Succession in the spotlight as rising number of farmers plan to cut back or cease farming

The number of farmers planning to cut back or cease farming altogether has risen to 28 per cent, up from 20 per cent last year, putting succession planning back in the spotlight.
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Leading rural insurer, NFU Mutual, spoke extensively to a representative sample of 1,654 farmers across the UK as part of its annual Voice of the Farmer study.

It found an increasing proportion of farmers believe they’ll cut back or cease farming altogether, coinciding with evidence the average age of farmers continues to climb.

More than half of the farmers surveyed (57 per cent) were over 65, while just 5.4 per cent were under 45, reflecting the demographic of UK farmers.

More than a quarter of farmers (28 per cent) plan to cut back or cease farming, up from 20 per centMore than a quarter of farmers (28 per cent) plan to cut back or cease farming, up from 20 per cent
More than a quarter of farmers (28 per cent) plan to cut back or cease farming, up from 20 per cent

As a result, succession planning is becoming increasingly important. Nearly half (47 per cent) of farmers now have a plan in place, and a further 18 per cent recognise its importance. Only 35 per cent of farmers think it is not relevant to them.

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Planning how and when to hand down the farm can be daunting, especially when there is uncertainty around input prices and the future of agricultural policy.

“Handing down the farm doesn’t necessarily mean giving all the assets away on day one. It can be helpful to think about the management and ownership of the farm as separate issues, giving the younger generation more of the day-to-day management but retaining ownership of the assets until a later date.

“Only by talking about these issues and thinking ahead as much as possible can you start securing the financial future of your farm and your family.”

Financial security

There were positive indications from the survey that an increasing number of farmers have some financial security for later life in the form of pensions, investments or savings. These can help ease handovers to the next generation.

Farm size

The degree to which farmers have planned their handovers varies according to farm size.

NFU Mutual’s 2022 survey showed that 58 per cent of farmers with less than 21 hectares didn’t have a plan or didn’t see this as relevant to them.

NFU Mutual’s checklist for Succession Planning

One of the reasons farmers may put off planning is the difficulty of talking about the future of the farm. A good way to ensure a smooth transition and protect the future of your family’s farm is by agreeing a plan and taking advantage of the advice available, putting that plan into action and reviewing it regularly. The questions to discuss include:

1. What is the longer-term direction of your farming business?2. What role would each family member like to play now and in the future?3. What development, skills or experience do the younger generation need to acquire?4. How are the assets to be owned in the short, medium and long-term?5. What provision will be made for those who are not involved in the business?6. What level of income does each member of the family want or need from the business?7. Where will each member of the family live?

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