On August 16, 2018, participants had the opportunity to hear from four presenters about how communities can support the transition of farm businesses during the Agriculture Economic Development and Planning Community of Practice webinar.
Mark Ferguson of the Ontario Ministry of Agriculture, Food and Rural Affairs’ Business Development Branch began the session with a definition of succession planning.
Succession planning as a process that occurs over time during which a family plans for the transfer of knowledge, skills, labour, management, control and ownership of the farm business between the founder (retiring) generation and the successor (next) generation.
He went on to share why some producers are not planning for succession including:
- Business/life cycle stage situation (currently not an issue)
- Busy with immediate business issues/pressures.
- Not sure where/who to turn to for information and advice.
- Overwhelmed by the thought.
Alison Earls from the Economic Development Tourism department in Haldimand County outlined her conducted research. Alison discovered that 76% of surveyed farmers were familiar with the term ‘succession planning’, but fewer individuals were participating in the process. In fact, of those surveyed, 46% did not have a succession plan, and of those who did have a plan, only 21% had it formalized in writing. Her research helped identify key challenges farmers face in succession planning:
- Farmers need more encouragement to take a less formal idea of succession and to convert it into a formal plan with actions.
- Although many farmers’ planned retirement age is 65 years old, about 25% of farmers surveyed indicated that they do not plan to retire, resulting in fewer farmers thinking about succession planning or disregarding it.
- Other barriers to succession planning:
- Farmers find it difficult to connect with appropriate consultants (e.g. accountants, lawyers, and succession planning consultants) to help them through the process
- Cost associated with succession planning; and
- Younger farmers interested in taking over farms may not have all the knowledge or training that is needed to succeed on the farm.
Alison also identified opportunities the Economic Development Officers can offer to help farmers with succession planning:
- Strategically provide information on succession planning to farmers
- Educate young farmers on succession planning
- Provide funding for consultants
- Encourage joint ventures
Bernia Wheaton, Economic Development Officer at Rural Oxford Economic Development Corporation outlined the reality of farm succession planning that many families and farmers face, and offered a solution to address those obstacles while looking to transition their farm to other farmers.
Bernia emphasized that succession planning today is similar to a ‘family feud’ game because the agriculture industry has shifted to a big-business financial reality, especially in the case of farm families who have multiple children. Variables such as estate equalization, tax leakage, and differences in lifestyle also put strain on the succession planning process. Bernia offers a unique financial approach for producers looking to undertake succession planning, which include the opportunity to sit down with consultants to discuss different financial alternatives to the typical approach.
Belinda Wick-Graham, Manager of Economic Development with the Town of Minto concluded the panel by discussing the Town of Minto’s use of two online platforms that connect farmers looking to transition their farms with interested individuals: FarmLink and Successionmatching.com.
Minto is currently working with neighbouring municipalities and the County of Wellington to launch their profile and in doing so, will become the first region to launch a regional profile. This is one approach to help local farmers find individuals who are interested in keeping local farms in business, especially when there is no clear farm successor.
To view the presentations and a recording of the session, click here.
The Agriculture Economic Development and Planning Community of Practice is a joint initiative between the Ontario Federation of Agriculture (OFA) and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). For more information on the Agriculture Economic Development and Planning Community of Practice sessions, as well as for access to previous presentations, click here.