In farming as in sport, retirement is all about getting out while you are ahead

'A good farmer has an obligation to himself, his family and the farm business to recognise the right time for a change of the guard'
'A good farmer has an obligation to himself, his family and the farm business to recognise the right time for a change of the guard'
Mike Brady

Mike Brady

Most farmers freely discuss every aspect of their farm businesses with a sense of pride and achievement. It is common to hear stories along the lines of: "My grandfather bought this holding in the 1930s, he then transferred it to my father and now I'm proudly carrying on the family tradition - we have grown it to five time its original size and my plans are to grow it further." Succession almost happened naturally in the old days.

Farmers lived shorter lives and many were prematurely broken from hard work, forcing them to retire, often in their early 60s. They burned out as opposed to rusting out.

Today, just like the rest of the population, farmers are living longer, farm businesses are getting larger and the expectations for living after pension age have greatly increased. Add into the mix the increased rate of divorce and the expense of providing a start for the non-farming children, it is easy to see why many farmers avoid the topic of retirement.

For the farmer who absolutely loves his or her job, the most difficult decision he/she will ever make is the decision to retire from farming.

We have all experienced farmers who continue to farm way past their time. These farmers discourage successors and stunt the development of the holding.

A good farmer has an obligation to himself, his family and the farm business to recognise the right time for a change of the guard by implementing a good retirement and succession plan.

We sometimes witness top sports stars getting out at the top of their sport after a glittering career which is the perfect retirement plan.

Many farmers have no such plan and, worse again, there is no team manager to relegate them to the subs bench if they decide to 'play on' so to speak.

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So, how do you retire gracefully and effectively from the family farm business?

There are two very distinct types of retirement plan - those with and those without a successor.

Retiring with a successor

For the family farm business with a designated successor, there are three milestones which may trigger the transfer of the business:

  • the successor reaches 35 years of age to avail of young farmer stamp duty exemption
  • the marriage of the successor, or
  • death of the parents.

These milestones have served the industry well in the past, but in modern farm businesses, farmer owner/managers have to stand up and recognise the right time to retire from their business rather than being forced to do so by traditional timelines.

The following is a commonsense four-step approach to farm transfers.

Parents must ensure they have enough annual income to keep them in the lifestyle to which they have become accustomed - they should retain some assets for health costs, family members needing financial help or future nursing home care costs.

Parents should protect the family farm business they spent their working lives building by ensuring the succession plan does not hinder its future development.

Parents must consider all their children/beneficiaries and reward them in an appropriate manner. The smaller farm businesses will still benefit from the traditional practice of transferring the entire farm business to the sole successor and fund education, weddings and sites for the other children. However, this practice is inequitable and outdated for successful larger farm businesses which generate large profits and have plenty of assets for distribution.

All transfer transactions should be carried out in a tax-efficient manner. It is advisable to engage the services of an experienced tax consultant to advise on future trading structures and capital taxes in the succession plan.

Retiring without a successor

Farmers running a successful farm business with no successors often have more difficult decisions to make about the future of the family farm business.

The following is a list of options for such farmers to consider before retiring:

  • Employing labour - continue the present farm business, but employ full-time labour
  • Partnerships - enter a partnership with another farmer
  • Lease - exit farming and lease out the farm on a long-term lease
  • Selling up and exit farming
  • Forestry - plant the farm with trees
  • Hobby farming - exit the main enterprise and farm on a reduced scale.

The same approach outlined for farmers with successors is applicable to those without successors; they just have a broader range of options to consider.

It is a shame to see a good farm business stagnate and deteriorate due to indecision on its future.

Of course, farmers without successors have the right to run their business down, but one has to question, is it the right decision for all?

Whether you are considering retirement or not, it is important you engage an experienced consultant/advisor to talk through and critically assess all your options.

Do not keep going and hope for the best - you will just run the business you spent your life building back into the ground.

Make an informed decision and exit on your terms, just like the successful sports stars.

Mike Brady is managing director at Brady Group agricultural consultants & land agents, email:

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