Growing a family farm presents unique challenges, requiring a blend of financial acumen, long-term planning, and adaptability. Kevin Connolly, a financial management specialist with Teagasc, has worked closely with farming families in Ireland, guiding them through the complexities of expansion, succession, and sustainability. His insights offer valuable lessons, not just for Irish farmers but also for those in New Zealand, where the agricultural landscape is similarly shaped by generational transitions and economic pressures.
One of the key challenges Connolly identifies is ensuring the financial viability of farm expansion. Too often, families focus solely on growth without considering the strain it places on cash flow and debt servicing. "A larger farm isn't automatically a more profitable one," he explains. "It has to be well-managed, and the financial structure needs to support sustainable growth."
This is particularly relevant in New Zealand, where dairy conversions, land acquisitions, and intensification strategies have sometimes led to over-leveraged operations struggling under high-interest rates and fluctuating commodity prices.
Connolly stresses the importance of detailed financial planning before any expansion. "We encourage farmers to analyse their balance sheets, cash flow projections, and return on investment before making major decisions." This approach resonates with New Zealand farmers, many of whom are navigating a volatile economic environment where inflation, labour shortages, and environmental regulations are influencing profitability.
Succession planning is another significant issue. In Ireland, as in New Zealand, passing the farm to the next generation is often an emotional and complex process. Connolly emphasises the need for open discussions early. "The hardest conversations are the ones that get put off, and that can lead to uncertainty and family tensions," he says. "It's critical to have a structured approach, considering tax implications, legal frameworks, and the aspirations of the next generation."
New Zealand farmers face similar concerns, particularly with rising land values making it difficult for younger generations to take over without accumulating substantial debt. Connolly suggests looking at phased transitions where ownership and management responsibilities are gradually transferred. "We've seen success when families implement gradual equity transfer models, allowing younger farmers to build their stake while still benefiting from the experience of older generations."
Beyond finances and succession, adaptability is crucial. Irish farmers, like their New Zealand counterparts, are grappling with shifting consumer demands, climate change policies, and technological advancements. "The farmers who thrive are those who embrace change rather than resist it," Connolly notes. "That could mean diversifying income streams, investing in precision agriculture, or adjusting production systems to meet sustainability goals."
New Zealand’s agricultural sector is similarly experiencing pressure to adopt more sustainable practices, with initiatives around regenerative farming, methane reduction, and biodiversity conservation gaining momentum. "New Zealand farmers have an opportunity to lead in sustainable production, but it requires investment in knowledge and infrastructure," Connolly says. "In Ireland, we've seen financial incentives help drive change, and similar approaches could work in New Zealand."
One of Connolly’s final pieces of advice is to seek professional support. "No one can do it alone. Whether it's financial advisors, succession planners, or industry mentors, getting the right expertise can prevent costly mistakes and provide clarity in decision-making." This holds true in New Zealand, where farmers often rely on rural accountants, farm consultants, and industry groups to navigate complex challenges.
Ultimately, growing a family farm successfully requires a blend of financial discipline, proactive succession planning, and adaptability. The experiences of Irish farmers offer valuable parallels for those in New Zealand, reinforcing the importance of sound management and future-focused decision-making. As both countries' agricultural sectors evolve, farmers who take a strategic approach will be best positioned to ensure their farms remain viable for generations to come.
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Angus Kebbell is the Producer at Tailwind Media. You can contact him here.
14 Comments
There's another element I think that deserves thinking about. That is encouragement and or facilitation of young, aspiring NZ farmer workers to transition into farm ownership. Historically the dairy sector did that pretty well through graduated share milking agreements. Although that seems to have reduced in recent years, seeing contract milking becoming more common.
It's a bit more complex in sheep and beef with the absence of a single desk (e.g. Fonterra, Zespri) farmer owned cooperative exporter.
In this rapidly evolving return to protective, tariff dominated, international market environment, perhaps NZ could look back in history to what supported intergenerational transition of farm ownership. Perhaps reinstate the Rural Bank. That would be a disrupter to the $7 billion plus profits being siphoned across the Tasman.
I wonder what percentage of those profits is derived from farm lending? In 2023 agriculture accounted for 82% of NZ merchandise exports.
The 82% figure is primary industries, including forestry and other primary land-based industries. And Rabobank is an existing rural disruptor already in the market.
KeithW
Yes, Keith re 82%.
Rabobank is not the same as the Rural Bank though.
I am inclined to the perspective that farming's capital intensity, plus issues of economy of scale, plus the social perspective that all siblings should be treated equally in regard to inheritance, are increasingly leading to important changes in the structure and the role of family farms. This evolution of structure has further to play out.
KeithW
The Irish agribusiness landscape is sufficiently different to NZ that this article, without analysing those differing factors, comes across as lacking value in the NZ context.
KeithW
Forgetting the one essential.
An interested next generation.
Talking to a number of successful farmers in their 60s and 70s with larger farms/multiple farms of scale that can accommodate an inter generational transfer of wealth where the kids have been encouraged to get good educations who are then getting good careers, marrying, having kids and not coming home.
Funny though. I know families with multiple farms but no kids interested in farming but are actively discouraging anyone one else from trying farming as a career. Even to the extent of taking on available 50/50 jobs cutting of that step on the ladder, let alone simply buying up farms cause they can and paying as little as they feel they can get away with.
A family member and his partner working their way up the farming ladder. Her parents, (very successful) approached their bank about buying a mid size, 400 to 600 cow dairy farm and putting the young couple in as 50/50 share milkers to help them in their career. Bank strongly advised against the move as the return to farm owner not worth the outlay and a purchase only worked employing contract milkers. Suggested the couple get a job elsewhere.
This dosn't just apply to farming businesses (speaking from experience). Young people have so many options these days and they can easily follow their dreams in a number of directions.
With this and ageing populations, the choices are only growing.
If Dairy is struggling what chance does dryland hill country farming have when competing with other jobs/careers that offer so much more in their eyes (and their partners)?
Once you go places offshore its even more confronting - 5 weeks paid leave (plus stats and a week of "me" time), 10% plus from employer to super schemes, large amounts of fully paid parental leave, breakfast and lunch provided, remote working options etc etc.
It gets almost impossible really when the earnings hardly provide wages for a person to work and run a farm - let alone any true profit apart from potential capital gain.
" An interested next generation" Exactly Wilco. Very seldom meet willing young farmers. I don't blame them though, for the same reasons Jack states below.
Doubt anyone will carry on with our remote farm. We will just retire it as a hunting block when we lose interest.
Hans, Jack, Wilco and Redcows
This is an interesting discussion.
I think the young folk interested in back-country farming still exist. First, they have to find a life-partner who can also love the back country.
And then comes the issue of schooling.
I see back-country land prices having further to fall.
The role of hunting and non-harvested forestry also have to be factored in.
I see interesting times ahead and I would love to hang around to see that future.
I have some optimism that those who do come after us will find a way through the challenges.
I think back to the first time I ever worked on a farm. It was 1965! If I had been asked to predict the changes that have occurred between then and now I would not have got within a bulls roar of where we are now.
KeithW
I agree Keith - something will happen and what I'm seeing on the ground is some people are making changes and the setups and ways of making the business work will be very different to the past - in all industries.
I have a number of hill country clients who have been working on this for a decade and have now reached the point where succession etc is sorted and the family is settled and all happy. Who runs the farm may not be direct family, and income sources are varied and different but they have the ability to weather upheavals on different fronts and all have Christmas together. Being angry and constantly raging against someone or something does not produce a solution.
Like you if someone had told me what happens today when I was starting out I wouldn't have believed them and thought them to be mad.
I'm actually optimistic and believe NZ is still in a very good place - it wont always be easy - but it never has been and we are all much wealthier and better off than our parents were in so many ways.
I'm trying hard to not be a grumpy old man but a grateful old man.
I am not worried about our own kids - we were very determined parents in pushing them to succeed at school then uni. Each one now has a great career and more importantly in areas that interest them. And no doubt we will be the bank of mum and dad when they look to settle down. If they want to take over our farm they will return with their own equity to start the process.
Our focus now is on helping managers get over the wage hump and into property/land of their own, whether with advice, a friendly phone call to the bank manager or more tangible support.
This group in their 40s and 50s, who are so valuable to operating our farming businesses need better ways of getting ahead than the current model provides.
As Redcows said earlier that used to be 50/50 share milking however many of the larger jobs up here are operated by existing share milkers or multi fam owners.
Land prices up here are still under the influence of forestry, the last couple of store country farms going to pine trees and a number of farms coming to market with vendors still able to plant. At prices well north of $10k ha. As well some of the local tree companies will work right to the edge of the land classification rules, I get the impression the suggestion is it is better to ask for forgiveness rather than permission.
Yep, that about sums it up Keith. All the best to you.
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