The Rural Voice, 2004-01, Page 30Helping the kids take over
A sucession plan can smooth the transition of hour farm
to the next generation. You should start planning earlg
to m transfer.
ne of the greatest concerns for
agriculture in Canada these
days is the aging of farm
operators. Statistics Canada in 2002
released information that showed the
average age of farmers continues to
increase and a 2001 study by the
George Monis Centre and the Royal
Bank shows that 120,000 farmers
will turn 65 in less than a decade,
forcing some of the $50 billion in
farm assets to change hands. Either
we find ways to bring more younger
people into farming or the number of
farmers will plummet even more
precipitously than in the past few
decades.
Part of the problem is that farming
must be more financially attractive,
said Ron Bonnett, president of the
Ontario Federation of Agriculture
when those Statistics Canada figures
came out a year ago.
"There has to be some attractive
economic features to keep young
people in farming, and for far too
long those features didn't exist,"
Bonnett stated.
He noted that just about the time
the previous census was done in
1996, the federal government made
drastic cuts to its support programs
26 THE RURAL VOICE
By Keith Roulston
for agriculture. "That signalled the
beginning of the exodus from
agriculture."
"Without something to give some
positive hope for young people
thinking of staying on the farm, or
getting into the business, it is easy to
understand why the average age of
farmers in Canada has been
increasing," Bonnett said.
"Young people have keen
business minds, and when they see
no encouraging economic indicators
for agriculture, they can't be blamed
for taking off -farm jobs."
In the case of the children of
farmers who are thinking of taking
over the farm operation, looking at
the viability of the farming operation
needs to be one of the first steps,
according to Merle Good of Alberta
Agriculture, who spoke on the issue
in an article in The Western
Producer. "The first thing to look at
is viability. If you're going to get
your entire living off the farm, you
damn near have to gross $200,000
per family." Without that, off -farm
income will be necessary to support
the kind of lifestyle young people
grow accustomed to while working
off the farm, he said.
But the process of involving the
younger generation in the farm
operation can actually increase the
viability of the farm. according to
John Uren. a St. Marys -area farmer
and financial planner with John H.
Uren and Associates Inc. The older
generation tends to run out of steam
after a certain age. If you're older
you start thinking about whether it
makes sense to tile drain that extra 50
acres, build that broiler barn or buy
more quota, he says. The young
generation is looking farther ahead
and they provide the drive to keep the
farm dynamic.
Winnipeg accountant Terry
Betker, in Western Producer says
examining key balance sheets,
income statements and debt servicing
will help show how risky or viable
the farm is. The appetite of the young
farmer for risk is also an important
factor in what Betker calls this first
stage assessment and analysis.
This process makes family
members seek as much information
as possible on farm viability, family
goals and objectives. "It shows areas
of common thought, vision, goals
and areas there they don't agree."
Getting people on the same page