Farmers need firmer grasp of costs to survive in new era says expert
Inheritance problems in spotlight at Post debate
TOO MANY farmers still do not have an adequate grasp of their production costs to determine whether they can adapt to a new era looming for British agriculture, an industry spokesman has warned.
Lending for farm investments that could help businesses mitigate the phasing out of direct support payments post-Brexit, depends on clear business plans, Brian Richardson, the head of agriculture for Yorkshire and Clydesdale Banks said.
And that “throws a challenge back to farmers”, said farmer Paul Tompkins.
Mr Tompkins, who is vice chairman of the National Farmers’ Union’s national dairy board, told a debate hosted by The Yorkshire Post: “It was not so long ago we were in the very poor milk price times and we were shocked to learn about the number of dairy farms that simply did not know their own cost of production.
“Speaking to some banks on the back of that, they now say that the problem is shared amongst most of the sectors.”
Mr Richardson said: “What the bank is interested in is how much is that business generating to pay back the interest and the capital payments and how secure is that business, but a lot of businesses don’t have that information in the first instance.”
RELUCTANCE AMONG farmers to talk about how their businesses will be passed on to the next generation can “destroy” families by storing up costly conflicts, a panel of agricultural and legal experts said as they urged people to grasp what is an ideal period to address succession.
Setting out how the farm will be inherited from one generation to the next can strengthen family bonds but by ignoring the issue, families are putting perhaps their most important decision at risk of future acrimony. As reported in The Yorkshire
Post on Monday, anecdotal evidence suggests that one in four UK farming families are not speaking to one of their own due arguments about who takes over the farm in the future.
But a debate staged at the newspaper’s Leeds office in conjunction with our 2018 Rural Awards yesterday heard that the process does not have to be divisive.
Charles Mills, who farms near York and is the Yorkshire Agricultural Society’s show director, believes a wise approach to initiating what can be difficult conversations is for families to understand what their next generation’s ambitions are.
“The first thing you have to do is ask the siblings do they want to see the farm business stay as it is or do they want to see it broken up,” he said. “If they have a desire to see it stay as a whole then that brings a common bond.”
Conversations around succession are not made any easier by land values which have soared over recent decades and have inflated the value of farms, Mr Mills suggested, as he urged fellow farmers to make use of professional advice.
“What you’re sat on can destroy your family,” he said. “It isn’t easy to talk about but you do have to take advice, without a doubt.”
Succession must become normalised as a topic of conversation, panel members said, with Dorothy Fairburn, northern director of the Country Land and Business Association, adding: “If you discuss the issue early enough, it becomes something you do talk about.”
Family members also have to realise that succession is not always equitable between siblings.
Margaret Simpson, a partner at Silk Family Law, explained: “You can have the issue where the farm has gone to the farming son and the other siblings have had less because the son devoted his life to the farm like his father.”
Miss Fairburn said: “Being fair doesn’t necessarily mean dividing things equally. As long as people understand that, then they know what’s likely to come and that reduces that sibling conflict.”
It is often a major life event that prompts farmers to begin discussing succession planning, said Paul Tompkins, who farms near York and is vice chairman of the national dairy board at the National Farmers’ Union.
Ms Simpson said her law firm often discovers a lack of succession plans when being called in to represent farmers in divorce proceedings. She believes farm accountants have a responsibility to ask farmers if they have succession plans in place.
It isn’t easy to talk about but you do have to take advice. Charles Mills, farmer and show director at the Yorkshire Agricultural Society