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bjbjz The information in this video is brought to you by University of Vermont Extension
with funding from the Northeast Center for Risk Management Education, through a grant
from the United States Department of Agriculture. Like many fathers and sons, Barney Hodges,
senior and junior, like to kid with one another. Barney Jr.: The trees are supposed to be four
feet and then when I wasn t looking dad moved em to five feet over there. Barney Sr.: Well,
they were bigger trees. Jr.: Screwed the trees up for life. The Hodges own and operate Sunrise
Orchards in Cornwall. They grow apples on two hundred acres and sell their entire crop
wholesale. The packing line hums in the winter and spring and by the time last year s crop
is packed and shipped, the buds are on the trees and the process begins again. Sunrise
Orchards was started by Hodges Sr. as a business partnership. When his partner left the day-to-day
operations in 1994, Hodges was advised to change the business structure from a partnership
to a corporation. Barney Hodges Sr.//Sunrise Orchards: My accountant seemed to advise me
that way and I think it was probably a mistake at that time because we weren t making money.
If you re making good money than it s good to have a corporation, but if you re losing
money then you re better off without having a corporation. Hodges was strictly a grower
and had little control over the price he was paid for the crop. Hodges Sr.: When I planted
the orchard, I sent all the apples down to the Shoreham co-op at harvest time, they stored
them, they packed them out. All I had to do was wait for the money and then the money
became kind of meager. After a couple of successful off-farm careers, Barney Jr. returned to the
farm in 1998 to find the family business was failing. Hodges Sr.: When Barney wanted to
come on board, I advised him not to because financially we were having a bad time, we
were struggling. Barney Hodges Jr.//Sunrise Orchards: And I would say in 1998 this was
not a viable business. So, any type of successional planning is a moot point when you don t have
a viable business, it s not going to work. So at the point the plan was: what s our exit
strategy. And our exit strategy is liquidating the real estate. When the next generation
gets involved, the ante is increased significantly because two families are needing to be supported
rather than one and I looked at the business at the time and there was no way that was
going to happen doing what we were doing. Faced with selling the farm, Barney Sr. gave
his son his blessing and Barney Jr. began selling apples out of the back of his station
wagon. Over time he built up clientele and drastically changed the business since coming
on board in 1998. Hodges Jr.: Where we were a horizontally integrated business we are
now a vertically integrated business where we own our own storage our own packing house
our own trucks, we sell much of our own fruit. We developed new relationships completely
changed the business. Sunrise Orchards is two branches from the same tree. Barney Jr.
and his wife Christiana own the corporation which consists of the crop and the equipment.
The real estate and the buildings are owned by Barney Sr. and his wife Pat. And now it
s time to transfer those assets to the younger generation as well. Hodges Jr.: We need to
invest in the infrastructure here. So far every construction project has gone to increase
the assets of my parents and as long as they ve been the primary owners of the corporation
that s been O.K., but now we own the corporation and we take on debt sometimes to build a building
or improve or put in a packing line put in a storage building whenever we re doing that
we re building the asset base of the estate not of our own personal assets. it s not that
we have a problem with that it just doesn t make sense to continue in that trajectory
so now were working toward transferring real estate ownership and that s a huge challenge.
I have two older sisters and we have to be open and clear and communicate as a family
to try to figure that out. Bob Parsons//University of Vermont Extension: what is unique about
this farm is they re selling apples there not a dairy farm, they do a lot of direct
retail selling, that s about where the uniqueness ends. Bob Parsons, an agricultural economist
with University of Vermont Extension, works with farm families on planning for a farm
transfer. One of the biggest challenges in farm succession is determining what is fair
and what is equal when it comes to children NOT involved in the farm business. Parsons:
Splitting this farm up equally is not fair, but the hard decision then is if equal is
not fair then what is fair? [ ] the best solution is one that it is not rushed, but discussed
with the real practicalities of the implications of what it means for everybody so that everybody
gets their feelings on the table and then somebody has to end up making a decision.
[ ] the business is successful because of the land that it is using, if we change the
ownership of the land and the control of that land different from what it is today, we may
be killing the business, and that s something that the parents have to realize. Hodges Jr.:
with regard to the transition of real estate, I mean, we re still we re in the meat of it
and something will work out I m sure, but today I don t know exactly what that will
be, I put a proposal on the table to this family in the summer and we met about it and
it s had mixed reviews as a family as a whole and so we ve had to come back and revisit
it which we seem to do, we ve revisited many many many many different versions. As co-owner
of the Sunrise Orchards Corporation, Christiana Hodges has a significant stake in the future
of this farm business. For her, communication is key. Christiana Hodges/Sunshine Orchards:
We have had many many discussions with Barney s sisters and his mom and dad about you know
the different sort of ideas we have for how to take ownership of the farm and how to continue
the farm in the future it has taken a really long time. But no one, I don t get the feeling
that anyone is frustrated by that [ ] I think people have come to a lot of conclusions over
the last decade and that s really helpful so being really patient communicating and
I mean really deliberately in the form of surveys and face to face meetings and just
anytime you can get together and talk about it, it s really important. Hodges Jr.: we
all want everybody to be happy, but fair versus equal is somewhat subjective. The Hodges believe
their farm transfer will happen relatively soon Sunrise Orchards is the Hodges family
and the Hodges family is Sunrise Orchards for both to grow and thrive it will take patience,
communication and understating and it doesn t hurt to have luck on your side either. Hodges
Sr.: Having your son come in is a real blessing. I couldn t be luckier. If I didn t have a
son coming in taking over the business the farm would eventually be sold. From father
to son and from one generation to the next, there s a lot on the horizon for Sunrise Orchards.
In Cornwall, I m Keith Silva with Across the Fence. PAGE \* MERGEFORMAT [Content_Types].xml
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Silva, Keith Normal.dotm
Silva, Keith Microsoft Office Word University of Vermont Title Microsoft Word 97-2003 Document
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