California Ag Network

Category: Ag Legislation

  • Why Early-Stage Succession Planning Is Essential for Ag Businesses

    Farmers often have a great deal of wealth tied-up up in their business. It follows logically, then, that the most important step a business owner can take to protect that wealth they created for their family is to prepare their exit strategy far in advance of their anticipated exit date.  
     
    According to surveys by the Exit Planning Institute, 75% of business owners express regret one year after exiting their business. While there are many reasons for post-exit regret, these reasons often stem from one common cause: Business owners are not engaging in early-stage exit planning. Failure to plan early prevents them from thinking through how plans may go awry and take specific actions to ensure a successful exit. And family transitions only add more complications that need special attention, creating a greater need for early-stage exit planning. 
     
    For many business owners, exiting their business is an unpleasant idea, and burying their head in day-to-day operations is a convenient distraction. But life is full of surprises and an exit can occur much sooner than expected. Having a well-thought-out exit plan is essential to attaining the best outcome, while procrastination is the poison in all exit plans. 
     
    That Essential First Step 
    The first step the business owner must take is to start preparing their business as if they were going to sell it, even with family succession in mind. This process is best performed with the assistance of an exit planning professional, who will examine the business in detail, provide a value-range assessment, and create a detailed plan of action to optimize value and attain the highest sales price. Preparing the business for sale results in the owner developing the processes, systems and documentation necessary for a third-party buyer to step in and continue to run the business seamlessly, without the seller’s involvement. This is a vital for family succession plans because it provides the heirs with the greatest chance to of success. The best run companies — the most valuable business — are the ones that can run smoothly without the owner. 
     
    Ask Yourself the Right Questions 
    Owners need to think carefully about what they want to accomplish when deciding on the outcomes of their exit. There are essential questions the business owner needs to ask themselves, including: 
     
    ·              Will you hand the business over to your children? 
    ·              Do your children have sufficient skills to run the business?  
    ·              Do your children want to take over the business? 
    ·              What if key employees are more qualified to run the business than your heirs? 
    ·              Will you implement a training plan for your heirs? 
    ·              Will you develop incentives for key employees to stay and work for your heirs, instead of allowing resentment to cause them to abandon ship? 
    ·              Will key employees want to buy the business? 
    ·              Have you identified preferred third-party buyers, should the need to sell the business arise unexpectedly?  
     
    Early-stage exit planning includes open conversation about succession plans with all the stakeholders (family, key employees, advisors). This may lead to uncomfortable conversations, but it will also allow the owner to determine the most feasible and effective plan, and forestall potential conflicts arising among stakeholders after the owner exits from the business. 
     
    Pre-Empting Conflict  
    Conflict among heirs is the last thing an owner wants to occur after exiting the business. Unfortunately, there are numerous ways conflict can manifest. For instance: If the owner has more than one child, do they split the business evenly among the heirs? What if only one heir is an active participant in the operations? Heirs who actively work in the business may feel that their participation in the business gives them greater rights to ownership and profits. Heirs who do not participate in the business may feel that an equal share is their birthright. Resolving these potential conflicts should take place long before the owner exits from the business, and not be left for the heirs to resolve among themselves after the ownership transition takes place. 
     
    The Essential Question 
    Founders will often anticipate their heirs taking over their business as soon as they have children. It is a common and normal phenomenon. However, business owners must objectively assess their children’s ability to continue the run the business successfully, and ask themselves these questions: 
     
    ·              Do I want my heirs to inherit the business itself? 
     
    ·              Or do I want my heirs to inherit the wealth that I created in the business?  
     
    If your heirs are qualified to run the business without you, then pursing that succession plan may be your best option. Alternatively, if the children lack the skills or motivation to run the business, you should consider that a sale to employees or to a third party may be your best option. You can then transfer the wealth you created with your business to a diversified portfolio of assets, which can be professionally managed for the benefit of your heirs. There is no intrinsically right or wrong path here: The point is to make certain that you have carefully vetted the exit plan regardless which path you pursue, and that you have an equally vetted contingency plan. 
     
    What No One Tells You About Exit Planning 
    Surprisingly, the topic that gives owners the most difficulty in exiting their business is what they plan to do with their life after they have exited the business. Depression or melancholy in the first year after exiting the business is not uncommon. What will motivate you to get out of bed without a business to go run? After years of building the business, what will be your creative outlet? Did your social life revolve around a business you no longer own? Think about it this way: If you exit your business at age 60, and you live to age 95 (not uncommon), what is going to fulfill your sense of purpose for the next 35 years? Developing and testing your post-exit life plan while you still own your business is an essential step in exit planning. 
     
    The Time to Plan Is Now 
    Regardless of when or how the owner plans to exit their business, succession planning should start very early. Transitions without carefully developed plans can go horribly awry. Have a thoroughly vetted plan for the most desirable outcome in place — and have equally vetted alternative plans. And of course, make sure you include a professional exit planning professional in the process to ensure you remain objective and thorough in developing the most effective exit plan possible. — By Rich Gunn, CEPA
    Rich Gunn is a Certified Exit Planning Advisor (CEPA) and a Partner in the Advisory practice at BPM, one of 50 largest accounting and advisory firms in the country. His newsletter, the Business Owners Special Series (B.O.S.S.), is distributed monthly and serves as the basis for his recently published e-book, Value-Focused Business Planning.

  • Land Trust Alliance Welcomes Reintroduction of Conservation Easement Legislation in Congress

    The Land Trust Alliance, a national land conservation organization working to save the places people need and love by strengthening land conservation across America, today welcomed reintroduction in Congress of the Charitable Conservation Easement Program Integrity Act. The following statement can be attributed to Andrew Bowman, president & CEO of the Land Trust Alliance:

    “On behalf of the Land Trust Alliance and its nearly 1,000 member land trusts, I thank Sens. Ron Wyden of Oregon, Steve Daines of Montana, Debbie Stabenow of Michigan and Chuck Grassley of Iowa along with Reps. Mike Thompson of California and Mike Kelly of Pennsylvania for reintroducing the Charitable Conservation Easement Program Integrity Act. The time has come to safeguard taxpayers and ensure the continued viability and integrity of this successful program. Congress must pass the Charitable Conservation Easement Program Integrity Act this year.

    “Lobbyists working against the Charitable Conservation Easement Program Integrity Act claim it would hinder land conservation. But even a cursory examination of the facts shows this is patently false. Each year, approximately 2,000 to 2,500 conservation donations are made by landowners for truly charitable purposes. Such donations total about $1 billion in claimed deductions per year. That stands in sharp contrast with the $9.2 billion claimed by 296 entities – bad actors gaming the system through abusive transactions – in 2018 alone. If these bad actors are allowed to continue, their actions could destroy a longstanding and successful program. It is these bad actors, not this good legislation, that stand to hinder land conservation. Passing the Charitable Conservation Easement Program Integrity Act will safeguard the taxpaying public while ensuring the incentive for land conservation remains available for landowners acting with true charitable intent.

    “Additionally, lobbyists have claimed the effective date of the bill is retroactive. But that’s a disingenuous argument. The effective date of the legislation is the actual date the IRS placed these bad actors on notice and told them to halt their abusive transactions. Maintaining the effective date will ensure that funds taken from taxpayers and pocketed by these bad actors will be returned. Any attempts to shift the effective date are de facto attempts to protect the massive profiteering these bad actors have enjoyed.”

    More information about this issue is available at https://www.landtrustalliance.org/charitable-conservation-easement-program-integrity-act-advocate-toolkit.

    About the Land Trust Alliance

    Founded in 1982, the Land Trust Alliance is a national land conservation organization that works to save the places people need and love by strengthening land conservation across America. The Alliance represents nearly 1,000 member land trusts supported by more than 200,000 volunteers and 4.6 million members nationwide. The Alliance is based in Washington, D.C., and operates several regional offices. More information about the Alliance is available at www.landtrustalliance.org.

  • California Raisin Outlook: Prices, Production & the RBA

    Watch this brief interview with Dwayne Cardoza from the Raisin Bargaining Association as he shared some key insights on the current state of the California raisin industry at their recent annual meeting.  Read more about it in American Vineyard Magazine.

    Please thank this video’s sponsor Vmech for their industry support.

  • California Raisin Marketing Board Gets Shut Down

    Just last month, a vote passed to shut down the California Raisin Marketing Board. But what of generic California raisin marketing and the iconic dancing raisins? Watch this brief interview with Dwayne Cardoza from the Raisin Bargaining Association and read more about it in American Vineyard Magazine.

    Please thank this video’s sponsor Vmech for their industry support.

  • Almond International Trade Barriers & the Biden Administration

    What is the current status of the international trade war impact on almonds and what changes can we anticipate in the foreseeable future? Watch this brief video with Julie Adams from the Almond Board of California and read more about it in Pacific Nut Producer Magazine.

    Please thank this video’s sponsor Suterra for their industry support.

  • Aflatoxin in Almonds: How are we Doing?

    In addition to the temporary effects of port congestion, COVID-19 and international trade wars, aflatoxin inspections and rejections have been a longer term issue and limiting factor for our almond industry exports. Julie Adams provided an update at the recent Almond Alliance Convention on how the industry is doing in keeping aflatoxin levels down to a minimum in their orchard and post harvest practices, as well as current discussions abroad on lowering the costly inspection requirements. Watch this brief video with Julie, and read more about it in Pacific Nut Producer Magazine.

    Please thank this video’s sponsor Suterra for their industry support.

  • A Plea for Farmer Engagement and Government Support of California GSAs

    As farmers face drought conditions once again this summer, local Groundwater Sustainability Agencies are still working on the planning and implementation of their Groundwater Sustainability Plans. Watch this brief video with Patricia Poire, Executive Director of the Kern Groundwater Authority, as she shares concerns and needs for both farmer and government support to meet the Sustainable Groundwater Management Act (SGMA) requirements.

    Please thank this video’s sponsor Suterra for their industry support.

  • Executive Order Expedits Cal/OSHA’s New Revised COVID-19 Regulations

    Following the vote by the Occupational Safety and Health Standards Board to adopt revised COVID-19 Prevention Emergency Temporary Standards that reflect the state’s latest COVID-19 public health order, Governor Gavin Newsom today signed an executive order enabling the revisions to take effect without the normal 10-day review period by the Office of Administrative Law – providing clarity and consistency for employers and employees as California fully reopens its economy.

    Among other updates, Cal/OSHA’s revisions align with the latest guidance from the California Department of Public Health – based on guidelines issued by the Centers for Disease Control and Prevention – on face coverings and eliminate physical distancing requirements, except for certain employees during outbreaks. Unless they show symptoms, fully vaccinated employees do not need to be offered testing or be excluded from work after close contact with a COVID-19-positive person.

    Ensuring workplaces throughout the state have consistent guidance as California officially moves Beyond the Blueprint, the Governor’s order waives the 10-day review process by the Office of Administrative Law. The emergency regulations will take effect upon their filing with the Secretary of State. With over 40 million vaccines administered and amongst the lowest case rates and transmission rates in the nation, the state fully reopened on June 15, eliminating pandemic-related restrictions that have been in place over the past year.

    Initially implemented last November, the COVID-19 Emergency Temporary Standards remain an important component of the state’s ongoing response, providing balanced worker protections that support California’s continued progress in recovering from the pandemic.

    Businesses seeking assistance to provide N95 respirators for unvaccinated employees as required by the revised Emergency Temporary Standards can find distribution locations for state-provided N95 respirators here.

    The full text of today’s executive order can be found here.

    More information on the revised COVID-19 Prevention Emergency Temporary Standards can be found here.

  • California Farmland Trust to Host Inaugural Race to Slow the Pace at Bokisch Vineyards

    California Farmland Trust (CFT) will be hosting the inaugural Race to Slow the Pace run at Bokisch Vineyards on Sunday, Sept. 19, 2021. This live (virtual optional) 5K fundraiser aims to connect people with nature, the environment and the family farms that feed them. The run will foster a connection to the land and the importance of slowing the pace of development to protect valuable farmland.

    “We believe in connecting people with the land that feeds our families and the Race to Slow the Pace is a fun, healthy opportunity to take in the climate resilient environment that farmland provides,” shared Charlotte Mitchell, executive director at California Farmland Trust. “When we were brainstorming locations, Bokisch Vineyards was an obvious fit. Markus and Liz have a true appreciation for the land and have championed our mission. Not to mention, the course offers breath-taking views and opportunities to learn what makes Bokisch Vineyards unique.”

    Race to Slow the Pace runners will weave through the scenic Bokisch Vineyards, kicking-off where the winery meets the vineyard, continuing through the property on a maintained terrain, taking in the vines and the habitat, and eventually crossing the finish line at Bokisch’s infamous oak tree picnic area. Runners and registered guests will be served a paella lunch and celebrate with awards and Bokisch wine.

    “We’re honored to host the inaugural Race to Slow the Pace benefitting California Farmland Trust,” shared Markus and Liz Bokisch. “It’s been our mission to leave the land better than we found it, for our children and our children’s children, while also teaching and inspiring others towards that cause. We look forward to having trained runners, casual joggers, wine enthusiasts and those that simply love the land, visit our vineyard.”

    For event information visit www.cafarmtrust.org/racetoslowthepace. To learn more about Bokisch Vineyards visit www.bokischvineyards.com/.

  • Protect Citrus from Sweet Orange Scab and Lime Swallowtail Butterfly

    Citrus Pest & Disease Prevention Program — While limiting the spread of the Asian citrus psyllid and Huanglongbing are the highest priority for the California citrus industry and the Citrus Pest & Disease Prevention Program, the program continually monitors for a number of threats to the industry and has recently detected sweet orange scab (SOS) in new areas of the state. Additionally, an unofficial Lime Swallowtail Butterfly (LSB) sample was identified from Los Angeles County and several LSB sightings have been uploaded onto the iNaturalist application, including sightings in Los Angeles and San Luis Obispo counties.

    Sweet Orange Scab
    Sweet Orange Scab

    SOS is a cosmetic fungal disease that impacts the marketability of the fruit and effects all citrus, not just oranges. SOS is caused by the fungus Elsinöe australis, which is dispersed by water. You can recognize SOS by the scab-like lesions on fruit, and less frequently on leaves and twigs. SOS can cause premature fruit drop and stunt young nursery trees and new field plantings but has little impact on fruit quality.

    A positive detection of SOS was found during a commodity survey on the west side of Riverside County, the fourth detection in California within the last year and a half. To help protect citrus from SOS, growers and packinghouses within five miles from an SOS detection, and packinghouses throughout the state receiving fruit from groves within five miles from an SOS detection, are currently required to follow the below measures:

    • Sign an SOS compliance agreement with California Department of Food and Agriculture (CDFA).
    • Disinfect all fruit and field bins.
    • Collect and appropriately dispose of green waste.

    Per the Citrus Pest & Disease Prevention Committee’s direction, CDFA is also reviewing SOS impacts and analyzing the need to establish SOS interior quarantine regulations. Currently the program regulates areas within a five-mile radius from each SOS detection, following the United States Department of Agriculture’s quarantine protocols.

    Working hand in hand with growers, CDFA is exploring the rulemaking process to create state interior quarantines, which will avoid a broader statewide quarantine that would be more burdensome to the industry.

    Lime Swallowtail Butterfly

    There was one unofficial detection of LSB in Los Angeles and several reported sightings in Los Angeles and in San Luis Obispo counties.

    LSB in the larval stage eat citrus leaves and have been very damaging to nursery stock in other parts of the world. The larva looks similar to bird guano before maturing into green caterpillars. As butterflies, they are largely black with irregular yellow spots on the outer wings.