Farm Succession Corner: What should happen before the transition of farm ownership?

How to develop a step-by-step transition plan

It is important to start the transition process early, ideally five to 10 years in advance if time is available. This will not only provide your successor with the mentorship, experience, and time to develop the skill sets necessary for a successful farm. It will also highlight your successor’s aptitude and talents, as well as gaps that can be addressed through further training, education, or resources.

The ideal progression of a farm succession plan includes the transitioning of:

• Day-to-day labour — Start with basic tasks and increase the responsibility of your successors over time. This helps them build their skills and experience and become familiar with your farm’s operations.
• Daily operational decisioning — Routine decision-making such as scheduling work, managing livestock, or overseeing crop maintenance can help your successors gain the confidence and problem-solving skills they need to run the farm successfully.
• Larger management decisions — Transition decision-making authority over time and gradually allow your successor to make key decisions such as financial planning, equipment purchases, and employee management.
• Strategic planning — Involve your successors in strategic planning discussions such as those about growth, sustainability, or modernization. This helps ensure they understand market trends and financial risks. It also provides them with the knowledge they need to develop a vision for the future of the family farm.
• Leadership — Enabling your successor to take on management roles, represent your farm in the community and industry, and lead key projects can help foster leadership skills. Encourage communication, collaboration, and accountability to prepare them for full leadership of your farm.
• Ownership — Gradually transition the ownership of your farm to your successor through a structured succession plan. This should include legal and financial considerations such as estate planning and tax strategies. Aligning the transfer of ownership with management capabilities is crucial to ensure a smooth handover.

Mentorship is necessary as you transition your successor from labour to tactical decisioning to strategic planning to leadership. This provides the future owners of your farm with experience, problem-solving skills, and the big-picture thinking required of today’s farms and ranches.

Planning for the transition of your farm operations, management, leadership, and ownership may sound like a daunting task — and it is. However, developing a clear transition plan can help make the process more manageable and adaptable by all involved in the transition of your family farm. It is important to remember that transition planning is a journey and breaking it down into sequential steps can help make the process less daunting.

Take the next steps

Today’s agricultural landscape is complex, and the stress of managing it all can be substantial. However, transition planning can help your farm and your family navigate through an environment of ever-increasing change, risk, challenges, and opportunities. Once your transition plan is mapped out and implemented, your farm can continue to do what it does so well — growing Canadian food, stewarding resources, and contributing to your community.

For more information about how to develop a plan to transition your family farm, contact a member of MNP’s Agriculture team.