Handing Down the Family Farm: A living legacy
Al Montna's Sutter County rice farm is a haven for wildlife, thanks in large part to a 1,200-acre conservation easement.
Driving the back roads of Montna Farms in Sutter County is a wildlife adventure. It's not unusual to see a rafter of wild turkeys strut down a dirt road or catch a glimpse of a bobcat slipping into the bushes for cover.
The abundance of wildlife is no accident. Montna Farms is managed to protect habitat and encourage the growth of wildlife populations.
But, at Montna Farms, the best of California's wildlife is yet to come. When the time is right, more than 5.5 million waterfowl leave their summer home in the northern reaches of the continent and travel the Pacific Flyway through 11 Western states to overwinter in warmer southern locations. More than 10 percent of these birds will journey through California's Central Valley—and many thousands will stop at Montna Farms.
The largest exchange of wealth in world history is occurring as the aging make final decisions about their legacy. But, with the possible return of the death tax and the changing future of farming in California, which road should be taken? Ag Alert® delves more deeply into this important and timely topic:
Long before the birds arrive, there's plenty of work to do. Montna Farms' rice operation is geared toward maximum yields and production. That means Al Montna is usually busy checking the location of crews, getting field reports, talking on a cell phone and working his hand-held BlackBerry. But, along with rice production, the farms are managed to sustain large migrating waterfowl populations.
Several years ago, Montna became one of the first growers in California to develop a wildlife conservation easement on 1,200 acres of rice ground on his home ranch in Dingville. Part of a larger estate planning strategy, Montna said the move will help ensure his land is never taken out of farming and will always be managed to benefit wildlife.
Montna and his wife, Gail, have two daughters, Nicole Montna Van Vleck and Michelle Vogt, who share their parents' respect and appreciation for the natural wonders found on their land. The pair knows the hard work involved in farming it. And, they say they're comfortable with the easement's habitat arrangements as they take over full responsibility for operating the farming business and begin preparing to pass it on to their own children.
Van Vleck, who is a director of the California Rice Commission, said she and her sister have been farming rice for more than 15 years. They've always been involved in learning how to operate the ranch, from the time they were young girls gathering walnuts in the family orchard.
When asked about the more traditional approach to succession of farm assets—father to son—Van Vleck said, "My dad is turning the reins for all the day-to-day stuff over to us very willingly. He wants us to learn every aspect, in part because he's concerned that we be ready in case anything ever happened to him. My dad is not a micro-manager in the least.
"We used the (wildlife conservation) easement as a vehicle to transfer part of the ranch into protection, in addition to some other extensive estate planning," she said. "We're planning so that the transfer between generations will be smooth and easy, without wrenching effects on the estate side, as well as the succession side. We have the staff in place to keep things moving along when the time comes."
Getting down to details
Van Vleck said that one thing she would like for farm families to realize is that for an agricultural operation to survive, the younger generation needs to know every detail about the business. And, more than one person needs to know all the angles, in case something happens to another crucial family member.
"We do annual business planning sessions with our partners and owners and we have an annual planning session with our managers to help implement the overall succession plan," Van Vleck said. "It's not just for our family. It's also for those people who play a key role in the company as well."
She said annual planning really helps the family focus on the direction they want the farm to go and how to manage that in the future, as well as planning the transfer from one generation to the next.
"It's very time consuming and I think a lot of families put it off because it's not urgent," Van Vleck said. "And it's very expensive. I don't know how you get around the expense part of it. The downside to not doing this planning and transition work, however, is a huge tax bill to the government and the possibility the farming operation won't survive."
Vogt describes Montna Farms as a business where she can make a contribution as a professional. Prior to joining her sister several years ago, Vogt was a schoolteacher. She doesn't see her job at Montna Farms as an entitlement. Instead she sees it as a career opportunity and professional challenge.
"The reason I've been so active in estate planning is that there was always an issue with my family about who was going to inherit the land," Montna explained. "It could be quite contentious. And there wasn't that much estate planning that had gone on. It was always a lot of friction. Finally I just bought the farm with my brother-in-law and forgot about the rest of the estate.
"Because of that, when my daughters became involved with the farming business, and they're as good as I ever was at this business, I decided that what we needed to do was design an estate plan to ensure the family farm would never have to be sold to pay estate taxes."
Choosing the right tools
To assure his ability to hand down the family farm to his children, Montna created a family limited partnership, which is a vehicle he said has "stood the test of time in the courts and has proven to work without incurring extreme tax consequences."
Montna said, "I wasn't able to enjoy that kind of planning for myself and I wanted to make sure that my daughters didn't have to go through some of the things I did when it was time to pass down the assets. I want to be prepared in case I'm hit by the proverbial truck one day."
Montna knows what it's like to lose a parent at an inopportune time. He was a youngster when his father died. He and a brother and sister each inherited 3 acres and eventually they built and operated a peach sorting and inspection station on the land. It wasn't until after college that Montna learned to grow rice.
"I didn't know anything about the rice business when I started," he said. "But I went to a local rice grower, Cob Saunders. My mother had a ranch on her family's side and she leased him our rice property in Dingville. I asked if he'd teach me the business.
"He said yes, but asked me why I wanted to learn to grow rice. I told him because I wanted to take the ranch back and lease it from my family myself. Cob said, ?If you're man enough to tell me that, then I'm man enough to teach you. So, what can you do, college boy?'
"I told him I could work in the shop. I could weld and do mechanics. But, Cob said he wanted me to drive a tractor, plant fields and work as a flunky to his foreman. He wanted me to be a gopher, keep the harvesters running.
"He paid me $19 a day. I worked like hell and we became great friends. He was one of the best and I'm extremely grateful to him."
Within three years Saunders had taught the young Montna enough for him to take over the lease of his family's rice ground. He became owner/operator of Montna Farms in 1975 and, through the years, has tremendously increased the scope of his farming activities and business operations, ranking among the state's largest rice producers.
In addition to Montna Farms, Montna's business ventures include Montna Rice Dryer, CEM (a walnut farming and land development company) and a partnership with the American Commodity Co., which has primary markets in Japan, the Middle East and the Pacific Rim.
He also owns the Dingville Duck and Social Club, builds custom homes and is owner/member of Metro Air Park, located near the Sacramento International Airport.
Montna is currently president of the State Board of Food and Agriculture, and is a former chairman of the Farmers' Rice Cooperative and U.S. Rice Producers Group, as well as an advisor to California Polytechnic State University, San Luis Obispo, College of Agriculture.
He has been recognized many times for his commitment to U.S. agriculture. Montna was awarded the California Rice Meritorious Service Award, named Alumni of the Year for the College of Agriculture at Cal Poly San Luis Obispo, and in 2004, was named the California Agriculturalist of the Year by the California State Fair.
Beyond that he is recognized for his ability to find common ground with leaders in the environmental community, including the late activist Marc Reisner, author of "Cadillac Desert." After meeting with Montna, Reisner changed some of his thinking about the California rice industry, and Montna helped Reisner gain an appreciation of the environmental activities of the state's rice growers.
Banking on the future
"Working with Al has been such a positive experience for us," said Olen Zirkle, manager of Conservation Programs for Ducks Unlimited, a partner in the development of the easement on Montna Farms. "His dedication to agriculture and wildlife has resulted in our first wildlife-friendly agriculture easement in California."
Zirkle said that while Montna Farms was the first to step forward in arranging a wildlife conservation easement, Ducks Unlimited is working with other farm candidates and would like to expand the program to more than 5,000 acres by buying the development rights on other agricultural properties popular with waterfowl.
For Montna, the wildlife conservation easement on his property is part of a larger succession and estate plan that will help ease the transition when it's time to hand down the family farm.
Like her dad, Van Vleck feels it's important that family members want to work on the ranch, not because that's the only alternative, but because it makes sense for them from a professional standpoint.
"Even though our kids are very young—I have a 7-year-old and a 4-year-old and Michelle has a 5-year-old son, a 2-year-old daughter and a new set of twins—they'll need a good work ethic because they'll have a lot of responsibility. If any of our children choose to come to work on the ranch, they'll need to have gained experience working elsewhere first before coming to work here."
(Kate Campbell is a reporter for Ag Alert. She may be contacted at firstname.lastname@example.org.)
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