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Family business continuance: A global perspective.

Executive Summary

The term ‘succession’ is usually used in the narrowest sense of asset transfer between generations with little attention paid to management succession in the case of a (family) farm business or succession of board members at a board and governance level.

With agriculture contributing approximately 15% of GDP, New Zealand’s aging agricultural population is of concern, not only in terms of food production but in agricultural leadership as well.  The majority of agricultural leaders are derived from a practical-farmer base which has an estimated average of 65 years. These farmers have developed skills through their active involvement in Federated Farmers and other industry organisations.

Traditionally, New Zealand has had a relatively self-replacing dairy industry through sharemilking which allowed new entrants the opportunity to build up a herd of cows and develop crucial business skills before purchasing their first farm. Whilst this has allowed a readymarket of first farm buyers, most dairy farmers still aim to pass the family farm on to family members.

The sheep and beef industry has a more traditional approach to succession, with family members taking over the family farm or the property sold and assets divided equally between the family.

Changes to the entry cost of farming (increase in land value; introduction of Fair Value Shares[1] etc) relative to income has altered the perception of farming as a ‘easy’ option for those who saw themselves as academically-challenged to that of a business with increasing regulations and decreasing profit-margins.

The opportunity to work with Sydney-based accounting firm Grant Thornton Pty to assist in the development and implementation of family farm succession programs coupled with my personal situation of being ‘the farmer in the family’ with four non-farming siblings has impressed upon me  that succession is not the primary domain of lawyers, accountants and/or financial planners.

Family are complex beasts consisting of individuals linked through a common lineage, sometimes with little more in common than the blood that binds them. It is these individuals that form the heart and soul of a family-farm, ensuring it’s ultimate success or failure, yet it is these same people that are forgotten about in a traditional succession planning model, which is developed around tax-effective mechanisms for reallocation of assets when the matriarch and or patriarch are deceased.

Aims

Business Continuance and Succession Planning –the primary aim is to provide a readable document that highlights the issues and provides some commentary and suggestions as to how these might be handled. It is very much intended that the primary beneficiaries of this report are family farmers and their advisers.

To create a heightened awareness and understanding of the gaps that currently exists in our collective knowledge base around the continuation of family farming businesses via transfer of knowledge, skills and experiences from one generation to the next.

On a personal front, I would like to develop pragmatic models and tools for achieving efficient, harmonious and successful transitions between generations of agricultural and farming leaders; family farm businesses and individual family members.

Smooth and timely leadership succession is vitally important to the financial success and longevity of any business whether it be the family farm, corporate farm enterprises, Maori Trust farms or multi-million dollar co-operatives such as Fonterra, Ravensdown Fertiliser Coop, Ballance Fertiliser Co-op etc The Alliance Group Co-op is a particularly good example of a poor process for succession of their Chair as shareholders vented their spleen over the industry politics surrounding this decision.

Continuation of family farm businesses is vital for the continuation of agriculture and food production locally, nationally and globally and for industries to recognise the importance of this for their own survival.

Method

The approach I have taken was to study those who have managed this aspect of the succession process well and who have developed models for success and/or best practise guidelines for family farm businesses.

The countries I visited during my scholarship were:

UK, Belgium (Brussels), France – Contemporary Scholars Conference

Australia, Philippines, Hong Kong, China, US, Canada, Ireland, Northern Ireland – Global Focus Program

Canada, Australia, US, Northern Ireland, England[2], Wales, Scotland, India – Study Specific

The countries chosen specifically for the purposes of my study were based on a desk-top research of those individuals, organisations and conferences/seminars that I deemed to be of relevance. In many instances, as a result of my visit I was referred on to other experts in a form of an intellectual snow-ball waltz.

A semi-structured interview and/or active participation in conferences and seminars were used to gather information.

Family Business Continuance: A Global Perspective – Mandi McLeod

Animal welfare, environmental, & ethical issues affecting the value of NZ’s pastoral products.

Executive Summary

By introducing myself from the outset, I hope to help you understand where I’m coming from … my perspective, my personal bias, my motivation, my interests, i.e. an insight into why I may see the world differently from you.

I am the current owner operator of our intergenerational family beef farm, which I hope will provide a solid base for our family for many generations to come.

In 2006 we were the winners of the inaugural Northland Ballance Farm Environment Award, and from 2007 to 2009 we were the Far North, Meat and Wool NZ monitor farmers.

Our beef farm, like most NZ pastoral businesses, is committed to profitable and repeatable means of producing high quality animal protein products from resident pastures grown in conditions (soils, climates, locations, etc) unsuitable for growing crops for direct human consumption.

NZ pastoral farmers have made great productivity gains since subsidies were abruptly removed 25 years ago, to the point that many now feel they are pushing the boundaries of environmentally sustainable profitability. With a productivity glass ceiling reached, our products need to become more valuable in order to compensate for rising costs, and to enable us to lift production to satisfy the demand of the growing world population.

I sought the travel opportunity which a Nuffield NZ Farming Scholarship offers, to understand better the multitude of factors affecting the value of NZ pastoral products, to see how other farmers are responding to similar challenges, and to bring home ideas which may assist in sustaining greater profitability for NZ pastoral farmers.

It was my privilege to visit England, Wales, Brussels, Brazil, Canada, Mexico, USA, Hong Kong, Korea, China and Australia during 5 consecutive months of travel during 2009.

In an effort to give this report a focus, it primarily regards the rise of animal welfare, environmental and ethical issues on the global stage, and in particular, in our UK lamb and US beef markets. I will digress towards the end of the report and touch on other observations which may impact on the long term viability of farmers like myself.

Having always considered myself an optimist, my Nuffield experience was quite sobering. The cost of food will continue to rise, but I see no end in sight to the rising compliance costs of farming, or to the costs of accessing the global marketplace.

In the year ended 30 September 2009, the pastoral farming sector produced 42% of the FOB value of NZ’s total merchandise exports (data provided in email from Meat & Wool NZ Agricultural Analyst).

Animal welfare, environmental, & ethical issues affecting the value of NZ’s pastoral products. – Alec Jack

Indigenous peoples and how they have adapted to modern farming practices.

Executive Summary

I initially chose my topic as I believed that Maori farming is going through a renaissance and that we as a people are realising the potential of our immense land assets. Looking at New Zealand on a global scale I asked myself the question; how are other Indigenous peoples with bigger land area’s farming their land?

As a farmer and a Maori who has been involved in farming all my life I have a passion for both farming and the farming of Maori land.

As a Maori, educated through the system to tertiary level, with work experience through NZ and overseas and now employed by a Maori Incorporation, I thought I was in a good position to look further into this.

I had to first of all define ‘Indigenous’ to myself. This in itself was an exercise, so I had to break it down further to narrow down my research.

Through my Nuffield travels I was fortunate enough to travel to England, France, Belgium, Scotland, Australia, Philippines, Hong Kong, China, USA, Canada, Ireland, Ecuador, Argentina and Uruguay.

My initial research showed that there was a very noticeable gap between Indigenous peoples who had adapted and were benefiting from using their assets, both land and water, and those that were not. I decided to research the later and find out why.

Indigenous peoples and how they have adapted to modern farming practices – Gregg Pardoe