When it comes to the future, many family owned growers and shippers have two and only two choices: the next generation or selling out.
Joel Nelsen, recently retired president of the industry organization California Citrus Mutual, sees this trend among citrus growers in his state. Although acreage, at 280,000, is reasonably constant, there is a trend toward consolidation: both corporate entities and certain family farms are getting larger. (Some 64 percent of all vegetables sold in the United States come either from large or very large family farms, according to the Iowa Agriculture Literacy Foundation.)
One of the chief drivers of this trend, Nelsen observes, is whether there is a next generation that is interested in staying in the business. If so, they continue and can increase the size of their operation by purchasing farms where that isn’t the case. If not, they sell out to other growers or to corporations.
In the California citrus industry, Nelsen says, the newer generation is very “consumer-conscious.” They are aware of what consumers want and how to fit in with those requirements. One innovation made by the younger generation has been introducing Spanish clementines to California. Before the 1990s, they were barely grown at all in the state: now, along with oranges and lemons, they are the leading citrus crop, producing $2 billion annually in value.
This generation’s fathers didn’t have that consumer consciousness. “The older generation produced an orange, and by God, you’re going to like it,” Nelsen recalls.
For operations with a younger generation that is interested in taking over, agricultural financial analyst Darren Frye offers these tips. For the older generation, he recommends:
- Take gradual steps. The next generation needs to become part of the decision making process, but not all at once. You certainly want to avoid those situations where the older leader dies suddenly without having broken in the younger generation at all. For those individuals, “their initiation into leadership was scary and emotional—but it doesn’t have to be that way,” Frye says.
- Let them shadow you. Have them accompany you to meetings with bankers and marketing advisors. When you are making tough decisions, share your thought processes with them.
- Carve out a “sandbox.” Give them a specific arena of responsibility, and hand over decision making for it to them. When they fail—as they will at some point—the damage is limited to a small area. “We often learn the most from our failures, so help them look back on any negative results with an eye toward learning for the future,” Frye stresses.
For the younger generation:
- Be proactive. If you’re a next generation leader and you feel that you’re in the dark about decisions, talk with the older generation and point out (in a respectful way) how you want to better understand their decision making. You may find that they’re relieved that you brought up the subject.
