Late in August I attended the 2009 International Succession Conference in Quebec City. Why would I leave the farm when harvest was just beginning? In order to get more tools and ideas to help farm families work through the tough issues of transferring the farm to the next generation. Here’s a cornucopia of gleanings from my experience:
“You are no longer self-sufficient in a complex world,” says ag economist Daniel Mercier Gouin. Gouin emphasized that a good manager will try to control for debt load, will be continually getting more education, and will seek out advisory services. It’s the management that makes the difference on the farm.
DNCE means “do not cover their expenses.” If you are in the 28 per cent of Canadian farms that are DNCE, you need to act to change that scenario.
Translation: Many farm folks have had a disastrous year with markets, poor crops and crushing debt. Don’t suffer alone. Seek out debt servicing options, financial analysis of where you are really at, and don’t be afraid to ask for help. You may want to consider voluntary mediation with the Farm Debt Mediation Service. Call 1-866-452-5556.
“Thirty percent of new farms in France are managed by people who are not from the farm,” says Edouard de Sainte Maresville. France has a very strategic plan to help young people start farming. Older farmers are encouraged to rent houses and buildings to encourage installation of younger farmers. Sellers are listed on the web to create linkages between buyers and sellers. Young farmers can get lots of mentoring using viable plans, and skills training. When a young farmer needs to leave the farm for training, there are relief workers available to do the farm work.
Translation: What are you doing to mentor the next generation of farmers? Will you be positive and thankful for the opportunities you see in agriculture? Will you move off the home place to let the new manager test out his or her skills and have more control? Would you consider a non-family member to be your new business partner?
FCC’s farm transfer workshops are now open to any one wanting to learn how to be a better farm manager. Go to www.fcc.ca/learningor call 1-888-332-3301 to find the entire list of workshops. This is a great opportunity to improve your management skills and have a forum to talk with other farmers. Registration is free.
Translation: Farmers need to be life-long learners. What do you need to learn this winter?
“Many farm families are hoping for continuity of the farm, and this hope of continuity gives their life meaning,” say Caroline Collard and Brigette Pare. These Quebecois women have worked very intensely with many farm families to find the tools of transfer success. The driving force of “keeping the farm intact” is very important to many — but is sometimes unspoken.
Collard and Pare see success in farm transfer involving: — common vision
— new owners identified and
trained — much dialogue
— shared decision making — mutual respect
— founders willing to leave and “let go”
Translation: Communication is the big factor in farm transfer. You need to share passion and a common vision with mutual respect. The non-business family members need to be part of the discussion. Decision-making must be shared.
The average age of producers is increasing and their rate of replacement is declining. Hence, you better figure out fast how you are going to make the transfer of ownership a successful process.
“Don’t forget to think about the time value of money,” says Bill Brown from the University of Saskatchewan. Often the parents don’t know their real family living expenses, and when it comes time to move off the home place, there are little to no savings or investments to support the new lifestyle. Brown stressed that there needs to be revenue planning and diversification of investments. Do you realize that one third of Canadians age 55 to 64 have no RRSP or pension?
Translation: Are you saving now? Realize that the earlier you set up a savings plan, the more time you have for money to work for you. Do you have a financial planner on your advisory team as part of your succession process? This needs to be started decades before the actual transfer is to take place. If you think Mom and Dad are being stubborn about making the transition to a new lifestyle, have you considered that they are afraid they don’t have enough money to move to town or Arizona or change? As a young farmer, have you thought about non-farm investments, tracking your living costs, and using a financial planner? Consider that 50 per cent of retirement income streams should come from non-farm sources.
Celebrate Thanksgiving with a grateful heart. Being a farm family makes you very special entrepreneurs, and only two per cent of the Canadian population.
Communicate in a family business meeting, not around the turkey. Pick a special venue and discuss your learning plan for sharing decision making about the future.
Keep track of family living expenses this fall and winter. Interview financial planners.
Reflect on what gives your life meaning and purpose. Passionate farmers are more profitable. Great managers make the difference.
C’est toute pour maintenant. That’s all for now. I’ll bring more news about my gleanings in future columns. Share your succession stories with me at [email protected]
Elaine Froese helps farm families talk about the tough issues of farm transfer to make actionable plans. She is a mediator, certified coach, and skilled conflict resolution specialist. Call her at 1-866-848-8311 or visit www.elainefroese.com.Elaine is a member of the Canadian Association of Farm Advisors, and the Canadian Association of Professional Speakers. Book her for your next event. Buy her book for Mom and Dad for Christmas.