Jeremy's Blog 1st April 2021: Generational Change
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 1st April 2021.
In a sector of family businesses, a quarter or more of farms and estates might see generational change in any decade. Some may take longer, as where the business has no natural successor; others will come faster, whether by chance or necessity. This is likely to accelerate in the 2020s as the pressures for change intensify, often in circumstances requiring careful advice, personal support and good management. England’s “lump sum option” could prompt some to move earlier.
While easy to see this only with the withdrawal of Basic Payment in England, then Wales, and the post-Brexit policies developing across the UK, there are deeper and larger pressures. Alongside making the best use of the new technologies with the efficiencies that can aid profitability, they include:
- increasing regulatory demands as on land management and slurry storage, with costs
- changing markets and public tastes requiring more awareness beyond the farm gate
- the supply chain seeking assurance and carbon neutrality.
More businesses will need credible business plans more often. Wales proposes an assay of a farm’s business and environmental sustainability as the first step in applying for the Sustainable Farming Scheme.
With skills ranking with investment, innovation and greater openness in land occupation as keys to improved profitability, AHDB data show that, even for “farm managers” under 35, just 48 per cent in the UK have formal training but 64 per cent in Germany, 77 per cent in France and 84 per cent in Holland, all with better long run productivity records.
Steps are being taken. In England and Wales, tenancy succession’s suitability test will, perhaps from 2024, require the applicant to show a higher standard of business and environmental management. Northern Ireland’s aim is that all those taking on farming businesses from 2025 have a level of agricultural education. The Institute for Agriculture and Horticulture (TIAH) is being created to promote and co-ordinate skills and training provision throughout a farming life while the remit for the Agricultural Productivity Task Force includes skills and knowledge transfer.
Ensuring proficient and skilled farmers for the coming challenges is in the hands of those now controlling land and businesses, whether equipping existing people, managing generational change in the family or making land available to others. This will not only be about clarity of analysis, advice and action but also of approach, finding the language and answers so that this is not seen as personal defeat but as passing on a baton.