Farming succession - securing your future
One of the most challenging aspects of any farming business is planning for the future.
For those within a family operation, there is often an obvious succession route. However, increasingly, the younger generation is keen to have its say on the direction of the business and also to have control over assets at an earlier stage than was traditionally the case. These disposals need to be carefully planned with your accountancy, legal and land agency advisers in order to ensure there are no problems in the future.
Where there is no obvious successor, considerably more thought is required as to which options are feasible / desirable. It may be that the solution is to sell the farm altogether. However, this alternative is becoming rarer because of the continuing growth in agricultural property values and tax benefits associated with retaining such assets. With this in mind, alternatives to disposal might include:
- Renting the farm under a Farm Business Tenancy
- Grass letting
- Share farming arrangements
- Contract farming
- Partnership / Joint ventures
Whilst all of these provide viable opportunities, where there is no obvious / suitable succession route, obtaining the input of your professional advisers at an early stage is absolutely vital if you are to pursue the right option for your business.
For tenant farmers, there will be genuine concern (especially where a willing and able successor is in place) about securing continued occupation for the future. Options include investigating whether there is any appetite for the landowner to grant a longer term tenancy or even to consider selling the freehold.
Whilst the prosepct of succession can be daunting for any business, in the world of agriculture it can seem positively terrifying. However, continuously pushing discussions to the bottom of the "to do" list can lead to other problems in the business including: resentment from the next generation about the lack of progress with future planning; sudden changes of circumstance restricting or removing some of the options available and the worst case scenario of the farming business either failing or dying with the current generation.
The key message is to embrace open discussions and seek advice from specialist advisers who can help you make informed decisions about your business.
About the author
Richard is a partner and Head of Burnetts’ Property team.
Published: Thursday 7th August 2014