December 01, 2008
AGING AGRICULTURAL WORKFORCE NEEDS TO CONSIDER
SUCCESSION PLANNING
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The Australian agricultural industry has an aging workforce, with the average age of Australian farmers now approaching 60, up from 44 in 1981. One of the consequences of an aging workforce is the question of retirement and succession. Experts agree that effective succession planning takes approximately 10 years. According to a 2004 survey by the Institute for Rural Futures, most Australian farmers plan to retire or semi-retire at age 65, making succession planning a hot issue right now.
Western Australian grain grower Tony Critch and his family have elected to take a professional approach to ensure their farm's ongoing viability. It was important to the Critch family that "Wyalong" - a 37,000-acre broadacre farm located 72 kilometres east of Geraldton in Western Australia - continue to be managed by the family. With four children, however, the line of succession is not clear cut.
Tony's two older sons, Daniel and Tim, are passionate farmers and plan to remain on the farm along with their own families. Tony's daughter Penny and youngest son Jerome do not plan to play an active, on-site role in managing the farm. However, as Tony points out, these children are still entitled to receive a share of the family asset.
"It's a very delicate balance to make sure we look after the on-farm and off-farm children appropriately," he said. "One thing we do know for certain is that the farm is the most important thing and we need to ensure its profitability. We cannot starve the farm of resources, so we need to manage this as we go along.
Professional help
To avoid family strife and ensure the farm's future is adequately catered for, Tony and his wife Judy engaged the help of professionals.
"Our accountant has provided a guiding hand for us during the past 10 years while we've been discussing the planning," said Tony. "Even though this is a relatively small operation, we decided to turn it into a board-run business. Each member of the family, including our children's spouses, is a member of the board. We employ a professional board chairman and hold quarterly meetings and yearly strategic planning meetings. We also use other outside, professional help whenever we need to."
Tony's son Tim is very pleased with the board arrangement.
"We all get a say in how the farm is managed, which really spreads the load," he said. "In the past the person managing the farm might have made a decision that didn't turn out well. That person would feel dreadful, knowing that the responsibility for that decision rested on their shoulders alone. But now that we have the board set up and each person gets an equal vote, we know that we all share that responsibility equally. It's a good feeling.
"Because our wives all get a seat and a vote on the board they feel less isolated and more an integral part of the farm as well, which is great," he added.
Five-year plan
The Critches have been actively planning for Tony's retirement for the last two or three years and in February 2008 formalised a five-year plan.
"In five years Judy and I should become a peripheral part of the business, just helping out as needed and perhaps moving to a small fishing village close by," joked Tony. "Of course this all depends on our health and other issues that may crop up. Knowing that we have a plan in place is a good start. Even if the plan isn't perfect, we can modify it as we go."
The unpredictable nature of farming means that succession planning is not always simple and cannot be set in stone. The exchange rate, commodity prices and climate change are just a few of the many conditions that can drastically affect the family farm.
"I'm not sure there is such a thing as a ‘traditional' Australian farm anymore," said Tony. "Times are very hard and it doesn't look like they're going to get any easier. I'm proud of my sons for following in my footsteps but this industry is certainly character-building! In some ways I would have liked them to have had an easier path."
Tim believes that farming is in his blood and he wouldn't have it any other way.
"I looked into other professions, but in the end farming was perfect for me. I always knew I'd do something in farming, I think it's something you're just born to," he said. "This succession plan gives my family some certainty and allows us to plan for things like where to send the children to school."
Things looking up
Like farms everywhere, times have been tough for "Wyalong" recently. Yields in 2006 and 2007 averaged half a tonne per hectare. This year, things are looking up with an anticipated yield of two-and-a-half tonnes per hectare.
With yields improving this year, the board decided it was time to invest in new equipment, including a new 120-foot Case IH SPX Patriot sprayer, two Steiger 485 tractors and a Magnum 245 tractor. The family chose Case IH equipment because of the exceptional deal offered by their local dealer, Purcher International. The precision agriculture capabilities of the Case IH tractors was also very attractive as "Wyalong" is suffering from the skills shortage and needs equipment that is easy to use for lower-skilled workers.
Tony's advice for other farmers beginning succession planning: "Get help from the professionals to try to view the future and make sure you take into account the views of all family members."
