The generation game — building a resilient farm business
It’s vital for farmers to have a firm footing in our uncertain and increasingly competitive industry.
A large part of the sector’s future prospects is interlinked with post-Brexit trade arrangements and, whatever deal is struck, it’s likely we’ll see the industry regroup as it adapts to its new environment and a new payment regime, post-2021.
With these issues front of mind, over the last month we hosted four roadshows from Castle Douglas in the south to Thainstone in Aberdeenshire, along with Johnston Carmichael and Galbraith. Each focused on building a resilient farm business that’s capable of succeeding regardless of what’s happening in the economic or political context.
Of course, what was interesting is that despite much talk of — and preparation for — change, the crucial elements that we can control, such as succession planning and farm diversification, remain the same.
The key to a resilient farm business is understanding its potential and, of course, having robust asset growth plans, and equally important protection plans, in place: the more successful a farm and its associated enterprises, the more there will be to pass on to future generations.
Involvement across the generations — drawing on people’s varying perspectives, ideas and expertise — can take farms beyond traditional land management and prove crucial to building a business that will thrive, rather than just survive.
Encouragingly, one of the take home messages from the events was the enthusiasm and optimism of the younger generations of farmers, and how they’re actively looking for new or different opportunities. We only have to look at the educational tours SAYFC runs for evidence, such as the group currently in California looking at large producers from wineries to vegetable farming enterprises all being inspired to bring their learning back to apply in their own businesses.
Capitalising on that drive, NFU Scotland has just launched its share farming hub which, amongst other things, can give retiring farmers a place to link up with the next generation to provide opportunities for entry and exit, respectively. While the share farming hub is being met with enthusiasm, it must be carefully executed so each party fully understands all the legal and fiscal implications such as the way the property will be treated for inheritance tax purposes.
Shoring up the foundations; planning to succeed
Of course, all can be lost without careful planning.
It is often said that the biggest threat to the family business is the family itself, so with that in mind the responsibility of all in the family is to understand how to protect the assets from any hostile claims on the death of any of the family members.
A recent Scottish Government consultation on suggested legal right changes has recommended no change for now, so it’s still important to continue to take great care in succession planning, after all a legal rights claim made by a disinherited or inadequately-provided-for relative can prove ruinous to a business.
Specialists can advise on the best way to structure a rural enterprise, protect the asset base and review funding options to bring about developments: working in a team to deliver growth and sustainability and create a secure succession plan for future generations.
The ultimate end goal of succession should be to inform the business growth plan, with preparation for the exit — and re-entry — of members being considered: avoiding a situation where the business is negatively impacted by inadequate planning and resultant family disputes.
In short, trusted advisors can alleviate increased burdens, such as planning regulations, access to funding, business structure and continuity planning: allowing entrepreneurs to do what they do best and help build a sustainable future for rural businesses in an ever more complex and competitive market.
This article originally appeared in The Courier on 10 December, 2018.