Farm Succession Conference 2002

Control of the chequebook last job to be handed over
By: Professor Andrew Errington

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In a multiple-country study from 1993 to 2000 that included Ontario, Quebec, the state of Iowa, England and France - the result was the same: the last responsibility handed over to the succeeding farm owner by retiring farmers was the chequebook.

Professor of Rural Development at the University of Plymouth in England, Andrew Errington, told delegates that control over paying the bills is seen as the most important job of the business and therefore the one retiring owners are least anxious to give up.

But that spells obvious trouble for new farmers who have little experience in financial decision-making and is therefore, said Errington, a key area where training is needed. "Financial decisions are the last to be transferred so we are seeing new farmers, most of whom are aged 30 to 35, who badly need financial management training."

Other financially related roles are also passed over reluctantly including the negotiation of sales, deciding when to sell crops and stock, the purchasing of equipment and planning capital expenditures of all kinds.

More likely to be shared with would-be owners early on are what Errington called "strategic" and "tactical" decisions such as daily work plans, deciding how jobs should be done and deciding on types and brands of equipment.

The study was an examination of data stemming from different surveys conducted in each geographical area.

Errington said in England, only 25 per cent of farmers discuss succession with the younger generation. He added, "They talk more to their accountants than their own families." The result, he noted, is a high proportion of people in England who are not well prepared to take over the family farm. He referred to this group as "Farmers' boys," victims of farm owners who retain their children as farm labour without sharing any management responsibilities. It's a problem that exists in all of the regions studied and worse yet, said Errington, "the younger generation is not well paid because they are expected to get their reward when the business is passed on."

He suggested that advisors consider working with more than one farm family at a time in a single sitting so the farm families can share their experiences and not feel so isolated. The families ideally should not know each other but be at the same stage of succession.

Errington also noted that in England and elsewhere, a smaller separate farm enterprise on the "home" farm is a good idea, giving the younger generation a chance to learn the business. Then, when the time comes, the younger generation can take over the main business while the retiring farmer has the option of running the smaller enterprise.