Succession with Johnny Klemme

Shay: Welcome back, everyone, to another episode of the Ag View Pitch. Today you have Shay Foulk with Johnny Clemming. Johnny, how are you today?

Johnny

Klemme: I am doing great. Thanks for having me back on, Shea. Greatly appreciate it.

Shay: Yeah, absolutely. It's been interesting to see over the last, I don't know, 6 months or so, the book has been rolling out on your end. And, you know, we had an episode, it was probably 6 or 8 months ago already, around kind of the core values behind this wonderful piece that you've written that shares values, share stories. Talk to me a little bit about what the last 6 or 8 months has looked like for you since the book has rolled out.

Johnny

Klemme: Yeah, it's been incredible. You know, you put all this time and effort into writing a book, and you hope that, you know, you've, you've put something out there that can help other people, and in particular farm families, which was was my goal with this book. You know, I've had a lot of great feedback from families who were struggling, you know, with what to do with the family farm, or, you know, farm families who are farming the family farm and have dynamics with non-farming heirs who've said, hey, you know, this helped us get through a sticking point and, you know, kind of come out on the other side feeling really good about the next steps. It's, it's opened a lot of doors. I've spoke at a lot of succession planning events since you and I last talked, have several keynotes lined up over the next 6 or 8 months.

And, you know, ultimately, I'm really proud to say that, you know, the goal of the book was to help farm families. And I'd always hoped if I could help just one farm family, then I did, did, did it right. And I believe I've accomplished that goal. It feels really good.

Shay: So let's go to the opposite end of the spectrum of helping just one farm family. An interesting statistic that I've been using in a lot of my presentations here the last several months is there's something to the effect of $1.5 trillion of agricultural assets that are set to change hands over the next 20 to 25 years. And that statistic is based on the fact that a good portion of the land that's owned in the United States is owned by 65 or older participants. That's a staggering number. And how I try to visualize that for people is at the average land valuation of $5,800 an acre across the US so that, you know, that's pasture, that's dry land, that's crop, that land area would be the size of Texas and California combined. Now, probably physically a little bit less than that when you look primarily in the Corn Belt here where you and I are located.

But even if, even if 25% of that comes up to a critical decision of what are the heirs going to do, maybe lack of clarity from the senior generation. I don't think we've seen anything like this in a very long time, at least. So it's one bite at a time, but there's also this feeling. I think people can kind of feel this tidal wave of change that's coming. How do you, chew on that, or how do you think about that? Because, you know, I think there's— it's probably not a coincidence that timing of your career leading up to the book, leading up to the changes that we're about to see, um, seems like things are lining up pretty well there. But talk to me about how you think about that $1.5 trillion assets set to change hands.

Johnny

Klemme: Yeah, it's the— the numbers are staggering, right? But what I will say is, uh, what I'm— what I'm very hopeful and I am pleased to see is that all the events that I attend and, and the turnout for succession planning events, I see the attendance going up and strong response from the family farmer. They're still struggling with how to do it. But I think, you know, we're also at this incredible time that, you know, with the right media and press and continuing to emphasize the importance of of succession planning, you know, I mean, X percent of that statistic that you shared, those farms are going to stay in the family, right? And X percent, good, bad, or indifferent, you know, are going to change hands, you know, most likely on the public market. But, you know, I always— I'm an eternal optimist, I guess.

So, you know, from that perspective, you know, even if it's a family that I'm working with who has gotten to the point where, you know, whether it's for retirement or healthcare, medical needs, they have to make the decision to sell the farm. You know, I still refer back to the book and say, hey, you know, you do have— you still have control, you know, and you can make some decisions, you can find, you know, the next steward of your farm that aligns with your own values, to continue carrying on the traditions, you know, maybe your legacy sort of become something different, right. But even through that process of you know, the sale of the family farm, I still believe there's a way to honor that legacy and remind landowners that they do have other options other than just take it to the auction block. Let's get the highest price possible.

Shay: You know, I live and breathe these conversations every day. And there's a few examples I'll kind of ask you on here. But one of the, one of the meetings that I had actually yesterday in our office here in Illinois was a family that the, the young, the young couple is looking to transition with their parents and there's a good chunk of own land there. But then their parents' parents don't have estate plans fully formed or there's questions around that. And so what I find is you end up actually having 2 or even 3 in some cases transition plans occurring at the same time. And I think the importance of the conversations and kind of the values that you outline in the book is everybody needs to understand why they're doing what they do, what the meaning has for them. And then what is— what I've really been focusing on is what's the intent?

You know, is the intent for, uh, to build a legacy that at some point if someone wants to sell, they're going to have a significant contribution back to their family? Is the intent to keep the land in the family forever? Is the intent to allow multiple generations to thrive? Or, you know, when you start getting the cousins involved in this process. So I think intent has a lot to do with it. And I guess I just wanted to stress, first of all, from this situation, it seems as though more and more of these conversations with the demographics of senior party, maybe mom and dad, and now you got the junior operators coming back in. You're almost working on succession and transition planning for 2 or 3 generations. Have you kind of found that as well over your career?

Johnny

Klemme: Yeah, it's a very common scenario. I mean, it truly is, you know, and, you know, the basics are the sooner you start the process, the more successful you are. And you can look at a lot of the statistics. We recently had an event with Purdue University's succession planning team. A lot of people don't know this, but Purdue University School of Agricultural Economics Texas has a succession planning team. And they have team members all across the state. And I spoke with one of their, one of their members, we had a conference for succession planning. And, you know, they bring out a lot of stats that successful succession planning is typically, you know, a 7 to 10 year process, right? You have to align on values first, starting with The books is not where you start. You start on values. The intent, like you said, is critical to the success here.

And, you know, that next generation coming in also, you know, they have some, some serious needs too. If you want the next generation to continue farming the family farm, there needs to be a shift in decision-making at a certain period of time. And, you know, true ownership or buy-in to what's happening. Because if you don't have that, as you have these multiple succession plan sort of happening, it's hard to keep everybody on the same page, right? I mean, uh, where we see most of this stuff break down is where, you know, the older generation just either doesn't have trust in the next generation or they just don't know how to let go of the day-to-day, you know.

And when you start to let go of day-to-day so the next generation can take over day-to-day and they feel that true ownership and decision-making, that's where, you know, you can kind of bridge those gaps of the challenges of how do we manage this transition and this transition and this transition? Because ultimately, at the end of the day, even if part of the next generation isn't the person that's there, you know, doing the heavy lifting, so to speak, you know, planting the crops, harvesting the crops, marketing the grain, even those other people that are part of that decision have a skill set, and that input that's very valuable to make those things work.

Shay: Yeah, that third perspective or even that advisor role, you know, most of the operations that have had a good person in that position, be it family member, friend, you know, neighbor down the road. Several times in my meeting yesterday they said, well, the people we had an opportunity to buy land from, they were like grandparents to us. Yeah. And I thought that was an amazing sentiment of it showed the care in the community and the connection that goes into it. Well beyond just, you know, the acres or the pasture or whatever it may be. Another, another thing that I think is pertinent is there's, there's so many options. There's, there's no one way to do it right for any business. And I'm sure you've seen a lifetime of that. I see it every meeting that we're at is I've never come across two farms that are exactly the same. Now, the issues that they face might be the same.

I'm a little crass sometimes on how I say it, Johnny. I say, you are not unique. And what I mean is everybody has these challenges. Everybody goes through these conversations. Everybody has the, you know, the weird local land market, and they think that it's a unique scenario. But the core behind it is there's, there's ways to navigate this. And we always lay it out when we're working with farms on the transition and succession planning piece of, here's some options, here's some things that you can do. Ultimately, you have to decide what is best for you. And then we're here to help you navigate that. But sometimes just getting a fresh look, a different perspective, and understanding that we're not pigeonholed into, like you alluded to earlier, just taking it to a public auction. It gives people a lot of freedom, I guess.

It gives them a lot more confidence in the decisions that they're making. Anything else you want to add onto that just from your experience there?

Johnny

Klemme: Yeah, you're bringing up an excellent point. And in my book, I include— I've got two big stories that sort of weave through the book, but then I also have, I'll call them vignettes, just a short little one or two paragraph scenario of like, You know, here's a scenario of a family, right? And, and here were their goals, and here's how we got to the finish line, right? It looks totally different than the previous example, but I put a lot of examples in the book because you're 100% correct, right? I mean, doesn't matter if you're an urban farm and you're growing vegetables, you know, near an urban center, or you're a row crop farm in one of the I states, right? Every farm is going to be different, and it ultimately comes back to, you know, what do you value most? What do you believe is right for your family, for the next generation?

You know, it's not uncommon to have a family where, you know, maybe it's mom and dad, right? And they've, they've farmed the farm for generations, but the kids are no longer in the area, right? They're not near the family farm. They have no interest in coming back. They live out of state, they have their own lives elsewhere, right? But how could we preserve that legacy of our family farm that Grandma and Grandpa, you know, passed down? You know, even in those scenarios, there is a way forward, right? I mean, I've worked with families where that's been the scenario. And we've worked with local community foundation and a land trust. And, you know, we've taken a portion of the family farm and preserved it for agricultural use, you know, we found a local farmer that had the same values that they shared and the same management practices.

And now all of a sudden, their legacy still lives on, even though they're not farming it. And then the proceeds from that farm are going to the community foundation supporting scholarships, ships, you know, mission trips, whatever it happens to be. And so, you know, it's a big world. And there's a lot of options out there, as you mentioned. And that's just one example.

Shay: I want to share a personal story here that I think really emphasizes the ripple effects that the legacy of the farm, the farmland, the family's involvement can have in it. So right here, right here where I sit today, is I didn't grow up here. This is where my wife is from. But we joined into a family business, her family's business that's been around for about 100 years on the seed side, and lots of close related families in the area. And the first farm that we had an opportunity to rent was about 2 miles west of what I would call the home place. And the gentleman there was retiring. He wanted to give 2 young farmers in the area an opportunity to get started. We were one of them and we're so thankful for that every day. But the piece that we had the opportunity to rent was actually his sister's who had lived in Chicago basically her whole life.

And when we took it over, we just started that communication around, "Hey, here's what we're doing. Here's what we got going on. Here's some improvements we think that we can make." And she just was eating it up. She loved— she would go and visit her brother and all that. She didn't understand a lot of the day-to-day things that had gone on and just loved getting pictures, you know, loved being involved, loving being a part of it. Well, fast forward a couple of years, I think it was 2021 or 2022. We had her grandson come down and intern for our business, and he had just started at Iowa State. He wasn't sure what he wanted to do, but he liked the agricultural path. So he interned with us and I said, well, you know, if you're ever looking for a job or think that you want something to do down the road, you know, reach out to me, we'll see what we can do.

And as we sit here in 2026, he's actually in the process of trying to buy that farmstead, that homeplace from his uncle or great uncle, if you will. He's trying to buy it back because he wants to come back. He wants to put livestock on the land. He wants to get involved with the farming. And, you know, here you have a grandkid removed, you know, first order, you know, first cousin side of the family. That lived in Chicago his whole life, has not been around row crop, but because he had that connection to the land, he went to a land grant university. He is going to be in a position with a local retailer. And we offered to, you know, essentially crop share that acreage with him that we first had an opportunity because we want him to have an opportunity to get started.

And I think, I think I want to emphasize that so much because the hard conversations that need to occur and the values that you outlined in your book, the opportunities, the options that you outline. These are important things. These are so— these are very, very important things from a legacy perspective that we have a tendency to shy away from conflict and we have a tendency to shy away from talking about death. And I say we as a collective, you know, human people involved in agriculture. But look at, look at the importance of what having those conversations had on a young man that is probably going to impact generations of his family too. So I just wanted to share that personal experience.

And yeah, I'm sure you got 100 just like it, but it's near and dear to me, not only from what we do on the consulting side and the farm operation that we run today, but also to see how that impact has emanated from a, from a close relationship. I just think it's really cool to see.

Johnny

Klemme: Yeah, that's an amazing story. I appreciate you sharing that. I mean, it speaks volumes to your passion for the family farm. And it speaks volumes to your— to you and your family's values, right? I mean, you want the next generation to succeed, you want to continue to see agriculture thrive, right? And, and that's a very common thread in most of the families that I work with, too. But like you said, sometimes the conversations are avoided, right? I have a series of worksheets, you know, that I've created, because It's just difficult for people to, to say what they're thinking, right? And sometimes that we just write it down and we sort of share those, those papers, you know, with each person, like, this is what's important to me and this is why. And even if you just write it down, right, because some people just aren't good at communication and that's okay.

That's a, that's a great way to get it started as well.

Shay: So yeah, and we, you know, in our side of the business too, with the consulting and helping people on the succession and farm transition, I've created 3 or 4 tools for succession planning around, you know, how do you set up some of the estate planning documents? What, what's your intent again, if you will? What is— for those who are actively involved, what is the long-term retirement planning strategy look like? Because it's, it's important to focus on the values and, and shared goals and shared vision moving forward. And then you do need to get the books in line of how can we make this work? Is it feasible? What does timeline look like, especially if it comes to transitioning, you know, owned acres and things like that? There's significant dollars that we're talking about anymore.

So I just share that too, you know, in addition to the tools that you mentioned there, there's lots of resources available and, you know, lots of people there's lots of people that are willing to help, whether it's the Purdue Ag Econ Outlook team there, what you do in your business, what we do in our business. I think the rising tide really floats all ships here of how do we work together to share the message. Any other final thoughts that you want to share? I got one other thing that I want to add, but what's kind of top of your mind right now, I guess, as you continue on with this process?

Johnny

Klemme: I had a— I'll share a brief story. I had a really great conversation with a local farmer last week, just called me out of the blue to ask a couple of questions. But, you know, what I really admire about him and his wife and what they're doing is they've formed an advisory team, right? They're in a— they have regular meetings, right, with other farm families and other professionals, you know, who are going through this process, right? Because they know it takes time. They know that it's not easy. They see their peers and, you know, their high school friends and classmates that they've either completely lost the family farm, or the writing is on the wall, you know, and they're just being proactive about it. They know it's not an easy path, right? But it's, it's near and dear to them and important. And they're taking the steps. They know, they know, like anything, right?

I mean, even when you think about the farm, right, you don't, You don't go into spring season without a lot of planning, right? You don't go into harvest without thinking about logistics, right? It's the same thing with succession planning. You know, it's seasonal, and it's a long view. And the sooner you start, the more successful it'll be.

Shay: And oh, that's, that's one thing that I forgot I was going to mention earlier. So the folks that we had in our office yesterday, mom and dad were 62. And the others were, you know, the next generation was, I think, 33 and 36. The mental decision-making that goes into working through some of the transition planning can be exhausting. And some of the research I've been looking at here recently indicates that you start having mental cognitive drop-off sometime between 62 to 68, you know, so call 66 an average in there. And I share that not to, definitely not to pick on anybody, but just for consideration of the longer that you wait to go through this process, the harder it gets, the harder it gets mentally, the harder it gets physically. Time is your best friend, as you indicated, that 7 to 10 years.

Yesterday, you know, yesterday we basically had the transition set up for roughly 6 years of key goals. But there was a caveat that Mom and Dad may need to continue to farm on paper for another 3 or 4 years. So that's a, that's a 10-year outlook. And, and to do that transition effectively, I think that's the best plan for them at this time moving forward. You know, transition planning is this evergreen process, but I really commended them because now is the time for them to be making that plan. Or, or I always say some of the favorite calls that I get in are couples in their 30s, 40s, 50s that realize that they need to do transition planning Unfortunately, sometimes it's because mom and dad screwed it up. Or, you know, I say that jokingly, as in they maybe just didn't have the communication that they needed to.

And so they're trying to be proactive and say, hey, we're going to get this figured out for the next generation. We want to have that legacy. We want to build that long-term outlook. But I just wanted to emphasize that on the, on the cognitive piece, if there's anybody listening to this that you're dragging your feet or don't know where to get started or, you know, need some, need some advice or need some encouragement, I would encourage you to get started because this stuff does not get easier with time. And we've seen that time and time again, mainly in the demographic of folks that are 65 plus. It just gets harder to make these decisions.

Johnny

Klemme: Yeah. And I would, I would also add to, you know, we bring up this topic over and over and over, but anybody who's part of this process or anybody who quote unquote sits at the table with you, they can't read your mind, you know, and until you speak it or write it down and share it, you know, the person sitting next to you or across the table from you, you know, the previous generation, they may not know how you feel. They might have some expectations for what they think you should feel, but that doesn't mean that is how you feel, right? And so You have to speak up. And again, if the conversation is difficult, write it down and share it. You know, at our last succession planning event that we held at Purdue University's Beck Agricultural Center, you know, that was kind of one of the takeaways too, was like, well, what could I do after I leave this meeting today?

And I said, you know, to this family and to the audience, I said, hey, Whoever is on your list and whoever is part of this decision, you could just take a simple step and say, "Hey, today we went to this event, right? And this is what we talked about and what we learned," right? And just share what you're doing. Even if you're watching this podcast or any of Shay's content, right? That can be just a simple way to keep the conversation going forward. Start sharing that information. If you find something and you have a little golden nugget, you know, that maybe sits well with you, share that with your spouse, share that with your grandparents, your kids, whatever it happens to be.

Because even if you're not good at sitting around the table and having the conversation, you can still move the process forward by, by sort of sharing, you know, what you're working through and what's important to you.

Shay: Okay, last thing that I have for you, this family yesterday the younger generation, the wife, we were talking a little bit about her family. And she has, you know, grandpa, dad, brother, they're involved in a farming operation. And I kind of asked some questions around that. And she said, well, kind of a classic situation of they're the ones that need to be around this table too, you know, two separate farming operations, but they're the ones that need to be around this table too. So what you just referred to is the family member that is attending the meetings, is listening to the podcasts, is reading the book, and working through these things. What's your encouragement for the family members that are involved in what appears to be a slowly unfolding tragedy in communication, mismanagement, whatever it may be? What's your encouragement to them or kind of where do you get started?

How do you go through some of this? I'm going to recommend your book first so that you don't have to, but I think that's a great place to start. Is, is just read through these examples, think through the values, what do we hold dear? But what's kind of your parting encouragement for that crowd, Johnny?

Johnny

Klemme: Yeah, and I think it's, it's also good to look around you, right? Is there a neighbor down the road who, who, you know, you know, passed the farm to the next generation? You know, sometimes the best place to look is in your backyard. You know, you don't necessarily have to look across the state or across the county. But you know, there's, there's always an example right in your backyard. Of a family that's, that's, they're still going, right. And there's always the example across the road of, you know, hey, they went broke, they had to sell the family farm, whatever it is. And so I would also just encourage you or just remind you that, hey, you are not alone. Circling back to kind of what Shay talked about at the beginning here, there are other people struggling with this. And sometimes, you know, the best, the best way to get started is to look across the street.

Shay: Yeah. And Johnny, there's a, there's a book that you've written that we've referenced several times. Where can, where can people find it? What's the title of the book? And, you know, anything else that they should think about on if they need something? How do they reach out to you?

Johnny

Klemme: Yeah, the book is American Family Farmland. The website is americanfamilyfarmland.com. I've got links to a number of online retailers, whether it's AcresUSA, Amazon, Barnes Noble. And if you're listening to this podcast, and you'd like to get a copy, just reach out to Shea. He can help get you a copy as well. So it's available anywhere that you can buy a book. You know, any events that I'm speaking at, you know, we typically are, you know, part of that process. If you come to an event, you know, you can also get a copy of the book. But, you know, reach out to Shea, he can help you, or go to americanfamilyfarmland.com.

Shay: Yeah, I've shared it with all of our landowners, and I know so many of the people that attended our conference or attended the other speaking event where I handed out some of the books. First of all, they went like hotcakes. It's amazing how quickly, you know, Type A personalities, they want those handouts. But no, they saw the value in the book. And I've had multiple people reach out to me and say, you know, we read it, we loved it, we shared it with our family, or we shared it with our landowners, or we shared it with someone else that needed to hear that message. So go find the book, get it purchased. Comes highly recommended for me and from our team here. So, Johnny, thank you so much for the time. Really appreciate not only the conversation today, but the work that you're doing in the industry. It's meaningful, it's impactful, and thank you for your service there.

Johnny

Klemme: Yeah, thank you so much, Shay. I echo the same sentiment to you. Keep up the great work and thank you so much for having me back on today.

Shay: And thank you everyone for listening to another episode of the Ag View Pitch. We will catch you next time.