In “The Death of a Family Farm,” online today with our media partner FastCompany, FERN reporter Kristina Johnson delves into a dramatic feud between father and son, Tony and Adam Azevedo, as they close their California Central Valley organic dairy. Through the lens of one farm family, the story spotlights what makes family businesses successful and shows that, often, it’s the family itself that can make a business fail.
“In family businesses across the country, it’s not uncommon for children to sue parents or for parents to write children out of the will,” writes Johnson. “When I ask Tony what advice he might have for other dairy farmers in business with their kids, he aims his fingers at his head like a pistol and shoots. It’s a gesture loaded with the frustration felt in many family businesses.”
Johnson reports that roughly 30 percent of American firms are family-owned; in farming, it’s 98 percent. But when parents near retirement, the passing of control and property to their children is notoriously difficult, she notes. Only 30 percent of family businesses survive into the second generation, a better rate than for the average non-family firm, which doesn’t make it past six years. But the transition is far more complicated when the boss is your dad and the employees are your kids, Johnson explains.
Through intimate storytelling and sharp analysis, Johnson follows a generational power struggle: Tony is one of the forefathers of organic dairy farming in California, but his son Adam had wanted to modernize, “to get big or get out,” even to drop the organic label if it meant a chance for higher profits. While the two men vied for control, drought gripped California and farmers struggled to afford higher feed prices. In January 2014, Adam walked off the job, claiming his dad was suffering from dementia. Tony, for his part, was sure that Adam had had a psychological breakdown.
By the time Johnson first contacted Adam and Tony in February, Adam had retreated to his house, refusing to speak to his father. And eight years after Tony made Adam a partner, their 600 cows—the first organic herd in the San Joaquin Valley—were slated for sale to a large dairy in Idaho. Johnson tracked the conflict between the Azevedos until May when the last cows were shipped out because neither man could compromise. She also called on family business experts to understand how the Azevedos’ struggle plays out in other industries as well.
“Family issues are the number one reason family businesses of any kind fail,” Wayne Rivers of the Family Business Institute explains to Johnson. The issue of succession—who will take over and when—is the biggest source of conflict, but according to a PricewaterhouseCoopers 2014 report, only 16 percent of family businesses have a succession plan.
The Azevedos’ story is a cautionary tale for any family, farming or not, that is trying to make money and keep the peace.