The second in the farm succession series, describing how one family approached the transfer of ownership within the family, starting early with a clear plan

When it comes to ‘what’s next’ for the farm, there’s a lot to think about, so we aim to share success stories, provide useful tips and help you understand more about the many facets of succession planning in the food and fibre sector. Today we are talking to farmer Kevin Van der Poel to hear about his farming business and their family journey with succession.

The family currently has two farms in their Waikato farming operation, the first is Emerald Farm which is 132ha effective milking 490 cows, the second is Alkemade Farm with an effective area of 95ha milking 380 cows

Kevin and his wife Cherie consulted with their professional advisers to set up a sharemilking company and have all the checks and balances in place to protect their own assets, and give their son Hayden the flexibility on his own assets.

What they ended up doing was giving Hayden the managing role of the autumn calving operation at Emerald Farm with a 30% share in a sharemilking company in partnership with his parents.

With Hayden’s equipment from contract milking and savings, he still needed to take out a significant loan to cover his 30% share of the sharemilking company, which Kevin and Cherie have guaranteed.

The sharemilking contract is for three years with the idea of offering Hayden more equity in the sharemilking company, and later down the track the sharemilking company will start buying shares in the farm. That gives Hayden more potential to raise capital through the sharemilking return to keep buying more shares in the land.

Hayden receives a manager’s wage which was set up to pay the loan interest, however, Hayden has also been able to pay the principal out of his wages as well. That means his share of the 20+% return from the sharemilking income can go towards increasing his share if he wants to in a couple of years.

Kevin is still in charge of the administration and oversees the business, but, Kevin and Hayden work together well, and one aspect of this is they don’t live on the same farm, and father is not constantly looking over son's shoulder.

One of the interesting things that keeps coming up is starting succession conversations early and working towards creating a plan and exit strategy for the retiring parents is critical, in a successful succession outcome, and Kevin has seen first hand how things can go south if the process is not managed correctly.

Remember, it’s not too early to start thinking about what’s next for your farm, and it’s never too late.

Listen to the podcast to get the full story and full perspectives.

Angus Kebbell is the Producer at Tailwind Media. You can contact him here.