Sell it, die on it, or give it to the kids. These are the three main succession options for retiring farmers. None of them are perfect.
1. Sell it: you get all the cash, but lose your connection with the soil you’ve spent your life cultivating.
2. Die on it: sounds romantic, but you’ll have completely worn yourself out and the farm won’t be operating at it’s full potential when you do go.
3. Give it to the kids: how does that leave you with any cash to enjoy your retirement? Where do your kids get the money from to reimburse you for the asset? Maybe you’ll be handing your children a big whack of debt at the same time – how kind.
But there are alternatives that put a positive spin on these succession options:
1. Sell it: what if you sold half the farm to a new farming family who were busting to get farming? It frees up cash for you to retire and your farm gets a new lease on life.
2. Die on it: remain the equity owner of the farm and arrange to stay on the farm for as long as you want. While there, offer your wealth of knowledge to the new family; become the chairperson rather than the CEO and help see the farm succeed.
3. Give it to the kids: offer your kids equity in the farm rather than giving the whole thing to them. That will keep them happy – especially if they’re not keen on coming back to run the farm themselves.
These options can be made a reality right now for any retiring farming family. There are farm match-making organisations who spend their waking hours finding opportunities for retiring farmers to sell equity in their farm to new aspiring farmers and investors wanting to get farming.
Cultivate Farms is one such organisation; they are a social enterprise aiming to rejuvenate regional communities by bringing young families back to regional communities. They connect young families with investors and retiring farmers to own and operate a farm together.
The agricultural industry has been crying out for new investment models to transition land between generations. Don’t sit around waiting for someone to find that perfect succession option for you – the ball is in your court. Get out there and find the solution yourself.