Are You Ready for the Next Generation of Farm Operators?
The coming wave of farmer retirements presents an opportunity for financial institutions, but also creates enormous risk.
Stratus interviewed 800 farmers from across Canada in 2018. They all had gross farm receipts of at least $250,000 and averaged $1.1 million per farm. As expected, many farms will change hands over the next few years, but not everyone is ready.
Transitions are mostly to the next generation, and soon.
In 2018, 70% of farms were operated by multiple generations; in fact 20% are operated by three generations working together. Almost all of those multi-generational farms expect ownership to transition to another family member when the time is right.
That right-time is coming soon for many! Retirement is imminent for 7% of farmers and another 36% say they are approaching retirement. Overall, 17% say their farm will transition to a family member in the next 2 years.
Are they ready? Can their financial institution help?
Most have a succession plan in mind. They say that a mortgage from a financial institution is the most common way that they will transition the operation to the next generation. However, among those who say the transition is happening soon, 56% still do not have a formal written plan in place!
While accountants are the leading professionals engaged in succession planning, financial institutions are also an important resource. Engaging with farmers, young and old, at this important time is a good way for financial institutions to assist their customers and to reduce the risk of defections to competitors.
The report also includes detailed data comparing individual financial institutions such as ATB, BMO, CIBC, National Bank, RBC, Scotiabank, TD Canada Trust, FCC, Desjardins and other credit unions.