Farm Table says:
What is the problem?
The proportion of farms being transferred to a success is declining, however published research on succession planning still remains limited.
This 24-page report was developed by Chapman Eastway and Charles Sturt University and is intended to examine the current and changing dynamics of succession planning in Australian farming families and the potential impact these changes will have on regional communities and the broader economy.
What did the research involve?
The information in the report is drawn from from the Farm Succession Survey, which is a research collaboration between Chapman Eastway and Adam Steen of Charles Sturt University.
Questions for the survey were developed during 50 interviews with Australian farmers and then the survey was emailed to 3,000 farming families. 300 responses were received.
What were the key findings?
The study found that:
- many succession plans fall apart because of the limited understanding of legal and tax implications of transferring land, income and assets
- significant deviance in ownership preference between generations (younger people prefer more collective models of ownership and older generations prefer sole-proprietor models)
- younger generations prefer open communication and collective-decision making
- succession planning is still influenced by a deep-seated, patriarchal ideology
- young successors are returning to family farm at later age (averaging 27 years) after taking a ‘professional detour’
- young farmers are increased required, and willing to, seek professional advice
- many farmers find the options available to fund retirement are limited if they leave planning too late usually because of an under-estimation of the ease of which sufficient funds can be accessed, given tax implications of withdrawing farm income.
- over half of respondents state they do not expect the distribution of assets to be equal, but fair.
- primary factor affecting the decision to sell or return to a family farm is financial viability.
The tagline to the report states “Succession, when done well – is not about power, it’s about empowerment”. The major issues identified in this study are those associated with a lack of financial and family planning, inter-generational change in preferences for succession and business organisation and widespread reluctance to retire.
Advice given in the report is 1) be proactive and start conversations early 2) run your business like a business 3) write it down 4) assemble a strong team of advisors 5) adopt a mentality of stewardship
The report also provides a number of policy recommendations.