What's the future of family farms? Exclusive new research sheds light on how farming families are planning for the future of their businesses. Do they have a succession plan? Who will take on the business? How will they fairly divide up farm assets between children?
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Succession planning research: UK family farms
1. April 2015 Ref: 5909
Image:FLPA/RexFeatures/Shutterstock
Succession Planning Research 2015
2. Succession Planning Research 2015
Methodology Executive
Summary
Respondent
Profile
Main
Findings
Summary
of Findings
Background
and
Objectives
3. The NFU Mutual offer farmers
financial advice, including that of
succession planning. To raise the
profile of their capabilities and
services in this area, they
commissioned Farmers Weekly to
undertake a piece of bespoke
research which will provide unique
content to feed into a feature in
Farmers Weekly.
Specifically, research was required to:
Quantify how many farm owners
have created a succession plan
Measure what those succession
plans contain
Measure the barriers to creating
a succession plan
3
Image:RobertHarding/RexFeatures/Shutterstock
Background & Objectives
4. Methodology
In order to provide a
robust sample for the
study, research took the
form of a quantitative
online survey conducted
amongst over 1.110
respondents.
Results are shown on those
answering each question.
A Farmers Weekly branded
email was sent to the
database inviting potential
respondents to take part in
the online questionnaire.
The survey was also
promoted via Twitter, and in
articles on FWi.
Fieldwork, data
processing and analysis
took place March & April
2015.
4
6. Respondents expect farms will be handed on to the next generation within 7 – 9 years.
Less than half of respondents (40% overall) have a succession plan in place.
Of those with succession plans in place, it is most likely to be ‘a written document embedded within the
business plan’ or ‘an informal understanding discussed with successors’.
Succession plans are most likely to have been communicated to family & successors only.
Challenges in creating a formal succession plan were most likely to be ‘the conversation is difficult to
have’, ‘the farming business can only support one successor’ and ‘the owner does not want to retire’
Executive Summary
6
8. Region
Owner Successor
South West 20% 18%
Midlands 17% 17%
East Anglia 13% 12%
South East 11% 12%
Scotland 11% 8%
Yorkshire & Humberside 7% 9%
North West 7% 6%
Wales 6% 8%
Northern Ireland 5% 4%
North East 4% 5%
Outside UK 0% 0%
Age Owner Successor
Under 25 1% 29%
25 to 34 3% 29%
35 to 44 6% 18%
45 to 54 25% 9%
55 to 64 38% 9%
65 or over 27% 6%
Average 57 36
Base: All respondents answering
(owners 414, successors 301)
Size of farm
Owner Successor
Less than 20 hectares 5% 5%
20-99 hectares 29%* 22%*
100-199 hectares 32% 30%
200-499 hectares 26% 31%
500 hectares or more 8% 12%
Average 203 239
Base: All respondents answering
(owners 410, successors 301)
Respondent Profile / 1
8
Type of respondent
Owner Successor
I / my family own a farm 76% 73%
I / my family have a farm tenancy 14% 13%
I / my family farm with a mixture 8% 13%
I / my family farm as part of a joint venture
2% 1%
Base: All answering (owners 414, successors 301)
Base: All answering (owners 414, successors 301)
* = significant difference
9. Enterprise type
Owner Successor
Cereals 62% 62%
Oilseed Rape 35% 37%
Beef cattle 50% 53%
Breeding ewes 35% 36%
Dairy cows 19% 18%
Renewables 19% 15%
Pulses 18% 15%
Potatoes 10% 6%
Poultry 10% 10%
Forestry 10% 7%
Sugar Beet 7% 8%
Vegetables 6% 6%
Pigs 8% 6%
Respondent Profile / 2
9
Gender
Base: All answering (owners 399, successors 296)
Base: All answering (owners 400, successors 296)
83%
17%
72%
28%
Male
Female
Owner
Successor
Generation of farmer
Owner Successor
1st generation 25% 5%
2nd generation 25% 23%
3rd generation 30% 43%
4th generation or more 20% 30%
Base: All answering (owners 411, successors 297)
10. Expectations of time of handing farm over
Respondent Profile / 3
10
Current status
Base: All answering 754
Base: All answering (owners 355, successors 270)
47%
8%
31%
9%
Owner and main decision
maker, still active on the farm
Tenant farmer
Potential successor, already
active on farm
Potential successor, not active
on farm
Owner Successor
23%
31%
26%
8%
13%
25%
33%
20%
2%
20%
Within the next five years
5 - 10 years
11 - 20 years
20+ years
On the death of the present
owner
Owner Successor
Average:
Owner 8.8 years
Successor 6.7 years
Owner 55%
Successor 39%
*
*
* = significant difference
11. 11
Legal documents / products have have in place
Q In addition, do you have any of the following in place?
79%
63%
56%
46%
40%
26%
18%
3%
84%
69%
59%
52%
40%
25%
18%
4%
70%
50%
51%
37%
40%
29%
17%
1%
A will
Personal pension
Investments other than the farm (i.e. shares, buy-
to-let property)
Life assurance
Partnership agreement
A power of attorney
Trust documents
Other
All
Owner
Successor
Base: All with a succession plan answering 685
(owners 404, successors 245)
*
*
*
*
*
*
*
*
* = significant difference
13. 43%
54%
4%
Owners
Yes
No
Don't know
13
Whether farming business has a succession plan
Base: all farmers responding (414)
Q Does your farming business have a succession plan?
Base: all successors responding (301)
33%
50%
17%
Successors
**
*
*
* = significant difference
14. 14
Whether believe a lack of succession planning is a threat to the future of the farm
Q Do you think a lack of succession planning is a threat to the long-term future of your farm?
64%
36%
58%
42%
74%
26%
Yes
No
All
Owner
Successor
Base: All answering 724 (owners 391, successors 296)
*
*
*
*
* = significant difference
15. 15
Contents of a succession plan
Q What should be included in a Succession Plan?
90%
90%
70%
67%
58%
52%
4%
89%
87%
63%
60%
50%
43%
5%
92%
92%
79%
76%
70%
64%
2%
Land
Buildings & other farm assets
Finance & loans
Partnership, tenancy, contract farming
agreements
Structured timings for handing over the business
Contingency plans
Other
All
Owner
Successor
Base: All with a succession plan answering 748
(owners 410, successors 300)
*
*
*
*
*
*
*
*
*
*
* = significant difference
16. 16
Format of succession plan
Q Which of the following best describes your succession plan?
40%
37%
11%
7%
5%
40%
36%
9%
9%
6%
38%
42%
12%
5%
3%
Written document / will, embedded in the
business plan and shared
Informal understanding discussed with
successor/s
Written document / will, not embedded within
the business plan or shared
An assumption, not yet discussed with
successor/s
Current owner's will but not yet discussed with
successor/s
All
Owner
Successor
Base: All with a succession plan answering 298
(owners 176, successors 98)
17. 17
How succession plan was developed
Q How was the succession plan developed?
59%
44%
24%
8%
2%
0%
55%
41%
23%
13%
1%
1%
60%
54%
24%
2%
4%
0%
Used professional services (solicitor, financial
adviser, etc)
Family discussion - immediate family only
Family discussion - immediate family and spouses
On my own
Informal facilitator (such as friend or other farmer)
Paid-for facilitator
All
Owner
Successor
Base: All with a succession plan answering 298
(owners 176, successors 98)
*
*
*
*
* = significant difference
18. 18
Professional services used to develop succession plan
Q Which of the following professional services did you use?
85%
81%
22%
9%
6%
4%
3%
11%
85%
81%
23%
11%
5%
5%
1%
11%
88%
81%
21%
7%
7%
2%
5%
14%
Accountant
Solicitor
Tax specialist
Financial adviser
Agri-banker
Wealth manager
Insurance agent
Other
All
Owner
Successor
Base: All with a succession plan who used professional services
answering 174 (owners 97, successors 57)
19. 19
Communication of the succession plan
Q Which of the following best describes how the plan has been communicated?
49%
32%
8%
6%
4%
0%
51%
30%
9%
5%
5%
0%
41%
41%
7%
7%
3%
0%
To family (including those who are not
successor/s)
To successor/s only
To legal / financial advisor
To all farm employees informally, as well as
successor/s & family
To no-one
To all farm employees through a formal
announcement (e.g. announcement, party, etc)
All
Owner
Successor
Base: All with a succession plan answering 296
(owners 175, successors 97)
20. 20
Successor to the business
Q Which of the following best describes the successor/s to the business?
36%
31%
12%
8%
3%
2%
1%
7%
34%
35%
14%
5%
2%
2%
1%
7%
38%
24%
13%
16%
5%
0%
0%
4%
Eldest son
Shared amongst more than one sibling
Other son
Eldest child (irrelevant of gender)
Other daughter
I am selling up
Someone outside the business
Other
All
Owner
Successor
Base: All with a succession plan answering 287
(owners 168, successors 95)
*
*
* = significant difference
21. 21
Q How does the Succession Plan accommodate for the interests of family
members who will not succeed to the farm?
Base: All with a succession plan answering (252)
21
Q How does the Succession Plan accommodate for the interests of family
members who will not succeed to the farm?
Base: All with a succession plan answering (252)
“They inherit parts of the farm, i.e. properties
to equal value.” - Potential successor, 25-34,
Female, 200-499 ha, South West
“The succession plan appears to have ben
changed recently influenced by a desire for
"fairness" and rising land values.” - Potential
successor, Male, 45-54, 100-199 ha, North East
“Other assets and cash.”
Potential successor, Female, 35-44, 500+ ha, East Anglia
“Gifting of non farming assets.”- Owner, 55-
64, Male, 200-499 ha, East Anglia
“It does not.”- Owner, 55-64, Male,
200-499 ha, Midlands
“No one to succeed so farm will likely close
on retirement or death.”- Owner, 55-64, Male,
200-499 ha, South East
“Males have their own farm, females
have investments.”- Owner, 65+, Female,
200-499 ha, Midlands
“Our younger son who wants to farm has become a full business partner, so will eventually inherit all the
business once my wife and I die. He does not however own the land that my wife and I do (i.e. this is kept
separate from the business. On death of the second of myself and wife, the land will be divided equally
between our 2 sons, with the farming one having to pay a market rent to the non-farming older son, who, if
he wants to sell the land, has to give our second son first refusal and a fair time (5 years or more) to raise the
money; the value by independent valuation.”- Owner, 45-54, Male, 200-499 ha, South East
“It does not accommodate those not in the succession
plan.” Potential successor, Male, 18-24, 20 – 99 ha, South
West
22. 22
Important reasons for creating a succession plan
Q In your opinion, why is it important to create a succession plan?
72%
62%
58%
58%
51%
37%
35%
2%
4%
64%
63%
51%
53%
52%
33%
33%
2%
5%
83%
61%
70%
64%
49%
45%
38%
2%
3%
Ensuring the future of the business
Tax efficiencies
Removing family tension by setting out a plan
Reassurance knowing everything is set in place
Fairness to all children
Older generations can enjoy their retirement
Best suited member of the family can take over
the farm
I don't like my son / daughter's partner
Other
All
Owner
Successor
* *
* *
Base: All with a succession plan answering 750
(owners 411 successors 300)
*
*
*
*
* = significant difference
23. 23
Important reasons for creating a succession plan – other comments
Q In your opinion, why is it important to create a succession plan?
Base: All with a succession plan answering 750
(owners 411 successors 300)
“My ex partner is a danger.”- Owner,
45-54, Male, 20-99 ha, North West
“You assume we want our children to work all
hours for little reward, we don't.”- Owner, 55-
64, Male, 20-99 ha, South East
“I want this small family to stick together &
NOT fall out amongst themselves, so it is
best they are all equally informed.”- Owner,
65+, Female, 20-99 ha, Yorkshire
“We do not (want) our children to go the
farm and have to work as hard as we have
had too and be as poor as we are.”- Owner,
55-64, Male, 500+ ha, South East
“Too much paper work for this job, we are
growers hands on not accountants we
aren't made for paper stuff to keep others
in warm office.”- Owner, 45-54, Male, 20-
99 ha, East Anglia
“So the younger gen know where they stand
and can make their own plans.” - Potential
successor, Male, 25-34, 100-199 ha, Midlands
24. 24
Challenges in creating a succession plan
Q And what are the challenges in creating a formal succession plan?
46%
33%
28%
24%
24%
18%
16%
12%
14%
32%
34%
29%
15%
26%
11%
18%
18%
16%
64%
34%
29%
36%
22%
27%
13%
4%
8%
The conversation is difficult to have
The farming business can only support one
successor
The owner does not want to retire
The owner does not want to discuss it
The owner can not afford to retire / live away
from the farm
Family instability / conflict
Successor/s do not have the right skills /
experience to take it on
Successor/s are not interested
Other
All
Owner
Successor
Base: All with a succession plan answering 718
(owners 388, successors 293)
*
*
*
*
*
*
*
*
* = significant difference
25. 25
Challenges in creating a succession plan – other comments
Q And what are the challenges in creating a formal succession plan?
Base: All with a succession plan answering 718
(owners 388, successors 293)
“Is it right to saddle my successor
with the restrictive life style of
farming.”- Owner, 45-54, Male, 100-
199 ha, Midlands
“Pride.”- Owner, 45-54, Male, 200-499 ha, North West
“Complications around the financial affairs of
one of the successors.”- Owner, 55-64, Male,
200-499 ha, South West
“There needs to be incentive to want to get into farming apart from the hunger to farm. What
percentage of people look at an industry which equates to hard work for little reward? We need to
look at solution from different angle. Not necessarily to get successors to want to do job by pressure
of loyalty to family but by reward. This way money can be made for both successor and existing
farmer who may not want to move on as it's the only way of life they know but each can enjoy the
benefits from their hard work.”- Owner, 35-44, Female, 20-99 ha, South East
“Will probably get out before this decision is set
to be made because the business is not viable
and assets far outweigh income from them.
Costs have gone through the roof and returns
do not match them.” - Potential successor, 55-
64, Male, 100-199 ha, South West
“How to reflect unequal contributions to
current business but stay fair to other sons
and not force contributor to pay too much for
the farm to make it viable.” - Potential
successor, Male, 35-44, 20-99 ha, Wales
“It's the white elephant in the room and easier if it can be
swept under the carpet until it is forced on you.” -
Potential successor, Male, 25-34, 200-499 ha, South West
“It's never bought up, never
thought about.” - Potential
successor, Female, 18-24, 200-
499 ha, Midlands
27. 27
Summary of findings
Respondents expect farms will be handed on
to the next generation within 7 – 9 years. Less
than half of respondents (40% overall) have a
succession plan in place. However, over half
(64%) of the sample believe ‘a lack of
succession planning is a threat to the long-
term future of their farm’. This increases to
three quarters (74%) amongst successors.
Elements deemed to be important to be
included in a succession plan were most likely
to be named as ‘land’, ‘building & other farm
assets’ and ‘finance and loans’.
Of those with succession plans in place, it is
most likely to be ‘a written document
embedded within the business plan’ or ‘an
informal understanding discussed with
successors’. The plan was most likely to have
been developed ‘using professional services,’
followed by having a ‘family discussion
(immediate family only)’.
Where professional services were used, they
were most likely to be accountants or
solicitors. Plans are most likely to have been
communicated to family & successors only.
The most mentioned successors to the
business were the ‘eldest son’, and ‘shared
amongst more than one sibling’.
The most important reasons for creating a
succession plan were ‘ensuring the future of
the business’, ‘tax efficiencies’ and ‘removing
family tension’. Successors were more likely to
see the benefits as being ‘ensuring the future
of the business’, ‘removing family tension’
and ‘reassurance’.
Challenges in creating a formal succession
plan were most likely to be ‘the conversation
is difficult to have’, ‘the farming business can
only support one successor’ and ‘the owner
does not want to retire’
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