Farm Ireland

Monday 19 November 2018

Five reasons why 50pc of Irish farms still don't have a designated sucessor

Mike Brady
Mike Brady
Mike Brady

Mike Brady

Studies have shown that farmers who have a designated successor for their farm business are considerably more motivated to drive on their businesses than those who do not.

When the topic of 'no successors' is discussed, many think of farm families who have no children, but the real 'no successor' story concerns farmers with children who are not interested in farming or taking over the farm business.

A recent survey stated that 50pc of farmers have no successors. I often wonder about such results, as these surveys pose the succession questions to farmers and not the successors.

The farmer might have a successor in mind, but that child/successor may have a different plan altogether. Therefore, there may be many more farm businesses without successors.

Most adult children are interested in getting ownership of the land but many have no interest in a career in farming. This situation has prompted me to consider why many farm businesses have no successors and look at the options open to farmers.

Here are the five main reasons why 50pc of Irish farms have no designated successor:

1 Farm Size / Viability

The average Irish farm is approximately 40ha and the average income in 2011-2016 was €25,362. Clearly this is not an attractive career for today's millennials, who are attracted by the bright lights of the city and the salaries/ modern working conditions in the Googles and Apples of this world.

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However, larger, developed farm businesses will provide the income and standard of living expected in today's world.

2 Discouraged by parents

Children from farm families are very well represented at our universities and ITs. We all remember our parents encouraging us to get a good education as there is no living out of farming. Today it important that parents know the possibilities for the farm business and educate or encourage their children appropriately.

3 Generation gap is too short

Even on viable farms a 25-year-old successor may not relish the thought of working with 55-year-old parents for 15 years until they reach a pension age. This is a new problem caused by people living longer and the funding of more extravagant lifestyles in retirement.

Perhaps parents who want the family farm business to continue should consider exiting the business at an earlier age to give the necessary freedom to successors.

4 Lifestyle

Like it or not, farming is a tough physical job, and many of today's millennials simply choose not to live the lifestyle irrespective of the salary. This is just a fact of life.

5 Career choice

The ease of access to third-level education and the globalisation of the workforce provides a multitude of choice for today's children; they are fully entitled to explore their dreams and ambitions in other careers.

The challenge here is to make farming a more attractive career so at the lease it is considered by our best and brightest.

What are the options for the farmers whose children choose a different career path? For me to advise these farmers, their farm business must first be categorised into a) viable or b) non-viable farm businesses.

Viable farm businesses

If your family have spent generations building a viable farm business and you are now faced with no successor to continue this progress there many options to consider.

The first consideration is to continue the business, and the first step is to replace oneself. A farm manager could be employed to run the farm or one could enter a partnership with a young farmer or another farmer.

This type of arrangement would suit a well-developed, profitable farm business. The farmer can build in whatever involvement he or she chooses - in fact the 'no successor' children with zero interest in physical farm-work may also become involved in the management of the business, physically or remotely.

Imagine a 200-cow dairy farm now run by an ambitious young trained farmer who is in partnership with the retired dairy farmer and his son or daughter who works as a surgeon in New York.

This was not common in the past because the size and viability of Irish farms would not support all parties.

I foresee more of this type of arrangement in the future and who is to say that the surgeon's children mightn't one day return to be full-time farmers on the family farm again.

Non-viable farm businesses

If the family business is not generating enough profit to attract a partner or simply there is no desire to continue the farm business, then the options are simple.

Sell, long-term lease, plant with trees or transfer the farm to the non-farming children.

Many farmers shy away from being proactive and making the big decisions about their land. Instead they hide behind a will, or worse again, do absolutely nothing.

It is vital for farm owners to face up to their responsibilities in respect of succession, given that they were designated to manage the family silver for a generation.

Get the relevant advice, and remember that the non-farming children can also be successful successors of the family farm business.

Mike Brady is a Cork-based agricultural consultant and land agent email:

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