With a firm belief that the family farming business will continue
to be the backbone of British agriculture, John and Rachel Geldard
were early to recognise that they had a responsibility to provide
for the next generations.
Charles, Richard, John and Rachel Geldard “We knew that our sons at an early age wished to farm, so
we planned towards providing them with that opportunity while they
were still in their twenties,” said John Geldard.
Now frequent family meetings play an essential part of business
management at the 500-acre owner occupied mixed livestock unit
Low Foulshaw, Kendal, Cumbria farmed by John and Rachel Geldard
in partnership with sons, Richard and Charles.
The necessity for farmers to start planning the future with their
families at the earliest, as in any other business if they are
to ensure succession and the continuation of a vibrant rural infrastructure,
is the message from Professor David Leaver, principal of the Royal
Agricultural College. Equally, as the UK livestock sector restructures,
so the allied industries must adapt, he stresses.
“More than 90 pc of the UK’s 253,000 farm holdings
are managed by family businesses,” said Prof Leaver, “however,
only 30 pc of farmers expect the business to pass to a member of
the family when they retire, compared with 50 pc five years ago,
according to a recent Defra ERDP survey.”
The survey, which took in 504 farm businesses, reported that 24
pc of lowland pastoral farms had no successor, while a further
25 pc were uncertain of succession; similar patterns were indicated
in the arable sector; while upland farms had the highest level
of assured succession at 41 pc, a trend possibly due to the limited
availability of off-farm options.
“While I think this reduction in expected succession is
mainly a reflection of the structural changes taking place in the
industry, most parents want the business to continue in the family,
therefore the issue needs to be addressed early on, and for some
that will be before their children leave for college or university
and then to be finalised on their return,” he said. “Problems
arise when succession plans start too late.”
John Geldard, a fellow of the RAC / Rumenco 100 Club which has
highlighted the issue, said: “The role of the family farming
business is unique. For example, one aspect which is the envy of
all is the speed at which decisions are made.
“Unlike corporate structures with lengthy procedures, following
research, decisions can be made around the breakfast table at our
weekly meetings. The secret is everyone is involved; we work together.”
“Since we put our first step on the ladder 30 years ago
on a tenanted unit with £5k capital, we have been profit
led. Adding value has been a pre-requisite throughout our farming
career, and various developments led us in the 1990s to implement
policies to develop a support free, profitable farming business.
“With the farm in good heart, we decided to establish an
off-farm diversification enterprise which would enable me to stand
back and ensure succession by enabling Richard and Charles to take
forward the beef, sheep and free range poultry enterprises.
“That diversification, Plumgarths Local Sourcing Hub has
also enabled me to fulfil a vision, to reconnect the food chain.” A
redundant family farm steading was converted with ERDP funding
assistance, five income streams have been developed, the business
has created in total 50 new and part time jobs, and it has a projected
turnover of £5m by year six.
“I firmly believe that the family farming business will
continue to be the backbone of British agriculture. However, the
most essential component will be profitability. Family farms cannot
continue being propped up at all corners by various forms of payments.
Instead, they need to develop and adopt business plans which will
enable the farm to be self supporting.”
He added: “One of the great opportunities of being involved
in the RAC / Rumenco 100 Club Annual Fellowship Beef and Sheep
Report is to have gained a very clear understanding that agriculture
has to take many great strides to get closer to the marketplace.”
Prof David Leaver
Prof Leaver urged that the planning process should commence at
least informally while the children were in their teens and formally,
in their early 20’s, to ensure the business remained on a
viable trajectory, and to generate enough income for the retirement
of those leaving the business, as well as to sustain the incoming
generation. Family meetings should determine goals and aspirations,
whether they are personal, business, or financial,” he explained.
“Where appropriate, they should take professional advice
on tax, wills, and business structures. They should separate the
assets from the business in planning, and consider use of these
assets for non-farming purposes. A subsequent action plan should
be developed with objectives and milestones, and finally, it must
be implemented. Ongoing monitoring and revision will be essential
at regular family meetings.”
More than 90pc of the UK’s 253,000 farm holdings (each defined
with a minimum threshold of eight ESU) are managed by family businesses.
This tends to be even more true in relation to upland farms and
farms where livestock are the predominant output.
Rapid inflation of land values and rents, the high start-up costs
of capital intensive farming, and the wide profit margins needed
to repay interest, means that setting up a second farm for the
children is now an option few farmers can afford. High land and
capital values also make it very costly for a successor to buy
out the interests of other family members.
One solution followed by British farmers has been to move towards
incorporating all willing heirs within an expanded family firm,
a strategy which is resulting in even more family partnerships
and increasing numbers of two-generation farms. This often means
that higher numbers of family members are dependent on the farm
There is a growing recognition that the rate of succession will
be a key determinant of future structural change in the industry.
An England Rural Development Programme (ERDP) north west region
survey concluded that the likely level of succession ranged from
30pc to 70pc.
The detailed survey of 504 farm businesses reported that on 24pc,
succession definitely would not take place and that succession
was uncertain on a further 22pc of the sample. The survey also
reported that only 30pc of farmers expected the family business
to pass to a member of their family when they retire, as compared
with 50pc five years ago.
The level of succession is also strongly dependent on a number
of other factors. These include the economic viability of the farm
business and the farm business size, with smaller, economically
marginal businesses less likely to secure succession. Greater off-farm
employment opportunities may also reduce the likelihood of succession.
The relatively high proportion of farms without a successor could
result in the number of farmers over 60 to 65 years increasing
as they stay on. When they eventually do retire, the farms are
more likely to be lotted for sale and the land parcels incorporated
into neighbouring units.
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