Farm succession and retirement: Some international comparisons

M Lobley, J Baker, I Whitehead - JAFSD Online

Type: Research Paper, PDF
Knowledge level: Advanced

Farm Table says:

"Interesting report of the varying approach to succession across the world - worth a read to give an insight into how others are undertaking this process."

What is the problem?

The increasing age of farmers and the reluctance to transfer management from the owning generation to the successor generation. This research aimed to provide recommendations to enhance the opportunities for successors to succeed in the continuation of the farm family business.

What did the research involve?

  • Reviewing literature relating to the succession of farm businesses.
  • Draws on both published and unpublished data from the FARMTRANSFERS project, a series of international comparative studies replicating an original survey by Errington and Tranter (1991).
  • Exploring attitudes toward retirement and also rates and patterns of succession in several contrasting countries and states in the United States.

What were the key findings?

The significance of barriers to retirement in the industry were confirmed, however these vary geographically as a results of a combination of internally imposed issues and/or externally imposed constraints.

Rates of Succession

  • England has a higher rate of succession selection compared with Canada, Australia, and several U.S. states.
  • The number of daughter or daughter-in-law successors internationally is low.

Delegation of Managerial Responsibilities

  • Results show that financial decisions are most likely to be made by the principal farmer without any help from the successor.

The Succession Ladder

  • France experiences a faster succession process than England, with Canada falling in the middle of the spectrum.

The Succession Process

  • First category of successor is the Farmer’s Boy,  in which the successor has little or no responsibility for decision making and provides mainly manual labor on the farm. This category is common in England.
  • Second category is the Separate Enterprise, where the home farm operation is large enough to support a separate enterprise run by the successor.
  • The third category of successor is the Stand-By Holding, in which the successor is set up on a separate farm in order to develop his or her farming skills.
  • Successors in Canada and the U.S. are more likely to take a professional detour route — a non farmjob right out of school before returning to the farm operation.

Retirement

  • Farmers in Australia, England, Ontario, and Quebec are more likely to experience semi retirement or full retirement from farming.

Final comment

The researchers end with the following three policy considerations:

  1. Measures to assist with increasing the likelihood of succession, that is, the presence of a successor motivated to take over the oftmentioned “reins of the business”
  2. Measures to encourage early identification of, and discussions with, the successor(s), to include the development of plans for “handing over the reins of the business”
  3. Measures designed to reduce the apparent barriers to retirement.

The international prominence of succession as the means of farm transfer should, alone, suggest the need for greater understanding and effort, to ensure that farm businesses have the best chance to remain (or become) strong and competitive, with the complement of assets to face the challenges of the future.

2010 - United States - M Lobley, J Baker, I Whitehead - JAFSD Online
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