Provincial Ag Scene - Spring 2017
April 15, 2017
Planning vs. Succession Planning
With Canada's aging
population, we are seeing an enormous transfer of wealth, one that will
continue for years to come. Included in that population are farming parents,
many of whose children have chosen non-farming careers and will end up
inheriting all or part of the family farm.
The term "farm
succession planning" usually implies that one or more farming children
will take over the farming operation in some fashion as their parents move away
from actively running the business. With the increasing number of farm kids
choosing different careers, a more appropriate term is "farm transition
planning". It encompasses transfers of farm ownership regardless of
whether the heirs farm the land themselves or not.
financial advisors, farm managers, and other professionals have been helping
farmers with succession planning for a long time. Its visibility among aging
parents, as well as their children, has given rise to inquiries being made of
other organizations for help. In particular, farm advisory associations, family
business organizations, and government ministries are being approached for
In a response to these
needs, Alberta Agriculture and Forestry conducted a series of Farm Transition
Planning Workshops this past winter. Held in a number of communities throughout
the province, they consisted of two days in each location, about a month apart.
The attendees ranged from farm couples accompanied by a son or daughter who
will take over the farm, to individuals and couples who have no one to succeed
them in their farming operation. The first day was facilitated by an
experienced family business professional and was devoted entirely to recognizing
family dynamics. The objective was to help attendees understand the importance
of dealing with family interactions and relationships, as well as potential
strategies for clear and effective communications. For the second day, advisors
from the law, accounting, and financial planning professions presented to the
group in the morning. In the afternoon, attendees met privately with each of
the advisors for preliminary advice on next steps in their planning process.
Comments from participants indicated this was a positive and helpful
takes a serious amount of time and effort, but without it, the consequences are
not likely to be pleasant. Some people compare the timing for transition
planning to the timing for planting a tree. The best time to start was years
ago. The second-best time to start is today. Call us to discuss how we can
assist you in the generational transition of your farm or ranch.
increasingly concerned about their environment, including how it is affected by
agriculture. They want easy access to nutritious, flavourful, affordable food,
but also want the comfort of knowing it hasn't been grown in a way that damages
It is common for people
to believe environmentalism is the sole philosophy that will deliver them safe
food and save the planet. There is more to it than that. For environmentalism
to work and have staying power, it needs to work in conjunction with economics
and social issues. This gives rise to the concept of sustainability. It is
important to consider the definition of the word "sustain" in this
context - it means to strengthen or support.
Sustainability is often
described as meeting the needs of today without compromising the needs of
future generations. It is about improving the standard of living by protecting
human health, conserving the environment, using resources efficiently, and
advancing long-term economic competitiveness. Integrating environmental,
economic, and social priorities into policies and programs supports action at
all levels - citizens, industry, and governments.
Dealing with the
environmental aspect, farmers may use methods to enhance soil health, minimize
water use, and reduce practices that contribute to pollution on the farm. They
will be considered good stewards of the environment if they follow certain
As for the economic
component, farmers producing the food must be profitable. If farmers are
subject to restrictions that make it impossible for them to make a living, they
eventually exit the business and stop producing food altogether. This also
applies to the people and organizations further along the value chain as
agricultural products are refined and prepared for consumption. The good news
is that many environmentally sound practices actually increase the long-term
profitability of the farm.
When we talk about
sustainability with regard to social issues, it can be described in terms of
consumers' desire for the wellbeing of others. People concerned with
sustainability can look for foods grown in certain ways. They could include
methods that promote farmer and farm worker health and safety, those whose
production methods are kind to the environment, or those that benefit the local
and regional economy.
If the components are in
place for sustainable agriculture, all of society benefits now and into the
future. At FNC Serecon, we are focused on helping landowners achieve their
goals for sustainability on their property.
Stewardship Tip - Crop Rotation
When people rent their
land to a farm operator, they need to know that their land asset is being
treated correctly and in a sustainable manner. One fundamental aspect of good
land stewardship is proper crop rotations.
The growing region
dictates the suitable crop species, as well as which sub-species and varieties
can be grown for the best results. An example of an acceptable crop rotation is
a three-year period that sees the first year as canola, the second as wheat,
and the third as peas or other pulse crop (eg beans, lentils). Pulses can be an
especially valuable part of the rotation, and a good crop can be especially
profitable for the operator. While enhancing soil health, pulses also
contribute significant amounts of nitrogen back to the soil for use by the next
Landowners need to know
the right questions and the correct answers so they are informed as to how
their land is being treated. If this vital component of preserving your land is
not something you're equipped to perform, just give Jim Robinson at FNC Serecon
a call at (780) 488-7440 and chat about how we can help.
Lease Rent Monitoring
If you have a surface
lease on your land, it may be time to take another look at your rental
agreement. With the instability in the oil and gas industry and the number of
abandoned wells climbing, it can be common for rental reviews to be missed.
The requirements around
rent reviews vary from province to province. In Manitoba, Saskatchewan, and
B.C., it is up to the landowner to request a rent review. In Alberta, the law
states that the operator of a surface lease must notify any landowner who is
eligible for a rent review, although it is a good idea for the landowner to be
aware of rent review dates in case their tenant neglects to initiate a review.
In any province, there can be rental agreements that are not updated, causing
the landowner to be paid insufficient rents.
Surface lease agreements
outline that a landowner will be compensated yearly for ongoing operations on
private land. The level of compensation is based on loss of use (the cost of
not being able to farm the land consumed by the surface lease), as well by for
such things as nuisance, inconvenience, and extra time spent farming around the
obstruction created by a surface lease.
In the western Canadian
provinces, rental review dates vary between three and five years. It is a good
idea to check the specifics of a lease to ensure proper compensation is ongoing
If you would like some advice on a surface
lease issue, please touch base with Trevor Birchall at (403) 216-2113.