Helping With Farm Succession Planning

Farm succession is a challenging area. At its core is an asset, being the land, that is generally high in value but produces returns of between 1% to 4%.

In an ideal world, when it comes time to transition that asset from one generation to the next, those wishing to purchase the farm would pay out family members equally.

However, due to the low returns, it means that when you try to borrow the funds needed to buyout other family members, that the farm does not generate enough cash to cover interest and principle payments.

So, for the incoming next generation farmer to have the ability to complete the farm purchase, they need an uneven amount of financial assistance. And it’s the requirement for this uneven playing field is where challenges often occur.