Ever wonder why your business is making a profit but never has any cash? It’s a question we as accountants...
One of the main reasons for this potential change is that the value and size of farms is increasing. This makes it difficult for family members to purchase the farm and have a sustainable business going forward.
If you want to keep your farming business in the family, then you need to have a plan in place to make this happen.
To succeed, succession planning for farmers is now more crucial than ever. This involves setting things up for future generations so that everyone is happy and it’s fair for all family members. However, fair does not mean equal. The contribution of the people working on the farm needs to be taken into account when determining what is fair.
Too often the issue of succession planning is put in the “too hard basket” and steps are not put in place for family members working on the farm to succeed into farm ownership. The farm is sold, and this causes tension and conflict between family members. Promises made by parents have no meaning unless they are documented correctly, which requires the help of professionals including lawyers and accountants.
If you wish to keep your farming business in the family for future generations, start planning. Doing nothing isn’t an option and is likely to ultimately cause conflict and disharmony between family members.
What is the legacy that you wish to leave for your family? Decide this and put the steps in place to make it happen.
Staples Rodway Associate Leigh Buchanan and her husband George own an 84ha farm near Inglewood in Taranaki and milk 265 Friesian cross cows. Their son Rob has come home on the farm this year and is nearing the end of his first season contract milking.
George and Leigh have two children, Rob and Sarah. Rob has a Bachelor of Commerce majoring in Agriculture from Lincoln University. He also worked for PGG Wrightson as a Technical Field Rep based in Darfield for 5 years. In this role he worked with dairy, drystock, cropping and seed farmers. He has seen a broad range of farming and is applying some of this knowledge in his role on the family farm. Sarah is a pharmacist, who works in Stratford.
Discussions have been held with all the family regarding keeping the farming business in the family and steps have been put in place to achieve this end result. All members of the family have been included in the family succession plan. This means that everyone is on the same page and there and there are no surprises for the non farming members of the family.