In the process of drawing up a succession plan, the farm business operator may benefit from the help of trained experts who have experience in the farm management, legal, financial, tax and commercial lending sectors.
Farmers should not assume there will be someone standing in the wings ready to take over when they decide to hand over the business, says Praveen Dwarika of Afgri’s Lemang Agricultural Services. Transition is a process, he explains, and the incoming generation needs training, practical experience, technical knowledge and often formal training before they can step into the leadership position.
“We tend to think, because it’s a family operation, things will happen smoothly – but most of the time this is not the case,” says Dwarika. “There is also the possibility of unexpected death or disability, and the interests of other stakeholders in the business, so attend to the paperwork.”
Managing succession well is partly an exercise in good administration. Getting the relevant paperwork in order is a good place to start. The will, estate plans, balance sheets, trust documents, insurance policies and asset lists are all important documents that should be easily accessible to key members of the farming operation.
Ideally the new-generation farmer or the heir should be part of discussions around succession and estate planning. Transparency and clear communication are hallmarks of stable family and business relationships. As the succession plan evolves it can be changed and strengthened and the estate structured to minimise taxes and conflict and to provide for costs.
Retiring farmers tends to put off making difficult decisions about transition but experts agree that enlisting the aid of good agricultural management consultants and starting the process early can take the sting out of handing over when the time comes to make an exit. The challenges of transition are common to farmers everywhere but customised plans and common goals provide solutions and keep farming businesses intact for future generations.
For more information, visit www.afgri.co.za/lemang-agricultural-services/