Sustainability - What Does It Mean?

December 28, 2022

Sustainability is a word being heard more and more in the agricultural business arena. While not a new concept, it is getting more attention from consumer-focused corporations in both ag and non-ag sectors. From our perspective, sustainability is a word that incorporates three different aspects of farmland ownership:

Environmental Sustainability
Generational Sustainability
Economic Sustainability

Environmental Sustainability

This aspect is receiving a majority of the focus lately. It typically applies to soil conservation and responsible nutrient management. There are many ways to achieve both through a number of practices ranging from simple to complex. A few practices we have successfully implemented, which were chosen based on the specific needs of the farm and goals of the landowner, include:

Reduced tillage
Cover crops
Grass Waterways
Nitrogen application adjustments
Variable rate dry fertilizer application
Nitrogen Bioreactors/Saturated Buffers
STRIPS - Science-based Trials of Row crops Integrated with Prairie Strips (Iowa State University)

Not every farm is a candidate for every practice, but typically there is an opportunity on every farm to place the right practice in the right place and make a difference in the environmental sustainability of the farm.

Generational Sustainability

This aspect describes facilitating the transition of a property to the next generation. Every family farm deals with this issue at some point during the ownership tenure. Many families work with a team of knowledgeable advisors to successfully navigate a transition. The following are suggested areas of focus to develop a team to assist with:

Minimizing tax liability (estate tax, capital gains tax, inheritance tax)
Providing options for the next generation to transfer ownership interests
Allowing for flexibility for the next generation to make decisions in a structured format
Facilitating communication early, before emotions are involved, regarding the wishes of involved parties.

Rather than sell a family farm out of frustration or conflict, there are solutions to avoid this circumstance such as:

Open and respectful communication
Proper tax planning and advice
Proper ownership structure
Active, qualified management committed to treating all parties involved (owner/operator/off farm heir/on farm heir) fairly, honestly, and equitably.

Economic Sustainability

This is typically the primary objective for most operations. However, sustainable profits result from a combination of the first two items being managed well. A well cared for farm, operated within the context of a long term plan, combined with open communication, has a good chance to be economically sustainable. The following are a few significant practices or improvements that can impact a farm’s economic sustainability:

Improvement or installation of drainage tile
Determine feasibility and implementation of storage/drying facilities
Development of a fertility management or improvement plan

In addition, there may be alternatives to increase income and/or decrease expenses:

Pursuit of specialty crops
Pursuit of manure easement to provide lower cost fertility
Analysis to determine if every acre is producing positive income
Determine if your current lease is the best fit for your farm

Economic sustainability alone can be achieved in the short term; however for long-term sustainability, all three aspects need to be managed.

In our experience, these three aspects are necessary to maintain a productive and viable farm. It is critical to understand that all farmland owners and their farms have their own needs within each category.

At Hertz we focus on determining how to maximize the sustainability of each farm and help each owner implement the strategies necessary for his or her situation.