Farm viability – or the lack of it – is frequently cited as one of the main barriers to succession by Irish farmers.
The recent Ifac Irish Farm Report 2023 found that two thirds (69%) of farm families have yet to identify a successor for their farm.
27% of farmers surveyed said that doubt over the viability of the farm is the main hurdle to succession planning.
However, even if the financial return from the farming activity may be less than ideal, the farm asset itself still has financial value independent of the farming activity.
This reason alone is sufficient to give care and attention to the issue of planning, according to one senior Ifac officer.
Speaking to Agriland recently, Ifac’s head of farm support Philip O’Connor said: “The reality is farmland is worth a lot of money.
“If you think about it, the average farm in this country is a little over 80ac. You’re talking about maybe a million quid worth of assets,” he added.
“We all know there is not massive money in a lot of farming, but it doesn’t change the fact that the asset is quite valuable.
“While you mightn’t be making a whole pile of money out of it, and there mightn’t be a whole pile of money to go around, it is a quite valuable asset. It does need to be thought about, it can’t be left on the long finger. It does need to be reviewed, it does need to be planned,” O’Connor commented.
While many farmers say that one of the biggest reasons they struggle on succession is farm viability, the Ifac officer said that this “slightly misses the point”.
“Yes, the farm mightn’t be generating a huge amount of income, but it doesn’t necessarily mean that the farm is not worth a lot of money,” he explained.
Succession, communication and land use
According to O’Connor, another emerging area of interest around succession is land use change.
In other words, can alternative uses for farmland, such as organic farming, forestry, and renewables, give the next generation more options to enhance viability?
“Will land use start to change a little bit over the next number of years?” he asked.
“Well that gives us more options; that it isn’t a case that you have to farm the exact same way your parents farmed before you. It’ll be interesting to see how that goes.”
However, communication is key to succession, O’Connor highlighted.
He said that sometimes farmers may go to their accountants or advisors without having spoken to their families first.
“You do quiz down into people and ask them who have they talked to about this. They might say no one. At least go home and talk about it with your spouse,” he said.
“And you should definitely talk about it to the successor. People sometimes assume [the possible successor] wants to go home. Maybe they don’t.
According to O’Connor, conversations like this need to happen, especially if a will is involved.
“A will shouldn’t be a state secret. There should be a level of openness among the family,” he said.
Ifac’s head of farm support said that pension plans are also something that need to be considered.
“We would talk to our younger farmers about putting money into pension plans, so when they do get to that age, they’re not reliant on the farm for their sole income.
“It is hard to take two full incomes off a farm. It is a huge cushion to succession that one generation has an element of pension coming in that allows the next generation to come through,” he said.