Statistics show few South African family farms survive beyond three generations. Yet their greatest threat is not drought, disease or market prices.
Theo Vorster, co-founder and CEO of Galileo Capital Limited, states the real danger often emerges at succession, when the “three Ds” – death, divorce and depression – can unravel a farming business from within.
When time runs out
Death is the most obvious of the three, and the one farmers most often assume they have under control. They do not. As farmers age, physical ability and mental sharpness decline. The consequences of an unexpected death – where succession has not been properly planned – can devastate both the family and the farm simultaneously.
One of the mistakes farmers most often make is failing to plan succession properly, says George Robertson of Galileo Advice, who helps family farming businesses with family constitutions and succession planning. Farmers often hold farming assets, or loan accounts, in their personal names, which can create significant cost implications for the family farming business upon death, including estate duty and capital gains tax.
Proper estate planning is therefore essential to understand the potential financial impact on the family farming business if the farmer dies, and to ensure the next generation is not left to manage both the emotional loss and avoidable financial pressure.
Also read: From Maile’s desk: For your farming legacy to continue, involve the next generation early
When purpose disappears
Divorce is the second force, and it arrives more quietly. When a farmer retires without purpose, the relationship with their spouse often suffers. The spouse was used to a partner who woke up early, worked hard and had a clear sense of purpose. Suddenly, the retiree has the whole day free with nothing to do, and friction develops. The relationship that survived decades of farming abruptly comes under strain.
When relevance fades
Depression is the third factor and, in many ways, the most devastating. Active, purpose-driven people who step away without a plan often fall into a depressive state. They wake up and ask: “Who am I? What will I do today?” Nobody asks their opinion any more. Their relevance fades. Vorster has seen once-vibrant people decline within three or four years of stepping away without purpose.
The answer is not to abandon retirement, but to reframe it. Treat retirement as a scaling-down project with responsibilities and things to do. Work on this plan long beforehand. Think about your purpose: what do you want to do with your remaining 10 or 15 years? Retirement should not be a one-time event – walking out on 31 December at age 65 and closing the door. It must be a process, planned over time, involving the spouse and children.
Also read: Succession: 10 pillars that secure the future of a family farm
Why farms don’t survive three generations
The three-generation problem is not unique to South Africa. Statistics worldwide show most family businesses fail to reach a third generation. German statesman Otto von Bismarck observed 150 years ago that the first generation works extremely hard, the second maintains the assets and the third is what he called “studied children” – they do not understand the sweat and sacrifice behind the business.
There is also a simple mathematical reality: a couple with three children, whose children marry and have their own children – the numbers multiply rapidly. The farm cannot be subdivided indefinitely. Difficult, rational decisions must be made. Later generations may simply not want to farm. A grandchild might dream of becoming a medical specialist, not a farmer. Loyalty to the farm is not guaranteed. A family farming business is just another family business – it must be managed correctly to survive.
The golden goose
The farm is the goose that lays the golden eggs. Family members sometimes develop the arrogance of “this is my right”. Born with the surname, the eldest child or favoured one forgets the farm came first and the golden goose has to be fed and protected.
Family members sometimes put their own lifestyle ahead of the farm, wanting more material possessions while the farm must foot the bill. Before making any decision, these questions must be asked: “Is this in the best interests of the business? Can the business afford it? Will it benefit the business?” Only after that can family interests come into play.
Also read: From our editor: Rethinking farm succession beyond bloodlines
Why the older generation won’t let go
The four reasons the older generation resists handing over are deeply human.
- Financial security is first. What will happen to their income, where will they live, who will care for them? The person who built up the assets for 20 to 40 years deserves security and dignity. You cannot expect someone to walk away without certainty about their future financial wellbeing.
- Pride and identity come second. The farmer established their farm, built up a brand and toiled through the nights. Handing over feels like losing who they are. The challenge is preserving the pride, integrity and dignity of the person stepping back.
- Relevance is third. “What will I do when I wake up? Nobody calls me, nobody asks my opinion. My sons make the decisions, the bank manager calls them.” The loss of relevance is devastating. Farming wasn’t just a job, it was an identity. That identity doesn’t disappear on the day of handover.
- The fourth reason – “the children aren’t ready” – is in 90% of cases an excuse. If the older generation never transferred responsibility, never taught lessons through consequence and never allowed the next generation to make decisions and live with the results, the fault is partly theirs.
The stewardship mindset
A different way of thinking about the farm changes the succession conversation completely. The principle is this: You do not own the farm – you borrow it from your children and grandchildren. Your duty as steward is to look after the assets to the best of your ability and to hand them over in better condition than you received them.
You are a link in a chain. Someone came before you and someone must come after you. Truly successful multigenerational farming businesses start with this mindset.
Also read: Veteran farmer Jerry Sefoloshe handing baton to next generations
The first practical step
When asked what the first practical step is for farmers facing this transition, Vorster is clear: communicate. Start with yourself, your spouse and your children. Begin with the soft, human things – dreams, fears, wishes, plans. Don’t rush to the hard, difficult topics.
People tend to form ideas and make assumptions when there is no communication. Wrong inferences get made. Create a safe space for everyone to talk.
Robertson further comments that in the family farming businesses he consults with, a lack of communication between family members is a recurring challenge.
Families often assume everyone understands the plan, the expectations and the future direction of the business, but those assumptions can create misunderstanding, resentment and conflict when they are not discussed openly.
Like a marriage or a business partnership, a family business relationship must be worked on regularly.
And a farming business is no exception. Regular, honest and structured communication gives family members the opportunity to raise concerns, clarify roles, manage expectations and build the trust needed for succession planning to succeed.
Only when things have been properly talked through should you bring in an objective, rational third party – an advisor, a lawyer, an accountant – to work through the structure. By then, the harder emotional work will have been done.
The three Ds will not wait. But neither will the opportunity to plan for them. The farmer who starts the conversation today is already further ahead than the one who waits for the crisis to arrive.
Also read:
10 Proven Financial Strategies: How David Mthombeni built his 2 162-hectare farming empire in Mpumalanga
Second-generation farmer reveals 5 financial rules that saved his 950-hectare operation
Business advice from livestock farmer Thabo Dithakgwe
