Stoicism is a trait many regional Australian's have in spades. It's what can help us endure endless harsh conditions, and often we take pride in being able to get on with the job -- but it's a behavioural trait that is helping feed a communication crisis in regional Australia.
Andrew Baldock is a farmer, family man and 2015 Nuffield Scholarship recipient. For those not familiar with a Nuffield Australia, they are an organisation who provide research scholarships to Australian Farmers to travel overseas and study a topic that they're passionate about, with the program consisting of both group and individual travel.
Andrew is a fourth generation farmer who lives on South Australia’s Eyre Peninsula with his young family. Farming alongside his Father and brother, Andrew started looking at ways to expand the family farm to include multiple siblings - which ultimately became the topic for his Nuffield Scholarship.
"The real issue was that the farm probably wasn't big enough for two of us to be back. We did a lot of off farm stuff and sort of looked at collaboration with neighbours. We started looking at private investment with agriculture and how machinery sharing might work, and I guess when I got into it I sort of realised that if we stopped pulling the pin and pulling the business apart every 25 years we probably wouldn't be in this situation”, said Andrew.
Andrew started researching his family history, particularly with how his father and uncles faired.
"When I look back, my Dad and his brothers sort of split up 25 years ago and they all struggled; 2 of the 3 made it, but that's pretty rare really. They'd all tell a different story on how it was split up, but the reality is that it was the 1980's and interest rates were through the roof. They were lucky to survive on pretty high levels of debt - shearing and selling chooks on the side - and they've since managed to build up a business that I can see my brother and I come into, but where do we go from here?
"Part of the reason that Dad and his brothers split up is they got married and communication between them broke down".
Andrew and his brother now find themselves in a similar situation where they're both starting young families and need to look to the future as to whether to split the farm or not. Both are adamant that they'd like to stay together.
Andrew says a big consideration is how to have ownership without complete independence from each other.
"It seems silly to be splitting what is a scaleable asset in half. We're a little unique to some families as we're mixed cropping and livestock. My brother has a strong interest in livestock and I have a strong interest in the cropping side, so we've set up pretty clear roles and responsibilities that's sort of evolving, just to give ourselves independence within the business. While we still report back to each other, I don't have much say in the livestock decisions and nor he with the cropping."
Andrew received his scholarship in 2015 and used it to identify the best approaches for building farm enterprises to accommodate growing families in a changing business environment. You can read Andrew's report here.
In his research, Andrew visited successful multi-generational family farms in North America, Brazil, Eastern Europe and Africa. And what did he find? Succession is a serious issue experienced by farmers around the world.
"Succession was the number 1 topic right around the world. I didn't find anywhere in the world where they were doing it any better. Maybe parts of North America are a bit more professional in their approach to business, but if you bring up the subject of succession planning most [farmers] don't have a clear plan and think the solution is to just build the business big enough for everyone – that’s generally the mindset”.
For farming families that are interested in integrating the next generation into the business, how do you overcome the challenges of bringing more family members into a changing and challenging business environment?
How To Start Succeeding In Succession
When it comes to successfully talking about succession in farms, a “one size fits all” approach doesn’t work. So how do you start succeeding in succession? Firstly, it’s important to sit down with the major stakeholders and family members to begin the conversation around succession.
If a farm has a sole operator, Andrew suggests taking time to break down the roles and see what jobs the potential successor can be responsible for as you go, so as the business is growing, you can a plan for the training needed to prepare the next generation to take on more responsibility.
"Job descriptions are really key, especially when you're looking to integrate the next generation," says Andrew.
So, how can it be done? Andrew recommends developing a culture of management systems within a business.
“We need to start setting time aside to speak about it. Start with a weekly tool box meeting, and that might become a yearly budget meeting and then that become a quarterly review of the budget. A few of the good businesses I saw all set time aside to meet with either off farm siblings or most importantly partners, wives in particular, maybe once a year or twice a year to sit down and open the books up to everybody involved and allow everybody to have a say about any issue that they might see. It all comes back to communication and I guess a lot of us have plans on doing it but we get caught up in the day to day running of a farm”, says Andrew.
“Farmers have a mindset that if they’re not getting their hand dirty they’re not getting anything done and there’s this fear of losing their independence. You need to find a balance between working in your business and on it”.
Lawyers & Accountants
As soon as you bring an outside entity into the farms process of success it really formalises the process and can shut down and open and transparent conversation between stakeholders.
Succession has typically been done at one point in time and undertaken by an accountant and/or the lawyer and it’s all about tax mitigation and protecting the asset and it just does so much damage. It really puts up a wall for those outside of the business and it doesn’t address the issues that break families down. Very rarely does a family business fail because of the tax planning or protection of the asset – it has happened - but so often the breakdown will be through a lack of communication.
If we don’t start these conversations to preserve the family unit, as Andrew says “it will lead to some pretty shitty Christmas’ and some really broken families”.
How can you start the conversation on succession? Andrew said it took him 8 years and Nuffield scholarship to try and get the conversation started! “And Dad still hasn’t read my 10,000 word report on it!” said Andrew.
“We did use the accountant for part of our succession planning as I knew Dad was comfortable with that. So, I pretty much went to our accountant and got him to help get Dad on board as I knew Dad had a lot of respect for him. That started part of the conversation in terms of how we we’re going to structure this business so that we can all fit in. I think there needs to be an outside facilitator, but I don’t think lawyers or accountants are always the right fit. I’m just hoping that we can do it better for the next generation.”
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