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THE CITIZEN, THURSDAY, MARCH 18, 2004. PAGE A-13 .
On the farm
Preparing to transfer the family farm
By Elyse DeBruyn
Citizen stuff
Farmers. as an industry, are aging
and a seminar in Brussels was held
to help them prepare for the difficult
job of transferring the family farm.
John Uren. a chartered financial
consultant and Nancy Ackert. a life
insurance advisor in Lucknow,
hosted the seminar at the Royal
Canadian Legion in Brussels.
A presentation was made by Dr.
George Brinkman, a professor in the
Department of Agriculture,
Economics and Business at the
University of Guelph, on an
overview of Ontario Agriculture
over the last three years.
He said estimates show 120,000
Canadian farmers will reach
retirement age in the next. 10 years
and 17 per cent of farm businesses-
will transfer tb new owners within
the next 1.5 years.
Continued from A-12
"It's custom-made products for the
consumer instead of being massed
produced."
Lewington held a open house last
summer for people to stop by and
watch his lambs and pigs out in the
sunshine.
"I do this so people know I'm- not
telling them a story and they can
come and see for themselves how
happy the animals are," said
Lewington.
When his sheep begin lambing,
Lewington said he moves them
every four days so they can lamb and
once they're born, he moves them
every two days.
Because he only has a small
amount of pigs, he only has to move
thern,once a week, but they need to
be fenced in, which he said is hard
because they like a bigger area.
Starting at day one, his chickens
are kept in a warm brooder, 90° F,
for the first few days.
When they are two to three weeks
old, he turns them outside to a small
pasture pen.
The pen doesn't have a floor
because the chicks like to scratch in
the dirt while the pen protects them
from the wind and any predators.
He moves the pen every morning
to a fresh batch of grass.
"They get bigger if I move them
every day and it's cleaner and looks
nicer."
His pigs and lambs are born in the
"This change of ownership will
either be as a result of a transfer
within the family or -a sale to a new
owner, most likely a neighbour who
is expanding or someone off-shore,"
said Brinkman. "Even though
farmers tend to think of themselves
as being able to go on forever, these
ownership changes will happen. It's
not a case of if, but a case of when."
Dr. Brinkman said that at the
recent Grey Bruce Farmers Week, a
number of presenters voiced their
concerns about the aging farm
population with over halt of Ontario
farmers over 50 years old. There is a
relatively small number of younger
farm operators with less than three
per cent being 30 years old or
younger.
"Where is the future of the
industry," said Brinkman.
He said that in 2002, the nominal
farm income was lower than in 1971
and in today's dollars. farm income
spring and pigs are ready for market
in October and November while
lambs aren't ready until late
November.
Lewington said he is trying to get
on the Huron Good Food Box list,
making it easier for more people to
shop locally.
It's called Field-to-Table which is
a collaborative of local agencies that
• came together around a shared vision
of ensuring nutritional food supplies
to Huron County residents while
creating new opportunities for the
region's food producers.
According to the Huron Business
Development Corporation's website,
the program has proved exceedingly
popular, growing by leaps and
bounds. By linking the needs of local
food consumers to the abilities of
local food producers, this initiative
hopes to open up new markets for
suppliers -of specialty food products
in Huron County.
"It's help for individual farmers
who sell directly to consumers and
it's also help for the consumer.
Unfortunately not every farmer has
the right mindset to deal with direct-
to-consumer on a regular basis," said
Lewington.
He said that some like to do the
farm work, but don't like people
coming in asking questions about the
products.
"The marketing part is lots of
work. Some argue its as much work
its as growing the food."
in 2002 was one-fifth of that in 1971.
He also said the capital in nominal
dollars increased over eight times
from 1971 to 2002. In 1973, the debt
to income ratio was 2.3 to I,
meaning if all the income were used
to pay down debt, the farmer would
be debt free in 2.3 years.
But the debt to income ratio in
2002 was 43.4 to 1, meaning it
would take 43 years to pay off the
debt.
He said that these statistics would
seem to indicate that farmers who
are planning to transfer their farm to
the next generation will face very
high increases in nominal values.
"These increases create high
potential tax consequences and
complicate efforts to maintain fair or
equal status amongst children," Dr.
Brinkman said.
Uren said the values are big today
at transferring.
"Very high values, but the dollar
amount to pay taxes of equalization
to farmers is hard to find because is
there is so much debt already," he
said.
He said the presentation was an
attempt to "try to provide a solution
(the farmers) might not have thought
about," said Uren.
For example he mentioned
freezing the value that parents hold
rather than them going on and on.
"In a tragedy, the spouse gets
money and rest is divided among the
kids. If there are four kids, three-
quarters growth will go to other
family members that might not have
been that involved in the farm," said
Uren. "The freeze value is the point
when the son or daughter really
started becoming the successor."
For example, he said if the son
decides to come back to the family
farm, the freeze value is his reason
for getting up because he will some
day get the farm.
"Mom and dad take a share in the
company that won't grow in value,
but has some contact with the
successor. Somewhere down the
road, mom and dad will give the
company to the successor," he said.
He said, then the person taking
over doesn't need money from the
parents because he or she is getting
the farm. When the parents die, the
farm is turned over to the successor
and the other siblings are
compensated.
He said when a life event happens
and there hasn't been any planning
done, no one is protected.
"People don't plan to fail, they fail
to plan," said Uren.
Dr. Brinkman said if the younger
generation leaves to find aareer in
the outside world, whether it be - a
teacher or .country western singer, it
is tine,"but if they leave because
they can't see a viable way to. take
over the family business, this is a
tragic loss," he said.
He said succession planning is one
of the most difficult issues to discuss
as a family.
"The younger generation may
have witnessed failed attempts by
others they have known or read
about and decide the risk is too
great," he said.
Dr. Brinkman went on to say that
parents need to recognize the
opportunity cost that the children,
who decide to return and be part of
the family business, will pay.
Continued on A-14
Lewington hosts open house