Transition plans help manage risk, offer peace of mind
Most producers say they would consider a transition plan as a possible risk management strategy for their operations, according to a more recent Farm Credit Canada (FCC) risk management survey.
Yet an overwhelming majority of producers continue to operate without a formal transition plan and many aren’t sure where to turn for support in developing one, according to FCC transition specialists.
“It’s one thing to tell producers they need a transition plan and they need to start early to keep all options available,” said Greg Thomarat, manager of FCC advisory services. “But the biggest challenge is sometimes knowing where to start and who to turn to for the tools and resources to help develop a plan that’s right for you, your family and your business.”
It’s estimated that over the next 10 years, 75 per cent of farms will change hands, yet only eight per cent of farmers have a written transition plan, according to Farm Management Canada (FMC), which recently unveiled a website portal that connects farmers with tools, resources and experts to help them through various stages of farm transition, from assessing their situation to plan implementation and evaluation of progress.
The farmtransitionguide.ca portal is designed to help farmers navigate their transition journey. The resources and tools include family and non-family transition options, as well as inspiring stories from fellow farmers.
“By taking steps toward transition planning, farmers are not only building upon their own legacy, but ensuring the continuity of Canada’s agricultural excellence through effective management planning,” FMC Executive Director Heather Watson said.
Over the past couple of years, FCC has also ramped up its transition advisory services in recognition that a growing number of farmers are reaching retirement age and are ready to transfer their operations to the next generation.
According to FCC transition specialists, the majority of producers who are ready to retire from farming are relying on income from a farm sale to finance their retirement, and one of the biggest challenges they face is developing a transition plan. FCC’s expanded advisory services include several activities to assist producers with the farm transition process, including coaching, connections with advisors, resources and services.
An FCC Vision Panel survey of just over 1,700 producers — done in partnership with Farm Management Canada (FMC) — showed almost 40 per cent of respondents experienced high to moderate stress from farm transition considerations. The survey also showed about a quarter of those respondents (12 per cent) indicated farm transition considerations kept them up a night.
FCC helps farm families who are at the early stages of transition get started in the right direction with their transition plans and continues to expand the number of advisory service and learning opportunities for producers.
“The business of farming already comes with a wide variety of risks and uncertainty, so developing and maintaining a transition plan provides a clear path forward for those who want to exit or be a part of the industry,” Thomarat said. “Agriculture is affected by so many things beyond the farmer’s control – economic conditions, trade agreements and the weather. A transition plan not only helps manage business risk, but it offers producers a sense of certainty and peace of mind.”
FCC is offering a free webinar — Finding Fairness in Farm Transition — on Feb. 9, featuring Elaine Froese, a family farm transition expert. To register, go to fcc.ca/events.
FCC is Canada’s leading agriculture and food lender, with a healthy loan portfolio of more than $41 billion. Our employees are dedicated to the future of Canadian agriculture and food. We provide flexible, competitively priced financing, management software, information and knowledge specifically designed for the agriculture and food industry. As a self-sustaining Crown corporation, we provide an appropriate return to our shareholder, and reinvest our profits back into the industry and communities we serve. For more information, visit fcc.ca.
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