Succession Planning in Australian Farming

John Hicks, Richard Sappey, Parikshit Basu, Deidre Keogh, Rakesh Gupta - University of Wollongong, Charles Sturt University - Australasian Accounting, Business and Finance Journal

Type: Research Paper
Knowledge level: Advanced

Farm Table says:

A nice summary of a wealth of research papers on the issues confronting succession planning in Australia and the risk factors for the continuing productivity of the sector in the next generation of farming.

What is the problem?

This paper states that there are a “declining number of farmers with the expertise to produce food at adequate levels for the Australian population”. It posits that opposed to an increase in farm amalgamation or corporate farming, the transfer of expertise from one generation to the next is likely to come from a continuation of family farming.

The purpose of this paper is therefore to understand the principal dimensions of succession planning in Australian agriculture. The researchers ask the question:

What are the levels and forms of succession arrangements in Australian farming and how to do these arrangements prepare Australian farms with the necessary expertise to grow food output at sustainable levels over the next twenty years?

What did the research involve?

The paper involves an analysis of existing literature. They focus on the context of family farms and a critical analysis of succession planning issues in Australia.

What are the key findings?

The researchers’ state there are three key issues during succession planning:

  • Ownership
  • Income
  • Operations

They break up their research analysis into the following sub-topics

  • Retirement plan
  • Identification of a successor
  • Transfer of control

The raw data discussed “calls into question the number of farms that can be handed down to family members and remain viable operations”.

They note that the main forms of pre-retirement ownership transfer include:

  • the employment of the owner’s children on farms (i.e. through wage payment).
  • the establishment of a trust.
  • the establishment of the farm as a company (some recent literature suggests a separation of the land from the business).
  • purchase of the farm by the children.
  • transfer of the farm to the children.

They find that the literature to date paints the following picture:

Slow decline of family farming in Australia and the important consequential effect of a problem with the transition in established livestock and broadacre agriculture from one generation to another

Final comment

The authors state that traditional attitudes to succession may have to change in order to make the transition between generations less costly, more efficient and less conflictual.

2012 - Australia - John Hicks, Richard Sappey, Parikshit Basu, Deidre Keogh, Rakesh Gupta - University of Wollongong, Charles Sturt University - Australasian Accounting, Business and Finance Journal
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