For farms to continue to thrive and develop they have to be able to be passed down the generations so that young people can put their energy and passion into this rewarding business. Therefore we need farm succession.
There are four principles:
It must be economic for the retiring generation
It must be economic for the generation going farming
There must be a plan for those family members not going farming
All the family must be accepting of the arrangement
There are some facts that cannot be ignored:
Equal is not fair and fair is not equal in farm succession
Farming is a young person’s game not an old person’s
- The retiring generation must have got themselves financially independent of the farm to allow succession to happen.
- The incoming generation must be passionate about farming or it and they will fail
- If the farm doesn’t make any money now then succession can only succeed with outside income and will usually require a lifetime of this type of support.
- Farms need to get bigger to remain economic as the continual squeeze on margins continues . Since 1900 agricultural returns have dropped 70% in real terms and it continues unabated
- All farms can get better which is why new blood is needed to take over.
- Technology will make the farm better and easier but more complex, hence the need for intergenerational change
- The pace of change driven by technology is increasing rapidly. If you were not brought up with computers you will struggle to cope.
- A succession plan should start the day you buy/takeover the farm. Don’t wait until you are 65 to start thinking about it. Failure to plan means you plan to fail.
- Almost all family farm succession plans need an independent facilitator to guide them through the process. It is money well spent.
- There are no magic solutions and most families do not have a joker in their pack of cards. It takes courage, honesty and hard work to create a plan that should work and then “sell” it to the family
- Family relationships will get tested, most
repair but some never do. It is the toughest part
of farming - Put up the farms numbers accurately and fairly. Answer all questions as they arise. Don’t be offended by hard, searching questions. If you can’t answer them then undertake to get an answer and don’t just ignore it. Reply to it without fail.
- Maintain your integrity at all times. Never bullshit, ever.
- Remember all families have rivers in them. Never assume there aren’t any. All family farm succession plans have many moving parts to them and it can be very rewarding, but it can be equally devastating. Don’t underestimate the the risk but don’t shy away either as it won’t go away.
There are five ways to go about dealing
with succession:
The old English way. The oldest son gets everything, the second son goes into the army,
the third to the church and the girls have to marry well.
Keep your head down, promise everyone that they will be looked after and hope you die before it gets to the point
Leave the farm equally to all your children and let them sort it out.
Do nothing.
Engage a competent succession planner well in advance of the time, create a plan, and hone it down over time. Bring your children up knowing what it says. They will usually work out who is going to be the farmer and they usually have a much better appreciation of what is required to be a successful farmer.
