Succession planning vital as older farmers face new challenges

With farmers around the world getting older there is a pressing need to ensure future generations of producers can meet the demands of a growing and increasingly urbanized population. In the first of a series we explore the challenges and necessity of having a succession plan

The average age of farmers in the UK, US and many other developed countries has been increasing for years, to around 60 in many regions1 .

One third of UK farmers are over the typical retirement age of 65, while those under 35 account for just 3%2 . In Japan, 60% of farmers are over 65, while Australian farmers are 17 years older than the average worker3 .

The Food and Agriculture Organisation says data supports the theory that as countries develop, agriculture’s share of GDP declines, and workers migrate to non- agricultural sectors 4 . Some of the largest remaining rural populations are in developing countries of Africa and Asia, but here too there’s a similar trend, with the average age of African farmers4 now up to 60.

Yet, as farmers grow older and people move off the land, the demands on food production are increasing. The world population has doubled since the 1960’s and is forecast to hit 9bn by 2050, when the UN estimates around 70% of people will live in urban areas, up from 55% currently4 .

All countries must support food producers and encourage successive generations into farming to meet this challenge. Agriculture needs to be seen as a progressive industry full of opportunity in order to inspire and attract the skilled labor needed to drive future productivity.

Individual businesses can play their own part by focusing on succession planning. On farms large and small, in developed and developing countries, a proper succession plan can make the difference between farms developing or decaying long-term.

The scale and structure of farm businesses around the world may differ, but many share similar challenges regarding succession:

  •     Lack of suitable successor (no family or unwillingness to enter agriculture)
  •     Reluctance to talk about or plan succession - not seen as important or no time
  •     Farm equity needed for retirement
  •     Hard to access finance - tight credit markets, high land values
  •     Equitable distribution of assets among multiple siblings
  •     Other personal/ family issues (e.g. family tension)

Overcoming these issues is not straightforward, but the first step is to set-aside time to talk honestly about succession. An independent person to facilitate discussions and help formulate a plan can be worthwhile, as will professional tax or legal advice where appropriate.

Plenty of external advice is available, especially in developed countries. The ‘Land for Good’ scheme, for example, provides ‘farm transfer’ support to US farmers in New England5 , while organisations, such as the UK’s AHDB, the Australian Government6, Japanese farming ministry (MAFF) and others, provide various information and support.

Sources: A variety of sources used, including:

1- http://www.un.org/en/ecosoc/integration/pdf/foodandagricultureorganization.pdf

2- https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/741062/AUK-2017-18sep18.pdf

3- https://ifama.org/resources/Documents/v15ia/Johr.pdf

https://www.japantimes.co.jp/life/2018/06/23/food/farming-japan-last-legs/#.W9mU-y-caLc

http://www.abs.gov.au/browse?opendocument&ref=topBar

https://www.abc.net.au/news/rural/2017-07-07/whos-farming-australia-abs-agricultural-census-2015-16/8686750

https://www.farmerhealth.org.au/page/health-centre/farm-succession-planning

http://www.maff.go.jp/e/policies/law_plan/attach/pdf/index-2.pdf

4- http://www.fao.org/3/ca1796en/CA1796EN.pdf

https://www.reuters.com/article/africa-farming-food-idUSL8N1AR4WS

5- http://landforgood.org/programs/farm-legacy/

6- https://www.business.gov.au/planning/business-plans/succession-plan

 

Click here to see part 2.

A proper succession plan
A proper succession plan can make the difference between farms developing or decaying long-term