Writing for the Farmers Weekly recently, Lord Donald Curry the cross-bench peer who himself farms near Hexham in Northumberland, expressed the opinion that a failure to successfully pass on the family farm to the younger generation is one of the biggest threats facing UK agriculture. “We need highly efficient technically sound farmers with excellent business skills and the ability to adopt new technology, understand risks and build resilient businesses”.
Too many farmers confuse succession planning with retirement. Succession planning is all about creating a long term plan for the business, understanding what the long term goals are and how you are going to get there. Farmers rarely ever retire (there are too many tax reasons not to!) What they often do is leave it too late to ensure that it is all planned successfully.
In the Spring of this year, the Farmers Weekly conducted a survey with 700 respondents. The average age of the farmer in the survey was 57 years, with nearly a quarter over 65. 60% of the businesses surveyed did not have a written succession plan in place, and 64% believed that the lack of succession planning could threaten their business. As you might expect, it was the successors who were more concerned about the lack of a succession plan than the owners (74% -v- 58%) with the underlying problem being the belief that neither could start the conversation about the issues that needed discussion.
Those that had been through a successful planning process found that as soon as the conversation started it became much easier to identify what needed dealing with.
UK agriculture is one of the most enduring sectors from a business perspective with a much higher proportion of family successions. This lack of communication is clearly the biggest barrier. Deciding and accepting who will own the farm and who is the best person to manage it are two very different issues – it isn’t always the same person and so the sooner the conversation starts the easier it is to get the process underway.
We have regular contact with our clients and therefore are often in the best position to facilitate that process. We are doubly fortunate to have colleagues with qualifications in family business succession planning, and a third party brought into the process is often invaluable in avoiding the perception that there will be a steer from those who believe they know best.
We are used to advising on provisions for wills, estate planning, general partnership agreements and financial services matters for pensions and investment planning and these all need a common objective. The sooner that discussion can start the better, to allow objectives to be identified and encapsulated within supporting guiding documents.
Lovewell Blake is hosting a seminar on 18 November entitled “What’s the plan Dad…?”
at Easton & Otley College in Norwich commencing at 6.30 pm, when we will be identifying some of the issues around succession planning within the agricultural sector. If you wish to attend, please visit our events page
and book your place, we look forward to seeing you there.