The average age of farmers in the developed world is 55 to 60 years old. In many agricultural regions there is concern over the future of family farms. In the United States, one study has predicted that there will be almost no farmers under the age of 35 by the year 2050. As land value continues to rise, there have been impacts on the accessibility for young farmers to enter into the sector. There are a lot of negative stories and concern in this area, but there is also a lot of hope.
However, hope is not a strategy (as both Michael Ehmann and Jean Lonie told us this week at the Nuffield CSC). If we are going to address the issue of succession we need to take concrete action. So what can we do? How can we ensure the viability of our future farms? On March 7 I teamed up with eight other Ag leaders, and fellow Nuffield Scholars, to tackle this question. Here is the strategy we came up with:
Partnership and business options:
There is a common perception that the only way to pass on a farm is as a 'whole' entity, or to divide among siblings/partners after a death or retirement. Often the feeling is that assets should be split evenly between siblings, even if they are not actively engaged in the farm. This can lead to issues with a lack of liquid assets, or emotional distress among the family.
Our group felt that in order to secure the future of our farms we need to look at farms as businesses and explore other options for ownership. Are there ways to allow younger generations or outside partners to buy into the farm in a shareholder agreement, leading to a multi-generational business ownership situation? Or perhaps there needs to be new models of land ownership and farm management, such as those being explored by Colin Hudon (a fellow 2015 Nuffield Canada scholar - @samc_colin). We suggest that farmers look into these options and perhaps even consider business models which are used in other industries. But the bottom line is that farms need to be treated as businesses and their structures formalized in the way most suitable to the individual situation. So how do we do that?
Communication and action:
We believe that the second step is to communicate these options to the farmer and take the time to put things down on paper. There are several professional consultants and organizations which specialize in business or succession planning. Farm families need to have these conversations and put these structures in place. It is OK to ask for help from others and often an outside perspective can be very valuable in determining steps forward for a business and facilitating the opinions of multiple family members.
A final point in securing the future of our farms is to ensure that they are profitable. Putting a formal business structure in place will often be a primary step to do this. When operations and management are viewed with a business lens it is harder to operate at a loss, or make decisions based solely on emotion. Farmers need to commit to investing in their farms as businesses.
The agri-food industry as a whole also needs to be seen as profitable. Without that it will be very difficult to encourage the next generation to want to join the sector (the topic which I will be working on during my Nuffield studies.
Succession is not an easy topic. The connections farmers have to their land and/or livestock is often very deep. Thus it can be hard to think about and have the conversations on what will happen in the future. But if we take the time now to engage in these conversations and build our business strategy we will go a long way towards ensuring a positive future for the agri-food sector.
I was raised as the seventh generation on a mixed livestock farm near Guelph, Ontario. Currently I am living in the beautiful Okanagan region of BC, where my husband works for Blue Mountain Winery. I maintain my close ties to Ontario agriculture through my job with AgScape (Ontario Agri-Food Education Inc.) and hope to bring a national, and global perspective to agricultural issues.