Farm viability has been identified as the biggest obstacle to succession planning, according to findings in Ifac’s Irish Farm Report 2024 published today (Thursday, January 18).
Succession planning remains a “major stumbling block” for farmers, with 48% of farm families yet to identify a successor, 2023 survey findings containing the views of 1,048 Irish farmers show.
This is an improvement on the previous year when the figure stood at 69%. The survey taken in November 2023 found that of those who have a successor identified, 4% are non-farming.
In total 94% of farmers still believe there are significant challenges for succession planning, with one in four farmers responding to the survey naming viability as the biggest obstacle.
A lack of interest from the next generation was identified as a burden to succession by 15% of farmers, while 17% said the farming lifestyle does not appeal to the next generation.
Succession planning
While every succession planning process will look different, one of the first steps is always to identify the successor, and, more importantly, the type of successor, Ifac said.
A willing successor is someone who is willing and able to take on the farm, however, there can be many reasons why a successor is reluctant to take over, the report states.
If a successor is reluctant to take over the farm, Ifac said it is important to understand the reasons why. Examples could be:
- They are only taking over the farm out of a sense of duty, but their real interest lies elsewhere;
- They are worried about the financial impact on themselves and their family if the farm is not viable;
- The timeline in the succession plan does not sit well with other commitments;
- They are worried that they will have to cope with an unfair burden, care, costs and/or family disharmony;
- They are worried that other family members have unrealistic expectations for the future of the farm based on emotional rather than sound business reasons.
Leasing may be an option for a successor who does not want to forego a career elsewhere. Other potential solutions could be partnerships, diversification, and changing business structure.
In a situation where there may be more than one successor, Ifac said it will be important to establish whether the farm can support more than one livelihood.
Where it is not possible to identify a willing successor in the immediate family, farm partnerships, leasing, share farming or transferring to a niece or nephew may need to be considered.
If there is no successor, alternative options to consider may include delaying transfer until after death (transfer by will), or looking at options to allow farmers to take a step back.
The Department of Agriculture, Food and the Marine (DAFM) has a Succession Planning Grant Scheme (SPAG) in place offering grants up to €1,500 to cover 50% of costs.
Starting succession planning early and maintaining an up-to-date will can be invaluable in the case of unexpected events, Ifac said. However, one in two farmers have no will in place.
Young farmers
Co. Cork has the highest number of young farmers in Ireland accounting for a share of 14%, followed by Laois at 9% and Cavan at 7%, Ifac’s Irish Farm Report 2024 shows.
The majority of young farmers are dairy farming (40%). Second in popularity among Irish young farmers is beef, sheep and tillage farming accounting for 32%, 16% and 9% respectively.
Over half of young farmers farm as sole traders, while 34% are in farm partnerships and 11% are registered as a limited company. The least common business structure is share farming at 2%.
Under share farming, each party makes separate contributions, keeps their own accounts, and calculates their own profits as a separate and independent business, Ifac said.