Advice for Son Before Returning Home to Farm

[Nathan818]

This will be a bit of a long post so here goes. As title says I'm planning on returning to family farm but want your advice on what contract/agreement I need to have in place to make transition into the business and further down the line succession go smoothly.

BACKGROUND
I'm Nathan, 20, currently on placement at uni but planning to return home to work on the family dairy farm with my dad in the next couple of years. We milk about 130 cows on around 150 acres (100 owned) in the west of NI. For anyone interested the system is Ayr calving, fully housed on robots, high input high output, do all our own tractor work (slurry, wagon silage etc). Dad is still young at 47 and in good health but is currently the only one on the farm, other than some weekend help from family. I'm the eldest of 4 and have always been the farmer out of us. Dad has made it clear that if I want to farm then he would love to work with me, and I know he will be very open to involving me in the business formally, arranging succession planning and is open to new ideas and giving me responsibility. He came home to farm after college himself and my granda essentially handed him the reins, which had a very positive impact on the business and his thoughts on succession. I should maybe also point out that I've been working on the farm for extended periods of time before during holidays and weekends, I've been a part of business meetings, future planning decisions and have had management input. We're well used to working with each other and dad has made a point to pay me a wage whenever I've been working for a stint so the farm currently owes me nothing and I owe it nothing.

I've heard many horror stories on here about working with family and succession issues, so even though I know it won't be a problem with dad I thought it best to write up a bit of an initial agreement for when I have a proper conversation with him about returning to the business. Just a couple of points to go through with him about what I require on a business and personal level to make this work for me. This is what I want your advice on.

AGREEMENT
1. Sensible wage including benefits
2. Father and son to treat each other with respect as business partners and involve in all business decisions and meetings from the start
3. Son to become equal partner over/in 5 years
4. Succession plan to be agreed and discussed openly with all partners and siblings every 5 years to ensure long term viability of farm business.
5. Meetings with consultant/bank manager/solicitor at start to discuss business direction and best way to structure partnership going forward

These are the main things I could think of myself that I feel would help the process but I haven't thought that long about each of them so am open to suggestions of other points to discuss or changes to be made. Let me know any more general advice or tips you would have for someone going through my situation or if you have any questions for me I'll see what I can do. Thanks all

 

[suffolksmallholder]

Travel to NZ and Oz and even Africa to see how they farm.
Get your uni degree. That is really important.
20 is way too young to be tied to a farm IMO.
Find another job out of Farming and do well in it for at least a decade then you will have a completely different mind-set from when you were twenty. This helps with many of life’s stresses.
I wish you well in your endeavours.
SS

 

[Johnnyboxer]

Good luck
A very sensible approach and a wise head on young shoulders

 

[Bald Rick]

Number one : Are you ready to return? Once back, you may be stuck. Personally I think there is no rush as I suspect your dad is not that old. Go and travel, work abroad etc

2. There is no reason why you couldn’t be made a partner. It’s what I did when my son came home. Twelve years on, I have largely passed the reins to him at the age of 36 and he makes all the major decisions because it is/will be his business going forward. However, don’t set dates in stone. You will both know when you’re ready

3. it will be tough to generate a lot of cash for wages but you will get other benefits from the business such as bills paid for electricity, water and perhaps even a car

 

[Clive]

This will be a bit of a long post so here goes. As title says I'm planning on returning to family farm but want your advice on what contract/agreement I need to have in place to make transition into the business and further down the line succession go smoothly.

BACKGROUND
I'm Nathan, 20, currently on placement at uni but planning to return home to work on the family dairy farm with my dad in the next couple of years. We milk about 130 cows on around 150 acres (100 owned) in the west of NI. For anyone interested the system is Ayr calving, fully housed on robots, high input high output, do all our own tractor work (slurry, wagon silage etc). Dad is still young at 47 and in good health but is currently the only one on the farm, other than some weekend help from family. I'm the eldest of 4 and have always been the farmer out of us. Dad has made it clear that if I want to farm then he would love to work with me, and I know he will be very open to involving me in the business formally, arranging succession planning and is open to new ideas and giving me responsibility. He came home to farm after college himself and my granda essentially handed him the reins, which had a very positive impact on the business and his thoughts on succession. I should maybe also point out that I've been working on the farm for extended periods of time before during holidays and weekends, I've been a part of business meetings, future planning decisions and have had management input. We're well used to working with each other and dad has made a point to pay me a wage whenever I've been working for a stint so the farm currently owes me nothing and I owe it nothing.

I've heard many horror stories on here about working with family and succession issues, so even though I know it won't be a problem with dad I thought it best to write up a bit of an initial agreement for when I have a proper conversation with him about returning to the business. Just a couple of points to go through with him about what I require on a business and personal level to make this work for me. This is what I want your advice on.

AGREEMENT
1. Sensible wage including benefits
2. Father and son to treat each other with respect as business partners and involve in all business decisions and meetings from the start
3. Son to become equal partner over/in 5 years
4. Succession plan to be agreed and discussed openly with all partners and siblings every 5 years to ensure long term viability of farm business.
5. Meetings with consultant/bank manager/solicitor at start to discuss business direction and best way to structure partnership going forward

These are the main things I could think of myself that I feel would help the process but I haven't thought that long about each of them so am open to suggestions of other points to discuss or changes to be made. Let me know any more general advice or tips you would have for someone going through my situation or if you have any questions for me I'll see what I can do. Thanks all

very sensible plan - more should think this through as you clearly have

only advise i would offer is go travel or work for others ( or both) before returning home - it will broaden your perspective and benefit you and your future business more than i could ever possible tell you

 

[Hill Ground]

I think you've got the right idea, as above go and work abroad, and maybe even some stints around the UK.

It doesn't sound like you will fall into the " we do it this way because that's how dad did it" but a bit of horizon broadening never did anyone any harm!

 

[David.]

Establish from day one how your siblings will eventually be paid out.
There is nothing in your post to suggest that the farm and your father won't be there in 5yrs time. If I had my time again there is no way I would seamlessly go from college to junior partner without;
A. Working for someone else,
B. Travelling.
Hopefully combining A & B.
Even with implicit threat that this was a once and only chance.

 

[Princess Pooper]

I would also advise further travel / working for someone else/ You will learn a lot and no doubt enjoy it and grow as a person as well.

Whilst I agree you can't allow yourself to be a slave, if you want to be a partner you need to have a realistic view of the farm's profit and ability to pay you a decent CASH amount. If as a partner you set up an agreement in a few years where you might be getting (say) 50% profit which might equate to £30k and you want to take £30k cash as a wage out of the business, then you will never build any equity in it . If you get £30k profit share and only take £15k out then your share of the business will increase by £15k per year and the remaining £15k might be used to repay debt or for the business to grow.

Whilst obviously I don't know the details of the farm's set-up, bear in mind that although your Dad is still young and retirement is probably a long way off for him then he might want to withdraw some or all of his share of the business capital as his pension when he starts to wind down, or to buy a retirement house. The business needs to be in a stable position in order to do that - another reason to ensure that you aim to build up a good % equity yourself.

All of this should be considered in the legal / accountancy discussions but it's good to have thought a bit about it beforehand.

 

[MF CI]

I would be more concerned about sorting the hopefully far off future. As the eldest of 4 and always been the farmer of the family, would be a shame to put years and years into it from the age of 20 and ending with it all getting broken up and ending with a 25% share.

 

[tepapa]

I'd be off around the world farming and then think about starting at home at about 27/28 yrs old, your dad would be nearer 55 so you could work a 5 year plan to get dad to 60 so he may slow down/semi retire If he wishes and you take over control.

I'm sure you'd still help out silaging etc in the summer but I'd be spending winter In the southern hemisphere .

It's only fair that your siblings will get some inheritance, so don't be caught in a trap where you spend 25 years working at home only to get a wage and 25% of the farm. It leaves you out of work if it all has to be sold off to pay out siblings.

 

[suffolksmallholder]

AND
@Nathan818
Read the ‘All-this-will-be-yours-one-day’ thread and take on board the slavery aspect.
Then RUN
SS

 

[Pan mixer]

Some solid advice there. The agreement idea is a good one but leave it for 5 to 10 years before you go home if you can.

Ultimate inheritance plans of your parents are key though and you should be able to discuss this with your parents and sibs now or else you could waste your whole life.

 

[melted welly]

Travel, work for others, see the good and the bad of what goes on. Don’t feel obligated to return home immediately, broaden your horizons and see the world while young and free, it’s the best time to do it, you can’t take 6months away in Oz if you’re depended on at home. You have a very sensible plan, but don’t rush to start it if you don’t need to.

 

[Hooby Farmer]

Go out into the world for the next 5-10 years, and get some life experience under your belt and I dont mean just Ag related.

 

[Still Farming]

What can be done if one child is keen and others don't want to know.
Leave all to the interested one is it??
No parent wants to "short change" any child ?
Crystal ball you need but all got to start somewhere and none of us know what's round the corner.

 

[Limcrazy]

Find somewhere better to farm where there is more available land and scope to expand. There are too many ambitious farmers in NI chasing the same acres You're at the perfect age with young parents to do it.

 

[Working from home]

Follow your own heart Nathan. The very best of luck. Whatever you choose to do, it will all change when you get a woman in tow!!!!

 

[Sonoftheheir]

Maybe if he goes off somewhere one of the others might step in?

 

[Bill dog]

Maybe if he goes off somewhere one of the others might step in?

My thoughts exactly. And dealing with 3 siblings may well be workable to sort out succession. But the 3 siblings with get partners , and they will all want their slice of cake one day!

 

[chipchap]

My thoughts exactly. And dealing with 3 siblings may well be workable to sort out succession. But the 3 siblings with get partners , and they will all want their slice of cake one day!

From my limited experience it seems the problems don’t start until the siblings get partners.

Make sure your parents have a watertight plan that is fair.

Fair does not always mean equal.