Succession questions cut to the core BY: TIM FULTON
F
arm succession can feel like an admission of mortality so it’s no wonder so many farmers delay big decisions until it’s too late. If farms were any other asset, a property owner might delegate the job to an agent. If it was a bundle of shares, cash might move with barely a blink. But farms are bound up in flesh and blood, so farming is different. Farm succession is often described as a planning process, but less often as a ‘people process’. Lincoln University researcher Peter Nuthall puts it plainly in a 2016 paper, citing “reluctance to accept ageing” as one of the stumbling blocks for family-owned farms.
4
Nuthall and his Lincoln colleague Kevin Old found that despite the growth of modern agriculture and farm size, family ownership, as has been shown in many studies, continues to dominate. In a 2014 survey they found that in New Zealand, all but 9% of farms’ assets were either held personally and/or in conjunction with a spouse, possibly through partnerships or private companies. They also found that farmers over 65 years had only started transferring assets 10.4 years earlier. For farmers between 56 and 65 years, the asset transfer only started 5.9 years ago. Like other observers, Nuthall and Old concluded that farmers move slowly on farm succession because they associate it with
retirement, a loss of influence and, ultimately, their own mortality. Nuthall says some of the tension arises “where a farmer holds up progress to avoid loss of control. Sometimes “death dramatically solves this problem”, but just as often a farmer and family members simply “exhibit denial over the whole issue”. One of the most serious problems arises when one part believes there is an implicit understanding of what needs to happen. Unfortunately, sometimes the process is manipulated, Nuthall says. “Sometimes denial allows escape from uncomfortable situations. Another ploy is to segment the overall situation and move ahead in some areas but not others, thus maintaining control in key areas.” Nuthall says the priorities for succession should be efficient and fair distribution of assets to the next generation, smooth management transfer, looking after family relationships and providing for retirement. Hayden Peter studied farm succession for a Kellogg Rural Leadership project: Conversations should start early and be maintained; particularly as young people’s
www.nzfarmlife.co.nz
