James: Succession planning biggest issue, biggest opportunity

Day 2:

IT'S interesting that when addressed by Berry Marttin, one of Rabobank International's board members, that the first issue the young farmers of the world raise is succession.

Succession planning certainly has been a point of discussion in Tasmania for a few years now, with farmers being encouraged to address the issue in their family businesses.

But it was raised today because the older farmers from the first Master Class, in 2012, found succession to be a major point of concern.

The impression from the Young Farmers Master Class is that succession planning presents many opportunities for a young farmer.

Opportunities to make positive changes to the family farming business, opportunities to grow, introduce new practices and explore new enterprises.

The way I see it, succession planning is also an important consideration for the future viability of the business as well as security for the younger generation in business and the older generation in retirement.

Another point of discussion today was the economics of farming.

According to Rabobank, figures every step in the value chain for agriculture, on average, receive a healthy return on equity... except farming.

Based on figures shown for the Netherlands, farmers experience zero and sometimes negative return on equity as a percentage.

This raised many concerns amongst farmers in the room today.

Questions like: "Why are we performing this badly?"; "Should we be vertically integrating?"; "How do we get better profits at the farm gate?".

When investing in the share market for example or commercial property or other business opportunities outside of the farming, the return on equity is expected to be much higher. So why do we continue farming?

As business people, aren't there better opportunities for investment out there?

Maybe it's the fact that we want to be farmers and because of this fact we are willing to ignore the fact that our investments may not be performing as well as other investment opportunities.

But as we also discussed today, agriculture is a growing business and as the world population grows and developing countries become wealthier so too will the demand for food and fibre.

So agriculture is a very attractive business to be in, especially for the young entrepreneurs in this room today.

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    James McShane

    James McShane

    is a farmer in Tasmania's Midlands and a member of Rabobank's Young Farmers Master Class.
    Date: Newest first | Oldest first

    READER COMMENTS

    chump
    3/06/2014 6:49:48 AM

    Hopefully some of our REPRESENTATIVES in farming will see this issue as important and put some effort into making succession work, cause at the moment in general across the industry it aint.
    Young Farmers Master ClassFollow five Aussie farmers' journey to the Netherlands for the Rabobank Young Farmers Master Class.

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