The number of family farms around the world continues to decline slowly with farmland consolidation also happening globally. There is however a misperception that big companies are taking over the family farms. In reality, it is family farms consolidating. For example, in the US, family farms still account for 90% of all farms.
Implicatons
What are the implications for family members as farms become bigger?
The small family farms which were the backbone of rural communities are giving way to bigger land holdings run with increased technology and benefiting from economies of scale. There will be less people physically farming and the farmer in charge will be more like the CEO of a business.
If we look at the likes of Iowa in the United States, this state has lost over 40,000 farming families since the late 1970s. In Ireland, there were 223,000 farm entities in 1980 and there are now around 150,000. Small in Ireland is tiny by international standards. Of the number of total farms, one third of them are small farms (less than €8,000 Standard Output) and only 13% are farmed full-time.
Even though, farms numbers are going down, output is growing, which means bigger farms producing more. It is this sector of farms getting bigger and more complex that will provide new challenges for families running them.
In smaller farms, the farmer often works in somewhat isolated conditions. As the farms become bigger, farmers need a broad range of “business” skills. These include farm management, technological, mechanical, organisational and interpersonal skills.
Coupled with this family members and farm workers want defined roles, defined renumeration, defined holidays as well as built-in flexibility – competing with other industries that may be better at attracting talented people.
Changing family dynamics
As farms get bigger and more complex, so too does the complexity of the family dynamics to run the farm. The bigger farms need a range of skills and families must plan for this. It is unlikely that all the necessary skills will be provided by family members and as a result skills need to brought in to the farm to allow it be run along the lines of a management team concept.
Roles and responsibilities for family members need to be clearly defined. Family members need be know what they are responsible for and they need to be held accountable for their performance.
It has been well documented the lack of detailed succession planning done by farmers in general. The situation is improving but it is not yet at acceptable levels.
It starts with what is the vision? What is the long-term vision for the business?
If you look at Colin and Dale Armer in New Zealand who built a business from one family dairy farm in the 1990s to now being one of New Zealand’s biggest farm set-ups, they didn’t get there without a plan. It had to include a plan for where their eight adult children would fit into the business.
The next generation need to be encouraged to stay on in farming but not all family farms are viable.
Family farms need to be viable and greater financial supports are needed. It has never been a better time ideologically for the next generation to commit to farming. They are interested in sustainable farming development. Young people are generally open to new ideas, open to trying new methods and innovative practices. They are better educated today. So if the family farm is given every assistance to make it viable, then the next major assistance we should give the family farm is advice on how to work together as family members.
Clearly defined roles
Some of the most vicious family feuds happen because of disagreements about the farm, how it should be run and who should own what. This is not unique to Ireland. It happens all over the world.
As farms become more complex to run, greater attention needs to be given to clearly defining what each family member’s role is with regard to the farm operation. The clearer the roles are defined, the less chance there is for argument. In tandem, the ownership structure should be clearly defined and there should be no ambiguity.
Seldom do families manage to put these two vital pieces in place without some dispute or procrastination. This is why it is firmly recommended to appoint a family business advisor to help put the right family structures in place for not just this generation but for future generations. The family members should be putting all their energies into developing the farm business and not having the all-too-familiar stress of constantly arguing. It is difficult enough to operate as a family successfully never mind working together as well. Seek outside assistance early to make sure your family can work in harmony. No farm is worth the destruction of a family.
Succession and inheritance: finding a ‘consigliere’
Succession: ‘This is not the time to be talking about the farm after I die!’