The Moss family has farmed Manor Farm for 150 years and is a highly respected local family. They’re just about to start the process of ensuring the farm and business move smoothly from one generation to another. They might wish to avoid the fate of a neighbouring farm, which is now on the market following family disagreements arising from not having followed a succession-plan process. A number of recent studies have shown that farms lacking proper succession planning are less likely to survive in the future. There’s little more disincentivising and disengaging for the younger farmer than not knowing what his parents or grandparents have in mind, and feeling they have no input into the strategic direction of the business. So what are the key components of succession planning?
Start farm succession planning early
Think about succession planning early: hasty succession-planning created under pressure can lead to family disagreements. A good plan allows you to anticipate and prepare for future events, and will take into account retirement incomes, support for incoming generations, motivation and off-farm alternatives for children who don’t want to pursue farming.
Farm succession planning is an ongoing process
It’s no good agreeing a plan and then forgetting about it: it needs to be a regular item on the family agenda. Over time, circumstances change, and new additions to the family, marriages, divorces, deaths and other changes, all necessitate a review of the plan. So even if you think nothing’s changed, ensure the matter is discussed at regular intervals – ideally yearly and definitely once every three years.
Good communication and involvement from all stakeholders
A smooth transition will be borne out of agreement and discussion by the core family group. Conversely, the lack of discussion will cause poor communication between generations, leading to mistrust – and in the worst cases, litigation. The start of any planning should be a family meeting (sometimes with the use of an external facilitator), where individual members can express their views on the family’s goals and ambitions, and where everyone is valued and knows what each member wants for the future.
Involve professionals in farm succession planning
Though these decisions are for the family to make, it’s vital that professionals – solicitors, accountants and land agents – are involved at the appropriate stages. This will ensure all relevant factors have been taken into account, and they can bring up options and ideas not considered by the family. It also allows for a less emotional and more detached approach to the decision-making process, and ensures any planning doesn’t produce any unforeseen consequences which may have tax or other implications.
Owning the farm or running it are different
The ownership of the farm and the running of it as a business are two different things and there’s no need for one to mirror the other. Sometimes the separation of the two entities will allow greater flexibility to plan for the future, and meet the aspirations of those family members not directly involved in farming, as well as those who are. As for the Moss family, they have now had several successful meetings, engaging all generations of the family and a plan has been produced with appropriate input from the professionals. I’m confident that Manor Farm will remain a successful business owned by the Moss family for several generations to come. Can you say the same about the farming business you’re involved in?