The Our Farm, Our Plan program identified the need for a succession planning session. Many farmers have goals on succession but are unclear how to start the process and progress. The most recent workforce survey revealed less than 14 per cent of farms in the WestVic Dairy region have an agreed plan written down for the transition of the farm.
Facilitator Colin Wright, a Principal and Agri team leader with Phillipsons Accounting, said that succession planning was a critical part of farm business management.
“Succession planning is very complicated, it’s all about securing and safeguarding a future for yourself, the business, and the next generation. It’s also highly emotional and it can be very challenging to know where to begin,” said Colin.
“What’s important to keep in mind is everyone’s journey is different, what works for one family may not work for another.”
“And whatever you do, start early. Succession planning takes time. There are many people involved, and many rules and regulations to consider.”
Colin said the first place to start is to understand what you own.
“It’s important that you understand not only what you own, but how you own it. And not just the farm, but shares, superannuation, life insurance, things like that. Once you know what you’ve got, you can put values to it and can create a realistic succession plan.”
Once you decide what you where you want to go, it all comes down to communication.
“You must be able to articulate your thinking, so everyone knows how you’ve done it and why you’ve done it. If you say nothing, no one understands why, and this is where problems occur.
“You must also make sure you document everything very clearly.”
Colin also explained it’s critical to have experts involved from the start. Get your legal advisor, banker and accountant to be a part of the succession meetings because there are so many elements to understand.
One element is different business structures that farms can operate under and the benefits and drawbacks of each one – from sole traders to partnerships, companies and trusts. There are also tax implications that need to be considered, including livestock, capital gains tax, stamp duty, structures, GST, gifting and superannuation.
The day concluded with panel discussion with a dairy farming family, the Campbells. Alan – along with his wife, Catherine – moved from New Zealand to Western Victoria in early 2000 and converted a sheep and cropping farm to a dairy farm.
There has been a lot of work, and a lot of ups and down to get the business to the point it is now, and it was important to Alan to be organised for the future.
“We anticipated we would milk 600 cows there, and we are now milking between 1,200 and 1,500,” Alan said.
“My wife and I wanted to make sure we pass on our business and our farm in a well-documented way to look after our future and our children.”
Alan and Catherine have three children. Their son Adam is the farm manager and has been back on farm for seven years, and two daughters. One daughter, Sarah, provides the farm with business support in addition to her project management role in the telecommunications industry.
The Campbells are currently in the middle of succession planning using a facilitator. Alan and Sarah shared how they are progressing – and reinforced that that is both a highly complex and highly emotional subject.
“You do feel quite overwhelmed and daunted in the initial phases,” said Sarah.
“I did some research and found that Dairy Australia was offering a HR course. One of the things I took from the course is just how important succession planning was and to always include everyone in the discussion so that everything is open and transparent.”
“Everyone has fears and it’s good to communicate those fears. We wrote our fears down and discussed them and this helped a lot.”
Sarah shared that her and her siblings had similar concerns.
“We discovered that taking the baton of the legacy is we get most overwhelmed by. Our Mum and Dad have grown a business from nothing into something we’re all really proud of.”
Alan agreed it was a huge task, and that having a facilitator and their accountant be a part of the discussions was enormously helpful.
“It’s a maze in terms of taking into account people emotions. It’s an evolutionary process that’s convoluted and takes a lot of time. We are still considering what business structure the farm should take and how it may evolve,” said Alan.
“We hope we are able to put the right structures in the right place to manage change to set things up for success.
“There are so many things to consider. Trying to get all the technical side of things and the emotional side of things together is hard work. But you’re dairy farmers, so you’re used to hard work!”
