From the Editor: Make succession planning a priority
Too many producers lack a formal plan to pass on the family farm.
Happy New Year! As you’ll read in the pages ahead, we’re ringing in 2019 with an eye towards the future. This issue is focused on the research and innovations that will help shape the industry in the coming years.
As part of that effort, we’ve developed our first Canada-wide research round up (see page 12) – something we plan on turning into an annual tradition. From precision feeding to sustainability, we’ve painted a broad picture of the Canadian research landscape.
Speaking of the future, I recently read some alarming figures. According to Statistics Canada, 92 per cent of farms lack a formal succession plan. At the same time, the average age of Canadian producers has hit 55 after steadily rising for decades. Moreover, there are now more farmers over the age of 70 than under 35.
Experts say this clearly shows more producers need to add ‘Get the ball rolling on succession planning’ to their list of New Year’s resolutions. Shea Ferster, a Saskatoon, Sask.-based business advisor with consulting firm MNP, has worked with numerous family farms, including poultry farming operations, on succession planning.
While families have many reasons to put off succession planning, Ferster feels the most common issue is that many simply don’t know where to start. “There are a lot of feelings involved,” Ferster says. “You don’t want to ruin Christmas and say, ‘Ok, here’s what I was thinking.’ “
But the consultant says time is of the essence with succession planning, especially for producers in supply-managed sectors. Why? He says quota adds a layer of complexity to an already complex process. Things get particularly challenging when some children are active on the farm while others aren’t. “How do you give quota to a non-active child?” he says, adding that without a succession plan the situation can get messy fast.
Ferster tells families succession planning is a process, not an event, and that it typically takes five to seven years to figure out.
Part of the reason it takes so long is the challenge of balancing ‘fair versus equal’, fair being a perception while equal being a mathematical equation. For instance, while a transfer of $1 million in farm assets is technically equal to a $1 million cash transfer, it’s unfair to compare the two. That’s because, unlike cash, the farmland requires hard work to generate value. Thus, planning well in advance allows families to balance this concept and avoid misunderstandings.
Ferster’s last piece of advice is to bring in a third party. An outsider can help facilitate the process, getting things underway while managing each party’s expectations so no family member is seen as the bad guy. “I think facilitation is key because you need to gather as much information as you can,” he says. “There are lots of folks out there with different processes.”
One approach Ferseter has found success with lately is conducting one-on-one interviews where he asks each family member the same questions. He finds people are more open about what their expectations are – e.g., active versus non-active children – in this type of setting.
And I have a final piece of advice of my own – be sure to check out our online succession planning portal familyfarmsuccession.ca. A collaboration between Canadian Poultry magazine and other Annex Business Media agricultural publications, the portal is full of expert tips and case studies to help ensure your family farm is successfully passed on.
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