By: Susan Anderson
Published: 27/02/2013
What are we trying to do?

Make good plans for the future of farms and agri-businesses across different farming sectors. The differences in cost, asset structure and return across sectors needs to be recognised in this process.

What are we wanting to work with? 

Family or other resources including people capital, and that family’s requirements and wishes. This is about setting goals, planning to achieve these, and moving forward.

Why do this?

Surveys suggest that the average age of the New Zealand farmer is 59 years. There will be two broad categories – those that have set up their plans and those worrying about doing it.

Advantages include:

If the person(s) putting the plans in place are actively involved i.e. aged anywhere up to retirement age then the plan must work around them and what they wish to achieve.  This planning is not necessarily meant to mean the farm owner is on the verge of retirement.  These plans need to take a longer view. Due to the size of the operations being dealt with “time” is often a very important factor in delivery on future plans.

Having any structuring that is necessary put into place and operating properly while the farm owner or controller can phase it in properly and make sure it works.

Ensuring a skill set gets passed to the next generation in a structured way.

Put enough protections around the situation so that the next generation operator is not set up to fail.

It should mean that everyone knows where they stand and they can, as individuals, plan for themselves.

Some people tend to put this work off for reasons like it is too hard or that there is a cost involved. That is an oxymoron, as putting it off will make it harder and costlier.  The later in the day that this is done reduces the flexibility in terms of good outcomes.

Where to start?

First if a plan needs to be formulated, the starting point would be to gather information:

The type of information would include:
  • The situation with you and your family or other participants.
  • The farm or business asset position.
  • The latest annual accounts.
  • Your wish list about what you want to happen.
If you think your situation is difficult, you have been trying to think it out and it doesn’t want to gel, engage a professional experienced in farming, finding solutions, and helping implement them.

When dealing with bigger things like that sort of planning it helps to make it routine. A skilled professional can help do that. That person should also be able to offer a range of possible solutions for you to choose what to do.

You should make it clear, if you need to, that:
  • You want to retain control over the decision making process.
  • That you want as much done as possible to have a safe environment within which to discuss and resolve what to do.
  • You may feel this process is threatening because you are planning and not retiring.  No reason not to make that clear as well.
You may have a plan organised that needs implementing.

If you have a plan in place, organised 5-7+ years ago, that plan should be reviewed. There have been a lot of
changes over the last few years and there is a definite need to give a warrant of fitness to any existing plan and the documents that govern it.

When to do this?

It is never too early to at least have a discussion about this type of planning.

The discussion is worthwhile having, even if it is early and the result is that you plan to make a plan. Work out the timeframe when you would look at this again, or events in life that would necessitate more formal planning.
Land owners and business operators should be well into this process and have it properly on foot.

Who should do this?

The answer to this question will be apparent. The people or group that own or control the farm or business assets should be aware of the responsibility to plan for the future of those assets. It is the ownership group or controlling group that must take steps to make plans. With that ownership or control comes a responsibility to deal reasonably with your family or others concerned. On this point, if you do not provide the direction, family members may be held back from maximising their potential. If they don’t know what they might be doing, it hinders rather than helps.

Farm and agriculture stakeholders, like financiers, are likely to look at the calibre of the planning around the business as an indication of the organisational skills of the owner or controller.

There is nothing to say that the planning has to be highly difficult or complicated. Simple and straightforward is the best if it can be achieved.

How to start?

Assemble some experts. The farm owner or business controller will have the information about the assets and their potential i.e. the farm, forestry, water, stocking rates, production. That person is likely also to be an expert on their family and the desired outcomes.

Look for experienced professionals in the agricultural and farming sector. Those people also need to be experienced in this type of planning. Ideally amongst the ranks of the professionals, you want someone that can take an objective helicopter view and help you deal with the weaknesses, and pull out the strengths of your situation.





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