What Makes a Farmer?

Where the famed work/life balance is an aspiration of many business owners, it can be virtually unattainable – and even undesirable – for farmers. “Farming life throughout the world is characterized by the almost inseparable, intimate integration of home, work, memories and family.” [1] More than just a job, farming is the locus of many families; a foundation that informs identity and gives purpose. 

As with anything business related, the financial side of farm succession often eclipses the equally valuable, personal side of the process. If you were to ask Revenue Canada Agency, a farmer is “the person who is assuming all of the risk in a farming operation.”[2] While useful for tax purposes and estate planning, this definition grossly understates what it means to be a farmer.

Agriculture and farming contribute an impressive amount to the Canadian economy – roughly 6-7% or $111.9 billion of gross domestic product (GDP) annually.[3] The economic importance of farming, coupled with the “greying” of farmers as a demographic (globally, not just in Canada), means intergenerational farm succession is increasingly lauded as the key to future agricultural viability.

Much of a farmer’s assets are in the form of physical capital – land, animals, and machinery – which tend to have substantial sentimental value.[4] Some farmers may shy away from transition planning given how emotionally and personally invested they are in their farming identities.

How does one begin to answer questions about what life after farming might look like when it is all life has been? For many, answers to these difficult questions come only after seeking outside help.

Financial advisors who understand farm succession is equally an emotional and financial process can help farmers envision and plan for a life after farming that invokes feelings of comfort, even excitement, and ensure the continued success of the family farm.

If you have questions about your farm succession plan or if you need help making yours, connect with us.

Sources

1, 4 – Whitehead, I., Lobley, M., and Baker, J., 2012. “From generation to generation: drawing the threads together”. Pp. 213-240 in Farm Succession, inheritance and retirement: Challenges for agricultural futures. International Farming Systems Association (IFSA), 2012, pp. 2-16.

2 – Canada, Growing Opportunities, et al. “A Legal Guide to Farm Estate Planning in Manitoba.” Manitoba Agriculture, 202, pp. 1-64.

3 – “An Overview of the Canadian Agriculture and Agri-Food System 2017.” Statistical Overview of the Canadian Fruit Industry 2017 – Agriculture and Agri-Food Canada (AAFC), 10 Nov. 2017, www.agr.gc.ca/eng/about-us/publications/economic-publications/an-overview-of-the-canadian-agriculture-and-agri-food-system-2017/?id=1510326669269.


[1] IFSA pp. 4

[2] Legal Guide, pp. 4

[3] “Overview of Canadian Agriculture”

4 IFSA pp. 4

Farming Family Brings in Help to Talk About Succession

When it comes to estate and succession planning, open and intentional communication plays a big role in the success of a transition.

Talking with our families about money, especially when it comes to wills and estates, is not easy. In truth, it is something most of us would rather avoid, even if family discussions are an important step to ensuring our future emotional and financial well-being.

Professional mediation is an immensely valuable resource that can help facilitate productive, honest discussions that ultimately help to retain the long-term health of the family and the individuals involved.

Mediators understand historical issues and resentments sometimes resurface during discussions about wills and estates and can threaten relationships. Mediators are also aware of how inherent generational differences can make it hard to reconcile the older and younger generations’ visions for the future.

The mediation process is foremost geared toward improving family communication so the complex dynamics, found in all families, are dealt with in a productive way. The process gives everyone a chance to be heard and individuals are able to be open and honest about what they feel is important. Open communication, with a mediator, is one of the best ways to avoid future upset over wills and estates.

 

The Situation

The following is an example of a farming family who found value in the mediation process.

John and Ellen are in their 60s and have two married children, Jake and Rachel. The family has been trying to build and implement their succession plan for the past two years and, for various reasons, have found themselves unable to.

John plans to transfer the farm to Jake, his current employee, but is having difficulty relinquishing control and ownership. For John, much of his identity comes from his status as a farmer and the way it enables him to provide for and give generously to his family.

Both Ellen and Rachel fear John is overworking himself (and Jake) and putting his health at risk. Ellen would like to see more of her husband so they can start the third act of their lives and enjoy retirement together.

Jake wants his father to fully transition into retirement so he can gain more experience managing the farm, while his dad is healthy and be able to “start his life” with his wife.

Historical sibling issues between Jake and Rachel also factor into the succession planning process. Rachel has never been involved with the farm and does not want a share of the estate, rather, she wants Jake to succeed their father and take over the business. With her parents in retirement, she will be able to see them more frequently. She considers Jake lucky because he has the luxury of seeing their parents on a daily basis whereas she lives too far away to do so.

Jake, however, feels that he missed out on the parent-child relationship Rachel got to enjoy because he was so accustomed to working for John, as his manager rather than father. Both perceive each other as having an advantage in their relationships with John and Ellen. Even though Jake and Rachel are not at odds over their parents’ financial assets, the emotional complexity of their relationships with their parents and each other were inhibiting open, productive dialogue.

John and Ellen’s financial advisor recommended working with a mediator to facilitate a meeting with the entire family to discuss the family’s estate in a productive manner.

 

The Process

*         Before calling a family meeting, the mediator spoke to each member to hear their individual concerns and was able to assess them as a neutral, unbiased party.

*         The mediator emphasized:

  • Better communication practices such as explicitly stating what position individuals were speaking from (e.g. when is John speaking to Jake as a father and when as a manager?)
  • Ways to start dialogue and better articulate feelings and concerns
  • Taking accountability for the actions each individual committed to

*         John realized he needs to work on his life after business plan given that so much of his identity is tied to his role as a farmer. It took a neutral party to open his eyes to the concerns his family had already been voicing to him.

*         Jake and Rachel realized their historical perceptions of each other were not necessarily reflective of their current realities and were better able to understand one another.

 

Takeaways

Professional mediation is not a threatening or intimidating process. Mediators lay the foundation for healthy communication which ultimately serves to enhance the overall well-being of your family.

Seeking help from professional mediators who are outside of traditional planning roles (e.g. lawyers, accountants, advisors, etc.) can be immensely beneficial to the planning process.

At Intent, we work with a collaborative collective of professionals and are therefore adept at bringing in the best individuals to meet the unique needs of every client to ensure your long-term welfare.

 

Connect with us to learn how mediation can help advance your financial, estate and succession planning goals.