Howard Buffett: Farming and finance

Legendary investor Warren Buffett has chosen his son Howard to succeed him as non-executive chairman, or what Warren calls the "guardian" of Berkshire Hathaway, his multibillion dollar holding company. But "Howie" - a farmer - is no chip off the old block. More comfortable on a tractor than in a boardroom, Howard is a hands-on philanthropist whose foundation spends $50 million per year to combat world hunger. Lesley Stahl interviews both father and son about their lives and their vision for the future of the company.

The following is a script of "Howard Buffett" which originally aired on Dec. 11, 2011 and was rebroadcast on June 24, 2012. Lesley Stahl is the correspondent. Karen Sughrue and Julie Holstein, producers.

Warren Buffett, America's second richest man, is a household name. His 57-year-old son Howard? Not so much. And yet he's the person Warren Buffett wants to succeed him as chairman of Berkshire Hathaway, the mega-holding company that Buffett built that owns everything from insurance to ice cream, and whose stock trades at over $100,000 a share.

We wanted to find out: what are his son's qualifications for the job? As we reported last December, for most of his adult life, Howard -- the middle of Buffett's three children -- has been a corn and soybean farmer in Nebraska and Illinois. When he's not up on his tractor, he spends his time using his farming skills, and his father's money, to help alleviate world hunger.

Like his dad, Howard does not live the high life. Unlike his dad, he loves getting down in the dirt.

This is the man who will become the next chairman of the company-acquiring, investment-picking, money-making machine Berkshire Hathaway, if Warren Buffett has his way.

Howard is a farmer who would rather dig up the ground and drive big machines than sit in a boardroom.

Lesley Stahl: Were you stunned? Were you surprised?

Howard Buffett: I was surprised.

Stahl: But no sign that he's about to leave?

Howard: He won't leave until he's buried in the ground. I hate to put it that way...

This is no gentleman farmer. Howard Buffett works his 1500-acres in Pana, Illinois, himself.

Stahl: We're going to go pick corn.

Howard: Ya, we're going to pick corn.

This year he harvested 87,000 bushels of corn with his 300-horsepower combine that he runs hands-free off GPS.

Stahl: You're like a kid, you know, who can ride his bike without his hands, right?

Howard: It's a big toy.

Stahl: It's a big toy--

Howard: But it's expensive.

But with corn prices soaring, he can afford it. And, incidentally, even a farmer named Buffett can get farm subsidies. Howard received $300,000 in federal payments over 13 years.

Stahl: Here's something you said once. This is a quote. "It seemed nothing I could do would be as successful as what he did," meaning dad.

Howard: That comment would mean that in the world's eyes, you know, I would never be seen in the same success as he would, particularly in investing and in business. That's okay. And I mean, you know, and my mom and dad always made it clear that that was okay.

Warren Buffett: There's no sense in trying to compete with me because he's not going to play my game. He should have his own game.

Warren: Grain shipments were down a lot last week.

Warren Buffett says he always told Howard to find something he loved as much as he loved making money.

Warren: Naturally, I have a lot of top secret stuff.

Howard: You always do! (laugh)

Stahl: You're all business. I think of you as mister indoors. The-- the numbers...

Warren: You got it.

Stahl: I got it. So here you have this son.

Warren: I know.

Stahl: He's a farmer, he's outdoors, he's down in the dirt. Are you sure he's your son?

Warren: Well I think that's worth checking out. You'll have a big exclusive.

Stahl: Well, he is really different. Explain that.

Warren: He likes doing big things. You know, moving dirt. And he just is happiest when he's working hard. I'm happiest when I'm just kind of sitting around watching football!

Howard's different in another way: He's an active hands-on philanthropist, who visits up to 20 countries a year. The Howard G. Buffett Foundation focuses on world hunger, spending $50 million a year on projects like feeding programs in Ethiopia and agriculture education in Afghanistan and he records it all through the lens of his own camera.

Howard: You all of a sudden begin to kinda look around. And you notice, "There's a lotta people around that don't look too good." And, you know, they're hungry. And they don't have great living quarters, they may not have access to water, they don't have good sanitation.

Stahl: You were seeing farmers who couldn't feed themselves?

Howard: Oh, absolutely. I looked at that and I thought, you know, this-- this is wrong. I understand agriculture. I should be able to do something about this.

In places like El Salvador he's funding a training program for 5,000 poor farmers like Carla and Edwin Trujillo. They learn new planting and fertilizing techniques to improve the quality of their corn and red bean crops.

[Howard: Carla, I'm Howard.

Carla: Hola. Mucho gusto.

Howard: Buenos dias.]

We tagged along as Howard inspected their six-acre plot in the tiny village of San Juan El Espino.

Howard: Oh, and she's got-- and she's got an irrigation system.

No big combines here and their irrigation? It consists of hoses connected to a barrel of water brought in by horse. Howard wanted to check on the quality of Carla's corn.

Howard: Does she mind? Tell her I won't destroy her corn crop...

And that meant doing his favorite thing.

Stahl: You're going to dig it up?

Howard: Yeah.

Stahl: Come on.

He didn't just dig up her corn; he was like a doctor doing an invasive exam, pulling up the roots, ripping it open.

Howard: You always have tough husks in this part of the world.

And cracking it in half. His verdict?

Howard: You've done an excellent job with-- with what you got.

Since Howard's program started, Carla has doubled her income. In one way at least he is like his dad: He insists that the farmers learn accounting and managing credit, and that they buy their own seed.

Howard: They're looking for the standard kernels.

Howard Buffett is making a big difference but on a small scale. He started out giving farmers the best of modern agricultural technology, but now he only teaches methods they can afford themselves after his projects end.

Howard's passion for farming started early. When he was just five, he turned the family backyard into a cornfield. His father was fast becoming a multimillionaire, but the family always lived modestly.

Stahl: Did you know, as a kid, that you were rich?

Howard: No. Not at all. And the greatest story is my sister, who when you had to go around the room in grade school and answer, "What does your father do?" And, you know, we knew him as a security analyst. And we had no idea what that really meant. And so she basically said, "Well, he's a security guard." And that's what we thought for a long time. We just didn't know any differently, you know?

As his father's fame and fortune grew, Howard seemed to zig and zag on his own path, dropping out of three colleges, one after the next.

Stahl: You must've been worried, or concerned.

Warren: I wasn't.

Stahl: You weren't?

Warren: No, I wasn't. He was just kind of finding what he wanted to do.

Stahl: And so it didn't--

Warren: --so it made no difference to me if he found it in a college or not.

Stahl: Really? Now that is an unusual parent.

Warren: It is an unusual parent. But it was the way both his mother and I felt. None of our kids graduated from college. Now if they pool all of their credits, we can get a degree.

Stahl: One degree!

Warren: Yeah. Just pass it around!

Once Howard settled on farming, Warren bought land for him, but then made his son pay rent, and tied it to his body weight.

Stahl: So if you gain weight your rent goes up and if you lose weight the rent goes down?

Howard: Something like that. Financial incentives are supposed to work in some things. They don't work very well in weight incidentally.

Stahl: But why wouldn't you just give your son a farm?

Warren: Well, I just don't think that's, you know, the way to bring up a son. I mean, I don't think he's entitled to be given a farm just because his last name is Buffett. We didn't want them to see the world, you know, through the lens of a super rich kid that got everything he wanted.

Stahl: You just didn't want spoiled little rich kids.

Warren: Yeah. Yeah.

Warren Buffett was famously reluctant to give his money away to charity.

[Warren with Bill Gates: I'm turning it over to you...]

So it came as a big surprise five years ago when he donated the vast bulk of his fortune - some $31 billion - to the Gates Foundation.

Bill Gates: It's a real challenge to make sure his money gets used in the right way.

Bill Gates is often described as Warren's "third son." They vacation together, spend their birthdays together. So the size of his gift to Gates left an impression that the Buffett children were given short shrift.

Stahl: Warren Buffett doesn't believe in inherited wealth?

Warren: I don't believe in lots of inherited wealth. I haven't been spending my life trying to figure out how to transfer wealth and not have taxes and all of that so there can be a dynasty of all kinds of little Buffetts going around for hundreds of years never having to do anything.

But don't cry for those little Buffetts. Howard, his brother Peter, and sister Susan have gotten multimillion dollar gifts of money and Berkshire Hathaway stock from their parents. So while he's not on the Fortune 500, Howard is by any measure a wealthy man.

On top of the outright gifts, each Buffett child is getting a billion dollars to go towards their philanthropy. But all that pales next to the $31 billion that's going to the Gates Foundation.

Stahl: So did you know, as far back as you can remember, that you were not gonna inherit his money?

Howard: Yeah, yeah.

Stahl: --the bulk of it? You've sort of always known that as you were growing up?

Howard: Yeah Yeah... And from time to time, that was a little frustrating.

Stahl: Because you wanted it or what do you mean?

Howard: Well, I just mean you feel like, that there are a lot of things you could do if you had more money. And I think that way, even in the foundation.

But here's the irony: Bill Gates is spending a huge chunk of Warren Buffett's money on poor farmers in Africa, giving them hybrid seeds and synthetic fertilizers. It's exactly the kind of hi-tech approach Howard tried and now feels is doomed to fail with farmers who make barely a dollar a day.

Stahl: Well, you know Bill Gates. Have you said to him, 'Eighty percent of what you're throwing down there in Africa is not going to work?'

Howard: Well, I said it a little differently, I think. And that is that we need to quit thinking about tryin' to do it like we do it in America.

Bill Gates: Well, Howie's the farmer here. So he can speak with knowledge. I'm the city boy on the panel.

Bill Gates and Howard Buffett were both honored recently at the State Department for their work on combating world hunger; work underwritten in both cases, by the largesse of Warren Buffett.

Stahl: So your father gives all this money to Gates. You come out and tell us what he's doing is all wrong.

Howard: I'm not saying it's all wrong.

Stahl: Well, a lot of it's wrong. Little bit of sibling rivalry there?

Howard: No.

Stahl: Maybe.

Howard: No-- you know, that's why we call him Brother Bill. But-- but-- (chuckle) but--

Stahl: Exactly.

HOWARD: No, I-- you know what? Bill Gates is the smartest guy in the world next to my dad maybe. I better say that if I'm on tape.

Stahl: How old are you?

Warren: I'm 81, but I feel good.

Stahl: Yeah, you look great!

Warren Buffett says if the Berkshire Hathaway board approves his son as chairman after he dies, Howard would not be paid and would not run the company day to day. Howard would be what Warren calls the guardian of the culture.

Stahl: What were you worried about?

Warren: Well you worry that somebody will be in charge of Berkshire that uses it as their own sandbox in some way. That changes the way that decisions are made in reference to the shareholders, or some, you know, the odds of that happening are very, very, very low. But having Howie there adds just one extra layer of protection.

Stahl: I guess someone whose on the outside looking in would say, 'But what does he know about this business?'

Warren: Oh he knows plenty about the business.

Stahl: Does he?

Warren: In the sense of the values of the business, sure. Sure. I mean, he doesn't know what insurance policy we're writing today, you know, or how many carloads of the-- the B.N.S.F. carried last week or something. But he knows the values of it.

Besides, Howard is the only one of Buffett's children who has been a corporate executive - in agribusiness - and the only one who has ever served on the Berkshire board.

Stahl: Let me just make sure I understand you. You will not be picking investments.

Howard: Absolutely not. And I shouldn't. I mean, you know.

Stahl: Do you have concerns about taking over this big role?

Howard: Well, as long as I can keep farming, I'm okay.

And as long as he can keep funding projects in remote regions of the world where, as we found, he is still working on becoming a household name.

Stahl: What did you know about Howard Buffett before? Had you ever heard of him?

Carla: No.

Stahl: Never heard of him?

Carla: No, no.

Stahl: Had you ever heard of his father? He has a very famous father, Warren Buffett. Had you ever heard of him?

Carla: Si.

Howard: Oh. I'm impressed.