The future face of farming
Younger siblings following their families into farming is becoming a thing of the past. The average age of UK farmers is now approaching 60 years old and this undoubtedly will impact the future of the industry.
Farmers under 35 years of age are at an all time low of 3% and 60% of farmers are approaching an age where retirement may be on their minds. If we look at Labour figures, those farmers, partners, spouses and directors who are involved in the business have declined by 23% since 1990 and paid farm workers in the same period have declined by 47%.
“I don’t think that these figures will come as a surprise to many farmers” says James Goodson, farming consultant at Fisher German. “We all know sons and daughters of farmers who have left the family farm to pursue different careers. This can be a difficult time for both the family member leaving the farm and the individual running the farm. Those leaving the farm may feel torn between letting the farm down in pursuit of their own future and the individual left running the farm may feel at a loss as to how they can take the farm forward into the future.” This can be one reason, among many, as to why farmers might look at restructuring the business.
When retirement looms, so do the following questions; who will take over the farm and what will happen to it? Some may choose to sell the farm at retirement; others may consider a collaborative or joint venture arrangement with their neighbouring farmer. For those wanting to continue farming, these types of arrangements can be financially beneficial to both parties as long as the right match is found.
Whatever course the business takes, it is absolutely critical that professional advice should be sought immediately as delays can lead to possible issues and problems with inheritance and capital gains tax in the future. “I know that some farmers may flinch at paying accountants, land agents and solicitors fees but when it comes to your business that you have spent a lifetime working for, it is far better to take good professional advice to help sort out your affairs. This could ensure successful continuation of the business rather than receiving an unexpected demand from the taxman that could put the business back financially or worse still have a catastrophic affect on its trading ability” states James. With good advice, the tax situation could have been at best avoided, or at worst the liability vastly reduced.
The ideal business planning scenario would be that the right arrangements are put in place throughout the life of the business rather than at the last minute. Much depends on the type of business and how it is set up in the first place. For those thinking of retaining their land with perhaps some livestock or machinery sold at retirement there are a number of farming arrangements that can cater for this situation. These arrangements can be hybrids of what is primarily a joint venture type arrangement.
These agreements are a good way of securing the business for the future and dealing with Inheritance tax issues. One caveat though with these arrangements is that the Inland Revenue is keeping a close eye at the moment due to the outcome of recent legal cases and proper advice should be sought to make sure that the full implications are understood before proceeding with anything.
Entering into one of these arrangements, is a way of retaining the core business for future generations, with tenants and land owners being able to derive an income from the land often supplemented by other external or diversified income streams. An important thing to remember is, whatever decision the family take and whatever direction the farm goes, entering into a joint venture type arrangement with a neighbour for the reasons mentioned above should be seen as a positive move either for retirement, a different career off the farm, or freeing up cash that can help fund diversification ventures or reduce borrowings.
“Farmers who are thinking of selling machinery, selling livestock, expanding the business, becoming involved with a neighbour in a joint venture type arrangement or selling the farm ‘lock stock and barrel’ should take good professional advice. I have witnessed farms who have not and they have never been able to recover” James warns.
“In terms of expansion of the farm, it would be worthwhile sending your local land agents some information about you and your farm and noting your interest in taking on extra land in your area. This will allow you to tender for any land that becomes available. Taking this step is important as it alerts agents and farm consultants that you are on the lookout. Be proactive and if there is an opportunity in your area, make sure that you put together a professional tender pack that shows your commitment to not only your own farm but the one you may end up running in partnership with your neighbour” James advises.
Fisher German can offer help and advice to farmers on all of the above and you can contact James Goodson in Market Harborough 01858 410 200 for further information. This article is intended to be an informative guide and the opinions offered should not be relied on wholly for the advice that may be needed in specific circumstances.
- Ashby de la Zouch
- 01530 412821
- Banbury
- 01295 271 555
- Knutsford
- 01565 757970
- Market Harborough
- 01858 410 200
- Newark
- 01949 851815
- Southampton
- 02380 883150
- Stafford
- 01785 220 044
- Worcester
- 01905 453275
