Farm succession the key to success.

Executive Summary

The sheep and beef industry is one of New Zealand’s leading exporting industries. Many sheep and beef farms have remained within the same family for generations due to successful farm succession across multiple generations, as evident every year at the New Zealand Century Farms and Station Awards (NZCFSA).

Succession planning is the development of a strategy that will allow a smooth transition of the business and assets with minimal disruption to the business or, more importantly family relationships. Often family members will have different expectations in respect of future ownership of assets and aspirations in respect of involvement in the business. A poorly planned and executed succession strategy may not only have financial and taxation implications but can also have a major impact on family relationships.

After conducting a literature review and three case studies I have formed three recommendations for successful farm succession of the family farm. They are;

1. 1. Open Communication – Encourage diversity of thinking during farm succession process helps to get a better understanding of all family members vision for the family farm. Who to involve;
      • • Both farming and non farming family members and their spouses.
        • Accountants, bank manager and lawyers.
        • And seek advice from an independent farm succession facilitator.
   2. Document Everything – The gold standard would be to devise a comprehensive business plan and distribute to all family members. Documents to consider include;
      • • Minutes from every meeting.
        • Farm succession strategy.o Businessgoals.
          o Timeframes.
          o Rolesandresponsibilities.
        • Updated Wills. But most importantly….

      3. Start Early – It is never too early to start!! Conversations should start at an early age and be maintained over the years – we all know how young people’s interest and capabilities change over time. Things to avoid;

• Making assumptions, as these can turn into expectations.
• Devising a strategy at short notice, as a poorly planned and poorly executed strategy can have a detrimental effect on family relationships.
• Not giving praise. Everybody likes praise, but farmers are very reluctant to give any sort of praise. Acknowledgement during succession planning can go a long way to building stronger family relationships.

I hope this report stimulates people to start farm succession planning now!! Enjoy your read.

Farm Succession The Key To Success – Hayden Peter