How can young farmers get into farm ownership? They don’t have to……. yet.

Posted by Brendon Walsh on 29 November 2016

Does a young farmer have to own land to own a farm business? No, they don’t and the so-called upcoming crisis on ownership is not a crisis at all. It is in fact an opportunity! It all depends on your perspective.

While visiting clients this week in Southland, we discussed how the average age of farm owners is increasing. Many don’t have succession plans or children who wish to return to the land and take it on. What’s to happen to their farms as nature catches up with them and they become less mobile? This will inevitably happen and is not new to anyone. Articles on this topic have been a flood for several years now.

Several voices would echo the old “sell the farm and enjoy life!” or the dreaded “Sell the farm and retire!” This will sound horrible to many older farmers who have worked hard all their lives. What would they do? Well, I feel the opportunity exists for older farmers to partner up with younger farmers who may not even be related and strike a win / win deal.

It is no secret that it is a steep challenge for young people without a family farm behind them to actually go farming on their own account. But what about leasing a farm from an older farmer, while the older farmers stay living on the property in their house they have been in for years? That way nothing much needs to change for the older farmer and they retain ownership of the land while receiving a passive income, the young farmer gets started, and that also buys time for the older farmers to decide what they really want to do, without the hassle and responsibility for daily farming operations.

Yes, the young farmer would need to find a house. If there was a second house on the property already then problem solved. If not, they would have to find one nearby. Mind you, there are other solutions as well, such as the older farmer putting a house on the farm for the younger farmer and that would cause the value of the farm to increase and also provide peace of mind.

One of my clients mentioned above (a young couple) has recently completed this exact process, albeit with their parents and this has been a great boost to their own lives and life path. If you put the existing family ties aside for a minute, they could be any young couple leasing off the parents. All that it needs is agreement on terms using the right advice, completion of the legal stuff and then getting on with it. Of course, the younger and older farmers would have separately researched their sides of the deal to ensure it stacked up.

Going forward, there could be a number of options depending on goals for both the older and younger farmers. The younger farmer could farm profitably and stash some profit to then use for their next opportunity i.e. do a straight lease before moving on. This could be done multiple times if the older farmers have a hankering to help young people get underway. The younger farmer could lease and then buy shares in the land as they go. It could be a lease to own outright deal. Perhaps it is an equity partnership from the beginning starting small for the younger farmers and growing progressively. Who knows, there are a number of options. All it takes is a bit of commitment for positive outcomes along with some creativity backed by desire for a positive future.  

Imagine the effect on rural communities with the introduction of more young families again! Schools, services, shops, doctors surgeries, community hall societies…… the list goes on.

Farm values may have increased a lot but that doesn’t have to stop young people from getting started, or older farmers from enjoying some freedom and options themselves in their later years. It does depend on the younger farmers being very profitable and doing what it takes to achieve their goals. Those systems exist and farming profitably every year can be done. My above-mentioned clients are doing it, as are many others in NZ. Besides, just ask these guys.

Come on NZ farming, let’s drop the angst around this issue and create some great solutions so we can all move forward, have fun and transition this industry together!

If you are curious about how the GrowFARM® System can help sheep and beef farmers generate the profits they really want, contact me here.