FARM SUCCESSION PLANNING
Unique, Different, & Critical

When farmers/ranchers think about their SUCCESSION plan, I believe what they really focus on is:

Can my kids, the next generation, continue feeding the world?
AND
What are the practical considerations needed to make this successful?

LAND – Dirt, as I call it, makes this REAL PROPERTY very unique. Your land has been in your family for generations. You, and generations before you, have cared for it, improved it and created value. Emotional ties to the land and a sense of entitlement or ownership may not be consistent with the plan.

 
FAMILY EFFORT – It all started with Great Grand Parents. The farm was built one acre at a time. Their children and their children’s children contributed to the value of the farm. Their dedication to farming, love of the land and appreciation of nature helped build the dream you are now thinking of “letting go”. This can be a huge challenge if the farmer has not yet handed off daily operations.

FARM INCOME – There may not be sufficient farm income to provide for both retirement and the successor. Are there enough non-farm assets for an equitable split among the non-farm children? Cash flow shortages are devastating financially and mentally.

DEBT VS EQUITY – The farm must be a viable operation. If the retiring farmer has the majority of his assets still invested in the operation this can put pressure on the transfer process. Farm debt is healthy when properly managed and controlled. Otherwise the farm will fail under the weight of debt. Instead, we should get wealthy on other people’s money.

 
An ideal farm succession plan is more successful with limited obligations or limitations. An understanding of the future is critical in developing a process for protecting the land, the farming family and having uninterrupted food production.

 
I believe society has a bigger interest in having family farm SUCCESSIONS succeed than they realize.

Your thoughts are always appreciated
Take care

Fred

Fred@thevoiceofagriculture.ca