I recently attend the 22nd International Farm Management Congress in Launceston, Tasmania. These Congresses are held in a different part of the world every two years. The Tasmania Congress attracted over 200 consultants, researchers and farmers from 22 countries.
A highlight for me was a day spent visiting three separate family farming businesses who are working through the transition from one generation to the next. All farms had been traditional dryland sheep properties which had diversified, with large scale irrigation, to lamb finishing and cash cropping enterprises. The intensification of the enterprises was in itself very interesting. Add to this the contribution of a successful family succession (in each case) and we were able to see three families that will continue to grow their businesses at a sustainable pace.
Those attending this field trip included family succession facilitators from England, Canada, the United States and New Zealand. We agreed the key points behind the successful transition of these businesses were:
- The families started the process early, when the parents were in their 50s and the children were in their 20s.
- The children were all provided with a rounded education and spent time working away from the family farm learning skills which they have brought to the business.
- The parents recognised that they needed to buy assets outside the core family farm (both farm and non-farm assets).
- The parents recognised they needed to physically step back from day to day decision making, while all are still physically working on the farm (to some degree), the younger generation are calling the shots in terms of day to day management.
- This has seen new ideas brought to the business, which the children have learnt elsewhere (other farms, university or industry groups). The parents have been used as sounding boards, but their ideas have not always been listened to - which provides for “healthy tension”.
- In each case an independent facilitator was used to work with all family members through the farm and business transition. This enabled all family members views to be fairly heard before the vision, goals and direction for the transition of business was able to be worked through. The business’s accountant, lawyer and key advisor(s) were also involved in this process. The process in each case differed, based on the style and approach of the different facilitators, and the family dynamics.
- Business and ownership structures are best developed once the vision, goals and key players have been identified.
- The non-farming family members are having different levels of involvement. All families were still having family meetings (typically once per year) to ensure everyone was kept informed. Open communication was noted as being the key to a successful transition.
- Structured farm meetings for planning and day to day operations were regularly scheduled and involved staff and advisors as appropriate.
All families agreed that a successful transition takes time, requires open communication, needs give and take, and the focus needs to be on the long game.