Kevin Connolly, an Irish financial management specialist, discusses the common issues family farms face that require a blend of financial acumen, long-term planning, and adaptability

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.