walk alongside you?

Is now a good time to talk further, or do you need some time to process what we just discussed? By when do you want to come back to the table to create some solutions and timelines for action?

Be careful not to confuse estate planning with transition planning. “It’s in my will, you’ll get it all when I die!” This is classic procrastination of not dealing with the need for transfer of farm assets in the transition process while the next generation is looking for ways to gain equity and the founders are fearful of failure and losing wealth.

Ask for help. Seek out ag-informed advisors with strong facilitation skills so the whole family can learn helpful language for conflict resolution with positive behaviours to create solutions not angst.

Try supportive words to open more communication:

• Tell me more.
• That’s interesting, what is the story behind that thought?
• I’m curious about what you just said, how does that feel for you?
• What ways would you like to be encouraged? Time with family, words of affirmation, or action on the farm?
• Here’s what I am observing…
• What do you need in this moment?
• What’s the next step you would like to take?

Many times, folks just don’t know what to say to comfort others, or to recognize the pain or frustration they are seeing. The Do More Ag Foundation has a great new conversation starter game. My Do More Ag conversation starter box has arrived, and it is helpful to be reminded how our questions and thoughts can create great conversations.

The post Watch your words appeared first on Grainews.

Landowners are the oldest in history, there are all-time-high land values, and the cash flow to acquire land is outside of long-term profitability, according to Bohr.

The next generation of producers, Bohr says, looks like this in Iowa:

• 68 per cent of farmers have no children who currently farm.
• 51 per cent of farmers have not identified a successor.
• For each farmer under the age of 35, there are six over age 65.

I see an opportunity here for young farmers to be developing relationships with non-related parties.

Bohr uses a worksheet to also put out the idea that there is a price to buy family land (discounted after debt) — what he calls “family land value,” not fair market value. I call this “fair family price.”

READ MORE: Prairie farmland values continue to increase

Regardless, the hard conversations are around expectations about who can purchase farm assets, and who can afford to cashflow the purchase of farm assets.

The other part of this storm is the expectation of parents to divest farm assets to give gifts or inheritance to non-farm heirs. Somewhere the perfect storm is begging a new money script from parents as to what is a reasonable expectation for the transfer of farm wealth — that is, if the family really wants to keep the farm business intact.

Bohr’s solutions:

• Know your role as a landowner, producer, or interested third party. Bohr talks about a century match, leasing agreements, advisory role and non-operating landowners. He is skilled at helping match retiring farmers to the next generation of landowners. This is your chance to tell your story often and build relationships with bachelor farmers, or farm owners who have no successors, to create new non-related partnerships. (Read my blog on landlord relationships.)
• Partner for economies of scale. Share equipment, use input buying groups, and gain financial benchmarking data with peer networking groups. Terry Betker of Backswath and Rob Saik of PowerFarm have used these groups well in Western Canada to help farmers grow with group coaching.
• Understand how to use the tools in your toolbox. Examples include corporation shareholder agreements; beginning farmer programs; investment strategies for buying land; and in the U.S., basis step-up.
• Understand tax brackets, bonus depreciation and lease-to-own leases. (Ask really good questions of your accountant and ask for clarification when you don’t understand!)
• Understand the marketplace. Options for the land include farmer ownership, division of land, corporate land, trusts, and combinations of those options. Give heirs a reason to want to own land, and let siblings “row the boat together” to have skin in the game with the success of the farmland ownership. Discuss the different approaches and outcomes with fair market value versus family market value. What are workable options for keeping the land together?
• Be prepared for understanding the consequences of your transition decisions — for example, will probate.
• Prepare to compete with the “big boys” — the farmers with ability to buy land. Are you developing land acquisition strategies with neighbourhood relationships and well-written leases? Landowners are looking for stewardship and care of the land. They want to share similar philosophies for farming and a nice person to work with. Producers want a long-term relationship and a way to learn and carry on their legacy while providing a great way of life for their family. Dick Wittman, an instructor with Texas A&M’s TEPAP ag executive program and farm management specialist from Idaho, would argue there are lifestyle farmers; those farmers who need to join forces with other producers; and then the “big boys.”
• Farm without the bank — that is, have working capital more than 100 per cent of income. Dr. David Kohl, from Virginia Tech, would love this recommendation. How much are you protecting and building working capital?
• Understand the difference between an “exit” strategy — when the farmer spends down the business over time with the intention of liquidation — and an “entrance” strategy, where you are growing into the operation to earn respect and trust. In Canada we call this the “successor effect,” where the young farmer’s passion to farm drives growth of the farm to support more than one family. Bohr also visualizes an entrance strategy where young farmers approach a mature landowner with a business plan. Whatever approach you take, ask for help! Network with key people and find a way to partner with a mentor.
• Identify what matters and what you can control. Does your family serve the business, or does the business serve the family? Be clear about what you are focused on, then execute.

Book some time to chat with Steve Bohr at 1-800-375-4180 or visit the Next Generation website for more information. I found his challenges and ideas refreshing, as he is practical and highly experienced in seeing scenarios that can work. Whether you farm in Canada or the U.S., there are nuggets here for you to weather the storm and be the captain of your own ship. Ask for help!

Steve Bohr’s “farm succession perfect storm”

1. Age of landowners: 60 per cent over 65.
2. All-time-high land values.
3. Cash flow to acquire land is outside of long-term profitability.
4. Farm is a legacy asset.
5. Control is difficult to surrender, but is required to transfer for transition.
6. Quality of advice from specialists may be limited by location, experience and incentive.
7. Interest rates are changing and becoming higher.
8. Longevity of landowners will see the “sandwich” generation losing ownership opportunities.
9. Family fights over “fair” versus “equal” are needing to view performance-based pay versus inheritance-based pay.
10. Farming is difficult, and each generation produces fewer farmers who are willing or able to take risk.
11. Tax law uncertainty with estate, income, capital gains (and basis in the U.S.).
12. The deferral mentality: procrastination causes owners to be susceptible to emotional decision-making mixed with greed, hope and fear.

The post Tips to navigate transition storms appeared first on Grainews.

And the reason parents need to ask both questions is because science is learning an immense amount about what leadership potential looks like.

“Leadership is really about people’s adaptive capacity,” says Kelly Dobson, founder of LeaderShift and the National Farm Leadership Program.

READ MORE: Do the kids really want to take the lead on the farm?

“Basically, adaptive capacity is our ability to learn and our willingness to engage, but it’s bigger than that. It’s our ability to grow — not just cognitive but also emotional growth. All of us have this capacity. The question is whether we’re willing to step into it.”

Say what?

Dobson knows this kind of terminology can create some confusion or impatience, but he sticks to his rhetorical guns, saying it’s just like anything else a farmer does. If you’re going to apply the science, you have to learn the vocabulary, whether it has to do with herbicides, genetics or even electronics.

So, he tries again. “If you want to do more so that you have more, you’re going to have to be more first,” he says.

It still takes a minute to follow him, but you find yourself nodding your head and you start to feel you’ll want to remember this, especially as it applies to your kids.

“Most people have an unspoken, unconscious belief that we can’t change and grow,” Dobson continues. “That is scientifically incorrect… This is learnable, it’s not mysterious, we know how people can grow to become more adaptable.”

In fact, it’s a quick introduction to powerful recent breakthroughs in psychology that include insights into both what we can and what we cannot do on leadership.

Crucially, for instance, modern psychology has made huge strides in measuring an individual’s level of what’s called effective leadership. A key finding is that when people with low leadership effectiveness experience some success, they get stuck trying to use the same process to solve every problem they come up against, with results that get increasingly unsustainable and unscalable.

It’s why they think they can manage fine, but in reality, their mediocre leadership starts to put a strain on relationships with family, employees and others, as well as on their own personal well-being.

Sound like anyone in your circle? Or anyone down your road?

“They are exhausted, they’re burnt out, they’re not taking care of themselves, and this is where they have to ask: am I willing to change my game even though what I’m doing seems to be working some of the time?” Dobson says.

“That’s fundamental, it’s the conversation that we all should be having because the real metric that we should be measuring is whether or not we are maximizing our adaptive capacity.”

Dobson notes that maximizing our natural adaptive capacity will determine the quality of our relationships and our ability to handle stress and it will directly affect our emotional and mental health as well as our ability to work through complex problems.

Learning how to deal with yourself

Craig Lehr, a third-generation rancher from Medicine Hat, says he knows a lot more now about personal growth than he did a year ago, since he signed up for the National Farm Leadership Program.

When Lehr joined the ranch full-time 23 years ago, there were seven family members managing the operation. Today, that’s down to four: Lehr, his father Randy, uncle Ken, and brother Scott and they have even more to manage: a 50,000-acre ranch with a 7,000-head backgrounding feedlot, 1,200-head cow/calf operation, and irrigated and dryland crops.

All family members have had to take on extra management roles, and because the ranch is constantly improving and trying to grow, Lehr has had to focus much more on the big picture instead of getting tied up in the day-to-day. To do that, he would need to rely more on some of his long-time employees, and for that to happen in turn, he knew he needed help to improve his communication and human resource management skills.

Lehr understood very quickly that the first step in that process was being willing to look at himself, understand his own personality, admit his faults, and be willing to make changes.

“I didn’t know what was holding me back,” Lehr says. “There were things in the operation or ways I wanted to do things but there was always something holding me back.”

“I learned that in my case, it’s my nature to try and be a pleaser. Recognizing that now allows me to deal with that side of my personality, work things through in my head and approach issues in a way where just because I’m a pleaser doesn’t mean if I want to make a change or do something, that I have to please everybody.”

Lehr says the program’s approach resonated well with him because it’s not asking someone to completely change who they are, but to build on strengths they may not realize they have.

“All the things inside of me that either hold me back or move me forward, all made me who I am,” he says. “The program is not asking you to become a different person, it’s just teaching you to recognize your holdups, your shortcomings and work to overcome them.”

Dobson agrees. “We teach pretty complex psychology and boil it down to basically the equivalent of 12V trailer wiring,” he says. “People get the idea that the lights don’t turn on unless there’s a good ground, which means unless I’m grounded, centred and present, I can’t get things to work. If your child can show up in a conversation and lead with something like ‘I don’t know what we’re going to do here, I just know we got to do something,’ the potential success of the farm becomes fantastic.”

Always more to learn

Lehr sees himself as proof that no matter how much you think you know, there’s always more to learn.

“I have learned a lot of hard lessons in my life on leadership,” he says. “The course has taught me how to have more positive conversations with people and how to handle situations when there is a problem without offending people, which is where I was always falling short… It’s allowed me to find different ways to speak with people, bring more out of them, and get them to be more invested and have pride in what they are doing. It’s encouraging growth instead of putting people down.”

Now, says Lehr, he’ll be encouraging the next generation to take leadership training too, and to do that sooner than later.

“It doesn’t matter the size of the operation, learning and advancing your leadership skills can pay dividends for anyone,” he says. “The funny thing I’ve learned is that often the way we try to preserve the family legacy is actually doing the opposite. Taking leadership training and working with a coach opens your eyes and changes your perspective.”

The post Is my kid a leader? appeared first on Grainews.