10 June 2013 Farm succession and governance – discovering farmers’ practices

Currently little is known about farmer practices in succession and governance, resulting in a knowledge gap that needs filling. With the average farm size growing steadily upwards, it is important that farmers have farm succession and governance systems that suit both their family situation and broader commercial objectives. So what does a farm succession and governance plan look like?  Research about to be undertaken by Lincoln University will attempt to answer that question and more.

“We have little knowledge of farmers’ views, attitudes and practices when it comes to handing the farm on to the next generation. Nor do we know much about how farms are governed. These two areas are linked” says Dr Kevin Old, one of the co-collaborators in the new research project and Senior lecturer in Agricultural Management at Lincoln University

Dr Old along with Dr Peter Nuthall, also of Lincoln University, are sending out 2,500 questionnaires to farmers up and down the country to identify current practice and attitudes around succession and governance. The sample was randomly selected from all regions, farm types and sizes, with the study itself funded by Lincoln University.

Ten years ago there were around 40,000 full-time farmers, but today this figure is more like 35,000. As the land area available for farming has not changed dramatically, the downward trend in farmer numbers suggests that larger farms are being managed by fewer individuals, with primary production increasingly taking on a ‘big business’ look and feel. Family-based multiple ownership is also an increasing trend.  All these factors impinge on the increasing need for good succession planning.

The survey will also explore the family background relative to the objectives held. Drs Old and Nuthall see all these factors as being important when organising suitable succession and governance systems.

The research is complementing other work involving personal interviews. These will explore farmers’ personal views and thoughts about succession and governance through a number of case studies. Personal interviews allow for a more in-depth exploration of the issues, while the current survey will also ask farmers to assess a range of statements for their degree of truth relative to their personal situation. Answering the simple survey requires ticking boxes and providing figures such as family size.

The survey is being posted out to farmers in mid-June. From there, the responses will be analysed so as to ascertain the common practices used by the participants. The systems used by farmers will also be considered next to personal factors such as the farmers’ commercial objectives. The overall goal is to work on providing farmers with helpful information for assessing the efficacy of their current practice regarding succession and governance, with the hope that new ideas will also emerge.

Results of the survey will be widely distributed throughout the farming press. Farmers will also be able to see the results online. Only averages will be published to ensure the data is both anonymous and strictly confidential to the researchers.

Farmers receiving the questionnaire are urged to take the estimated 30 minutes to reply. A stamped return envelope is supplied. The more farmers that reply the more useful the results will be.

In recent times the value of most farms has been increasing dramatically making appropriate succession planning critical. Similarly, with the increasing investment levels it is very important to have in place good governance systems to ensure the investments work to their appropriate capacity.

Stories of farm and family breakups abound. They stem from improper succession and governance planning. Each situation has a ‘best’ arrangement that needs exploring and putting in place. It is never too early to start this process.

A good system for one farm and family situation may not be good for others. The correct setup will differ in each case and be somewhat unique. Questions in the survey are designed to sort out the important factors impacting on uniquely appropriate systems.

A big challenge is setting up equitable systems that all members of a family are relatively happy about. Good communication is very important in coming to agreed arrangements. Sometimes this can be helped by an uninvolved third person with the right skills.

Kevin Old has spent many years studying governance and succession and has considerable practical experience in these areas.  Peter Nuthall has analysed many survey data sets particularly in the areas of managerial ability and farm computer use and benefit. The researchers expect the results to allow significant advances for New Zealand farmers in the areas of study.