It can be hard to know how to start the conversation, let alone know where to go for good advice.
There are often significant amounts of money involved, emotional attachment to our farms and competing family interests.
Coming from a farming family I know the difficulties first-hand.
Part of the Red Meat Profit Partnership remit is to ensure we support farming businesses to make informed decisions.
Our Pathways to Farm Business Ownership project looks at how to make the process easier, which has had huge support in the farming community based on our initial research workshops.
Decades ago the farm was either divided up between siblings or handed down to the eldest son.
Today, parents seek to be fair and equitable to all of their children so buying into the farm is a big ask for children wanting to take over the family business.
Similarly, those who wish to go sheep and beef farming without a family farm to go to are keen to know their options for how to become part of a farm business.
The RMPP, a Primary Growth Partnership programme between a consortium of agri-businesses and the Ministry for Primary Industries, has identified a gap in the knowledge and capabilities the red meat sector has around pathways in and out of farm business ownership.
The need to articulate and support an industry succession pathway is urgent.
The aim of the project is to provide resources to support farmers, new entrants and their advisers to explore the range of options available to them as they look at entering or exiting farm business ownership.
The need to articulate and support an industry succession pathway is urgent.
It has been estimated that within the next 10 years more than 50% of sheep and beef farms will be changing hands.
We believe one of the first key success factors for this project will be to change the industry’s interpretation of farm ownership.
For years we’ve considered farm ownership as being the goal, however, this suggests total ownership of land.
Today, entry into ownership is more frequently occurring through partnering or leasing a farm business where no land ownership is involved at all.
Ownership can be of stock and/or plant and can include land over time.
Farmers know that potentially none of their children will choose farming as a career option.
That leaves them with a problem of selling land they and their non-farming children might remain emotionally attached to or hanging on in the hope one of their children might change their mind and return to the family farm.
From past experience I have also found many farmers find it easier to keep their farm assets rather than sell up and invest in areas that are less familiar to them.
Although various options and models exist, they are sometimes not well understood and there is a lack of supporting resources to make it a straightforward process for those wanting to enter or exit farming.
For example, through an appropriate business structure they could exit day-to-day farming activities while receiving a reliable income and protecting their land asset and at the same time give another person a foot in the door to some form of farm business ownership.
To identify the resources needed to help support farmers in and out of farm ownership RMPP did four months of research; talking to farmers, advisers, young people involved in the farming industry and other rural professionals.
After talking to young people we found there was a real lack of available resources around the steps they could take to get them into a farm business.
Likewise, farm owners found it difficult to describe the steps they were going to take to expand their businesses or move away from day-to-day management of the farm.
There was also a lack of resources to help with business and financial literacy for both groups, which was of real concern and is seen as a severely limiting factor for progression.
RMPP is looking at ways to address that concern.
That does not diminish the importance of the role of rural professionals, particularly bankers, accountants and consultants.
They can help facilitate and broker both the relationships and the business ownership models that work best for the individuals involved.
Through the Pathways in Farm Business Ownership project, RMPP will look to develop resources and support networks to build the confidence and capability of people and increase the number of new entrants moving into farm business ownership.
Recently 80 farmers and rural professionals attended a workshop in Dannevirke facilitated by one of our partners, Rabobank, to discuss farm ownership options.
The day focused on highlighting a range of options available to both farm owners and those looking to get into farm business ownership.
Common questions were around decisions about equity required, the costs of setting up partnerships and the division of financial responsibilities in an equity partnership.
Over the next six months more workshops are likely to be run and the resources RMPP is creating will start being piloted, which will help provide answers to some of these questions and offer options for those undertaking farm succession.
