Striking A Balance Between Rising Farm Asset Values And Compensating Family Members Not Working In The Business
• Treat the farm as a business
• Plan for change and handover
• Communication is the key to success
Most family farms are complex beasts as each generation lays down decisions and operations over time, creating historical baggage along the way. From our experience, successful families manage this complexity by treating the farm as a business with planning a critical part of its operation.
Families often consider the operation but don’t think about the tension between siblings who work on the farm and those who don’t and their views around rising farm asset values. We’ve seen it often, and if it is not dealt with early on, it can blow up into a family feud.
The way around it is to plan. More often, the successful families treat the farm as a business and include transition planning as part of the operation like they would sowing. The process around planning has changed. Less often are things assumed, and more often, all generations get together to decide what will happen to the farm when the older generation step away from the day-to-day running of it.
So what does a successful transition look like when balancing rising farm asset values and siblings not working on the farm? A robustly discussed and communicated succession plan that has this tension built-in.
The plan should also be a live document that considers what the farm can and cannot do from a business perspective. This approach means you plan for change to reflect the challenges life throws up. The result is a succession plan that clearly outlines who gets and does what on the farm as each generation hands over the operation.
While there is potential for tension, you should view the transition or succession plan as an opportunity to talk and plan for a future that sees the farm stay in the family for generations to come.
If you’d like more information on succession planning, please contact your local Sprout Agribusiness representative.