Before farming came about humans had less permanent connections to land. Multi-generational farming has been a core driver in the development of civilisation. Creating a legacy, to hand on to succeeding generations, is often the primary rationale for all the hard work, sacrifices and reinvestments that develop a great farming business. Improving a property throughout a career is rational when a farmer knows that their children will enjoy all the improvements they make too.
When a family, their home, their wealth and business are as closely connected as they tend to be in a farming operation, emotion is likely to play a big part in any handover from one generation to the next. Finding ways to use that emotion positively, rather than let it potentially split the family, is a priority.
Succession can be a highly emotional experience for all family members, particularly the parents who are moving on from a pursuit that has defined their identity for decades. Rural accountants and lawyers report even the most stoic farming types breaking down in tears when they begin to address these personal issues. This is hardly surprising as they are laying bare their whole career in front of the people that matter most in the world to them.
When your objective is to build a family legacy, succession planning is more than an administrative process, it is the motivation for the hard work you do every day. Farmers, with the ambition to pass the farm on, look constantly to the future and plan how to create an asset that will give the best possible prospects to their descendants.
Considerable capital is usually tied up in a farming business. This has often been built up through slow appreciation over generations, as a direct result of previous generations of succession, rather than through retained profits. It is very difficult to take that accumulated equity out of a farming business without compromising its viability.
For the children, particularly those who have moved away and are not involved in the farm, the family property is often still a place they consider ‘home’. It is where they grew up, where they established precious memories and it remains part of their identity. They would often prefer the farm stay in their family even if they won’t personally inherit it. These attachments to the land place some expectations on the succeeding child to make a success of running the property for the family, to retain the land through farming’s cycles, to allow siblings and parents some level of continued access and, ultimately, to pass it on to the next generation.
Not all siblings will be equally passionate about keeping the farm in the family. Some may be more interested in what the equity in the asset could do for them if sold, especially if it represents significant wealth. Children’s partners and spouses might also bring in different perspectives on the way family equity should be shared. Their views and ambitions may create tension.
Parents have the highest stakes in all of this and can be pulled in many directions. They have spent their productive lives keeping and building the farm. They now have to front up to those they love on how they plan to share that asset.
The first thing parents must do is step back and dispassionately evaluate whether the child currently nominated to take over the farm is actually capable of running the business successfully. Their own future security may depend on the ongoing operational success of the farm.
Meanwhile, their role as business leader and steward of the family land are being dis-established after decades at the helm.
All of these factors create colossal, and complex, emotional dynamics. Great care is required to properly negotiate them all.
What is required to enable all members of the family to work through these emotions is strong leadership by the parents, clear communication with all participants throughout the process, acceptance by all parties that farm succession is a unique process that will require many concessions and as much objectivity as possible.