Protect Your Legacy by Thinking Outside the Box

No matter how much you love your job, you will want to retire one day. The lure of sleeping in, enjoying a daiquiri at the beach on a whim or the ability to pursue one’s hobbies without the interruption of work is too much to resist.

And the same is true for those working in the agriculture business, where the job’s physical demands can force one to slow down sooner rather than later.

Especially since the average age of a Canadian farm operator is 56, and 60% of them are over 55. Estimates vary, but between 40 and 80% of farm assets, or about $245 billion worth, will be changed hands in the next 10-15 years.

So when thinking about retirement plans, one must consider many different things because nobody wants to let decades of hard work rot away or fall into the wrong hands. Selling a farm to a condo developer may not be so appealing if there is that emotional connection to that piece of land.

And most assume that it is easy for a farmer to retire. After all, since the beginning of agriculture, farms have been inherited through a chain of genetic succession, going from parent to child or grandchild.

But what happens if you have no children, or the children you have are totally uninterested in farming?

This has become a growing concern for many as succession planning gets tricky when nobody is willing to follow.

Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) Succession Guide

Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) does have a succession planning guide. It contains the do’s and don’ts, answers on taxation, covers conservation easement of agricultural land use, a checklist and more.

Preliminary steps to creating a succession plan include opening the lines of communication between the generations. And those who know none of their family members are interested can talk to friends, employees, neighbours, and fellow community farmers to get a feel for any interest. There may be interest in the larger community, who would not only be happy to take on the operations but continue with the original farmer’s vision.

When a potential successor is identified, an honest conversation must be held. What are the goals? What is the shared vision? Is there personality conflicts? What can they afford to pay? Will the original farm have any input on the operation, or will they be fully hands-off?

Once those parameters are answered, they can move on to the business side by hiring a lawyer to review the paperwork. The above OMAFRA kit can be greatly beneficial in getting things ironed out.

But what are some of the other options?

Big farming conglomerates are always looking to purchase new land. They scour the countryside, finding operations to add to their portfolio. But they may or may not be interested, depending on your location, production style or crop output. The hard work put in over decades will be calculated into a dollar number by a team of analysts, economists and lawyers, and there will be very little opportunity to have a hand in the process. But at least you will get good payment, and the land will continue as a whole as a farm unless they decide to sell to that aforementioned condo developer a few years down the line.

New farmers are also an option. A growing segment of the younger population is interested in returning to the countryside and building a farm of their own. It is the dream of many Millennials and Zoomers, many of whom with zero connection to agriculture, to create a sustainable, eco-friendly farm. They are propelled by their values and not the bottom line. Though many may be naive, some are fully aware of the hardship of farming life and are ready to take on the challenge. Not only are they passionate about the industry, overflowing with new ideas, and highly educated and tech-savvy, but they are more often than not happy to acquiesce to some of the vision and goals you may have established over the years. The downside, however, is that these new farmers are often inexperienced and unaware of the rigours of working in the agricultural industry. They may be unable to purchase a large farm at the current market price – though there are many available loans for new farmers.

Suppose you want to go down this route. In that case, you may have to consider charging less for the purchase of your farm, divide the property into smaller pieces to then sell the lots either over time or to other young, new farmers or consider an alternative payment scheme.

Rent out the land. The Farm’s at Work organization aims to keep farmlands in production. They encourage those who have unused or underused farmland to rent it out. They act as a matchmaker connecting farm owners to those who want to farm but either have no property or wish to grow. It may not be the ideal solution, but it is a perfect stopgap.

Consider newcomers. One of the Canadian immigration streams is specifically for those who want to come to the country as a farmer. Many of these immigrants are very experienced and would make for the perfect successor.