The agriculture industry is fully aware that successful farm transition is not easy and comes with many potential barriers. Every family farm business is unique, but based on a new RealAgristudies study looking at farm transition, there are some common challenges to work through.
588 farmers across Canada responded to questions about farm transition as part of the study. When asked what the barriers are to a successful farm business transition, 43% said that tax implications are an extremely signifiant barrier, while 32% said it was a somewhat significant barrier. Lack of communication was the second largest barrier. Interestingly, older farmers tend to be more concerned about the tax implications while younger producers tend to be more concerned about communication.
You can view the graph below to see the full breakdown of the barriers:
When it comes to overcoming these barriers, 64% of farmers responding said they use an external advisor to help them with farm transition. Keeping mind that tax complications is the largest barrier, 87% of farmers are working with an accountant, while 72% said they were working with a lawyer. (See chart below)
Personally, I was surprised that only 11% said they were working with an insurance provider given how common life insurance is used in scenarios with off-farm siblings.
Knowing that lack of communication is seen as the second largest barrier, and accountant and lawyers are by far the largest groups used as advisors, there might be an opportunity to provide value on communication issues, in addition to the tax implications and financial costs around farm transition.