Handing farm on gets harder

Farm succession, and the ability for young people to get a start in farm ownership, has been a problem for agriculture for many years.

As one who achieved farm ownership at 25 with capital invested of $1500, and a car, I was probably fortunate to be in the right place at the right time.

With just 8% of family money and loans to be paid on 99% of the capital borrowed, it would seem impossible to achieve such a deal today.

But innovative and creative young people are managing to accumulate funds to get that start even in the face of big sacrifices.

Sharefarming, equity partnerships, sharemilking, and managerial roles with extra incentives have all been used for equity accumulation.

Agriculture needs enthusiastic and energetic young people to achieve the production increases necessary for NZ to grow. Have you views on how farm succession and farm ownership can be made affordable to keep young people in agriculture?

Handing on the family farm to the next generation is becoming more difficult as land prices increase and returns fluctuate reports The Southland Times. Farm management consultant Deane Carson said several factors worked against farmers when it came to succession. "If I was looking at buying a farm, based on the current rates of return, I'd be scratching my head. Equity as a percentage of total assets is increasing – and that doesn't make it easy for young people."

In recent years farmers had made less profit from more investment. "Over time we're also seeing more volatility in returns. However, Mr Carson did point out that because of better returns over the last year or so more people have been able to enter the industry that otherwise might not have. Less farm succession could impact on rural communities into the future, he said. "The population in rural communities has been pretty static and forecasting shows it's likely to remain the same."

In Southland, however, population decline in rural areas was on the cards. "We're going to have more people moving away – is that effective succession?" Couple that with the fact that rural populations were ageing and there could be issues for farming in the future, he said. But that was not the only issue. "Our farms are getting bigger and we've got fewer labour units per hectare.

"This could relate to increased use of contractors and on-farm efficiencies, but you could argue there are fewer people per farm." He suggested succession had always been difficult for sheep and beef farmers and "nowadays there are some real challenges". However, there was still potential under the right circumstances. "We do have a lot more options than we used to and recent improved returns are helping." If sheep and beef farmers wanted to change their situations they had to increase returns and "become smarter with succession plans".