A Farmer’s Guide to Leaving a Sustainable Legacy
Wrapping up our career responsibilities is rarely a tidy affair. One day, like it or not, we will be out of the picture. We can be forced out by the unpredictable circumstances of life —or we can strategize, align our ducks and “duck out” on our own terms.
If, like most of us, you’d prefer a controlled farewell to your farming operation, read on…
Enter Bill Loucks. BSc in Agricultural Science, CPA, CA, Chairman, and recent retiree himself. Bill has not only dabbled in multiple industries throughout Southwestern Ontario, but he has mastered the art of skillfully shifting from one savvy endeavor to the next. When seeking a credible authority on keeping career transitions tidy, Bill is your man.
Bill is all too familiar with the juncture faced by so many of Ontario’s soon-to-be retirees and farm families today. So, for farmers seeking insightful advice for retirement planning, here are a few questions and answers to get you pondering your own plan-of-action.
1. Is there a mass generational “changing-of-hands” on the horizon for farmers?
There is 350 billion dollars worth of farmland in Ontario. Half of this land will change hands in the next 10 years. Farm businesses have a greater need for capital than ever before.
2. What is the major obstacle facing modern farmers when it comes to succession and retirement?
With any family business, a major issue is a conflict between equality and fairness. Young farmers need financial help to start farming but parents usually want to treat all of their children as equally as possible.
3. How can I involve my spouse or other family members in the planning process so they are considered in the decisions and prepared for the coming changes?
Children need to be gradually given increasing responsibility. Parents can’t make all of the decisions and expect their children to wait most of their lives and then suddenly take on a role change from unskilled labourer to active partner in the farm business.
4. When is the best time to start succession planning?
The earlier the better. For example, if a child takes an early interest in some aspect of the business such as technology, parents can ask them to research which technology should be acquired. They can then be asked to take the lead on implementing and maintaining the technology. This will make your child feel like they are an important part of the farm business.
5. Should I seek professional services while planning succession and retirement?
As a retired public accountant, it would be strange if I didn’t recommend obtaining professional advice. Having said that, I recommend that families discuss the issues regularly on their own. I was always pleased when clients brought their teenagers to the annual business year-end review meeting so that they could become familiar with the financial realities of the farm operation. By doing this, the next generation was given the opportunity to become familiar with the business before they were expected to decide whether they wanted to take over the family farm.
6. Many farmers are “asset rich” and have lived modestly during their careers to build their wealth. How can they cash out without financial stress, and retire comfortably? Is there a happy-medium where farming is still optional without the ownership risk and responsibilities?
Traditionally if farmers wanted to enjoy some of their wealth during their farming career, they would have to either forego opportunities to grow the operation or sell or mortgage some of their land. Since none of these are considered to be good options, farmers have generally defaulted to the live poor and die rich option.
AGinvest now offers farmers an opportunity to obtain some liquidity to use for other priorities such as helping children purchase houses in the city without reducing the land that they farm or taking on a mortgage as they near retirement.
7. If I’m thinking of liquidating, is now a good time to sell in Southwestern Ontario?
Farmland continues to be an attractive investment. It is always a good time to sell something when there is a strong demand for whatever you are selling.
8. If I’m thinking of keeping the farm in the family, how can I ensure the sustainability of my farming operation for the next generation?
To be sustainable, a farm operation needs to be profitable enough to meet the financial needs of the owners. Providing you have a profitable operation, the next step is to have the next generation develop a plan to ensure the future sustainability of the business. Today’s farmers operate significantly different farms than their parents did so it is reasonable to expect that their children will also operate the farm differently in the future.
9. Looking back, is there anything you would change about the planning process of your own retirement? If so, do you have advice for anyone starting the process now?
I have no regrets regarding my own retirement planning process. After having a successful career, it is gratifying to see the accounting practice that I developed continue to grow and thrive.
From the very beginning, at Baker Tilly, I always focused on developing a strong team with lots of young people. I was proud of the fact that we had more designated accountants under the age of 35 than we had over the age of 35. By focusing on the future, I was able to retire without wondering who would be able to serve my clients after I retired.
The major take-away from interviewing Bill?
Communicate with your family and involve them when planning for succession and retirement —and it’s never too early to start! For more ideas and professional options, see AGinvest’s Land Share Exchange Program
Author: Sarah Taylor, Writer at 42 North Integrated Marketing