Managing farm succession and retirement : the perspectives of dairy farmers and advisors
Contemporary literature, newspaper articles and seminars have focused on farm succession in recent times and have upheld the general belief that farm succession is a common and desired occurrence. Farmers, from the lower North Island, who had 'retired' from dairy farming in the years 1990-1995 were interviewed in this quantitative study. Farmers defined farm succession more widely than the transfer of a parcel of land from parent to child. Their definition of succession encompassed the transfer of farming skills and family equity from one generation to the next to support continued or new farming activity. Most farmers surveyed desired farm succession to occur but the incidence of farm succession was very low (6%). Contemporary discussion about farm succession concentrates on means of achieving successful succession. This discussion highlights the issues of communication between all parties; advanced planning; fairness and/or equality to all offspring. The qualitative aspect of this study, however, showed that financial flexibility and economic stability are two factors which have greater influence in determining the success of farm succession, and suggests that these two factors determine whether succession will even be considered as an option at retirement. Farmers inadvertently plan for succession by ensuring their farm remains financially viable and ensuring it has the financial flexibility to support the families of both the retiring and succeeding generations during the succession process. Only when a child shows a commitment to a career in farming does planning for succession begin; and then most commonly informal planning processes are used. Interest by a child is more likely to be shown if the farm is economically viable and stable. Hence, the bequest motive and successful succession are interdependent factors. The nature of planning and the role of advisors in farm succession management are studied and the case is argued for greater recognition of farmers' ability to informally plan for succession. The farmers described the role advisors play in their farm succession management decisions as 'sounding boards' and people who formally implement plans. However advisors do not perceive these roles of themselves. Advisors perceive greater involvement at all stages of farmers' planning process.... [Show full abstract]
Keywordsfarm succession; informal planning; formal advice; financial flexibility; financial viability; economic stability; dairy farmers; farm management; economic aspects
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