Focus on succession planning

This week African Farming pays a visit to commercial citrus farmer Lavhengwa Nemaorane. He joined the family business in 2009 and took over the running of the operation nine years later. A smooth transition of leadership from father to son, or daughter, is the best succession outcome. 

Nemaorane, who took over the reins in 2018, a year before his father, Israel, passed away, says he believes he was lucky to take over a healthy business from his parents. 

Nico Groenewald, head of Standard Bank’s agribusiness division, says handing over a farming business from one generation to the next is one of the most important events from a financial risk perspective. 

“The farmer is handing over the management and control of the operation to another person; it’s critical that this is properly planned,” he says. Unresolved conflicts and an unplanned slide of control from one party to another is far from ideal and will probably lead to business instability.

That is why farmers need to do their homework, balance their business goals with their family values and move towards change with informed intention. 

Successor generations should be well trained in the financial, strategic and practical aspects of the business to ensure lasting continuity in a farming business. “When the baton is handed over, the new farmer can demonstrate and explain the business strategy to the external stakeholders,” says Groenewald.

Change can be used as an opportunity to grow the operation, provided the players have the resilience to adapt.

“The banks need to understand what the thinking of the new guy is and whether it is consistent with the thinking of the previous generation,” Groenewald explains. “We must know whether the new operator has the capacity to continue on the path of his, or her, predecessor.” 

To find out more, visit www.standardbank.co.za/southafrica/business/products-and-services/business-solutions/industry/agribusiness

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