Who will take over the family farm?
More than half of New Zealand farmers see "succession" as an issue for the family farm, with just 10% having a formal plan.
ANZ Bank has just released a survey showing that 71% of farmers want to sell the business to the next generation, but only 47% have family working in the business.
ANZ's Agri Insights from its Privately-owned Business Barometer, released yesterday, also reveals the high price of land is making it harder for young farmers to raise the capital they need.
The survey of nearly 5000 New Zealand businesses, including 750 farmers and agri-business owners, also revealed concerns over volatile commodity prices and exchange rates, as well as regulations and compliance costs.
"The stories of contested wills and family estrangements are all too common in the rural industry. One farmer told us the issue has the potential to create 'a hell of a nightmare'," ANZ managing director, commercial and agri, Graham Turley said.
Some farmers don't want their children to feel obliged to take over the family business, with ANZ Bank having to help farmers keep the farm while allowing their offspring to follow their own path.
"What we're seeing is farmers exploring new models of succession that ensures the business stays strong and all involved members of the family, including themselves, derive a long-term benefit from it, and have a level of involvement they are comfortable with," Mr Turley said.
The survey noted that farming families prefer a gradual transition or handover to younger members, though half of farmers are happy to carry on in the farm if they are healthy.
The bank says farms that are more profitable and well-planned for the future find it easier to deal with such challenges.
One in three farmers see an outright sale as a successful option, with 70% of those in the survey considering passing the farm to the next generation or progressive involvement of family.
"Farms that are in a good financial position often have few succession issues. Many of these owners recognises the need to involve owners and managers in the business to inject new ideas, maximise performance and introduce new systems," Mr Turley said.
ANZ general manager, agri and business strategy Ross Verry confirms a stronger focus on better profitability gives farmers more options for the future. Such options might include selling some or all of the farm to neighbouring farmers.
But Mr Verry warns many farmers need to get their finances in order and take advice.
Only two-thirds of farmers budget and only a third of those that do monitor their performance against budget and use that information to help them make decisions.
"There's a lot of things farmers feel they cannot control. We think the best use of energy and resources is to control what they can control and manage that well," Mr Verry told NBR ONLINE.
"One of the biggest constraints is access to capital- the ability of the next generation to finance a transaction," he said.
Having a profitable farm helps he said, not only in giving a better income for the young, but also allowing a flexible succession.
"So, the next generation can acquire a share of the farm and let the owner step back and still gain an income from his shareholdings," Mr Verry explained.