Planning farm succession as a family

By Dennis Gamble and Stephen Blunden

When conducting farm succession workshops, farmers were observed giving precedence to strategies such as re-structuring their business, minimising tax and protecting the farm in the event of divorce, without having first understood the needs of all the family members farming together.

Subsequent surveys with 154 farmers (eight succession workshops) across South Australia in 2002 and 2003 revealed differences between family members in their concerns, values and communication patterns.

It highlights the need for farm families and advisers to understand and work with these differences. The results are presented in a two part series on this issue: planning farm succession as a family and, in the June issue of Ground Cover, planning succession with advisers.

The older generation’s (farming with a younger generation) major concerns were not knowing how to simultaneously fund their retirement, provide a viable farm for the younger generation, and provide a fair inheritance for non-returning children. They also worried about anything else that threatened the farm asset and their life’s work (such as the impact of divorce in the next generation).

Because of the complexity of these issues, little discussion about succession has been occurring between older and younger generations. Of the older generation, 35 percent had not spoken to their successor and 45 percent had not spoken to their daughter-in-law or son in- law. It is not surprising that 90 percent of the younger generation were concerned about being involved in major succession decisions, or at least wanted to be kept informed about decisions that affected their future.

The surveys and workshops have shown that when a successor is invited into the business, older men became more focused on the farm business in terms of valuing new ideas to grow the business, hard work, team work and profit maximisation.

These are values shared by other family members. Maintaining and enhancing family relationships between all existing and new family members was the highest priority of all the surveyed farm family members. There is a dramatic increase in the complexity in family relationships when a younger generation member is invited into the farm business.

Older women appear to play a crucial role in managing this complex situation when they see a risk to family relationships.

In comparison to older men, a much higher proportion of older women indicated they were more concerned about how to treat all their children fairly, plus the need for all family members to feel emotionally and financially secure throughout a succession planning process.

Gender differences also showed up in the younger farming generation. Younger women (mostly daughters-in-laws) were more concerned about giving children the best possible education, actively supporting children to live lives of their choice, being emotionally and financially secure, and lowering the stress levels of family members who farm together.

It would seem crucial from this that both older and younger women are included in the succession planning process. However, the surveys point to most farm succession discussions only occurring on a one-to-one basis and even excluding some individuals.

Given the highest family priority is to maintain family relationships, it is crucial that family members work together to identify (and listen to) each others’ perspective. As a family, they should negotiate an agreement for farming together around shared values and direction and prioritising needs, which can then be addressed in a succession plan.

For more information: Dennis Gamble & Stephen Blunden, School of Environment & Agriculture, University of Western Sydney, Locked Bag 1797, South Penrith Distribution Centre, NSW 1797