Knowing when to retire

Michael Brady. Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents. The Lodge, Lee Road, Cork. 6th October 2020

It is often said that farming is a way of life.

Most farmers are sole traders with no employees only family help, it is easy to understand how one’s personal life becomes entangled with one’s business life. We all know farming is a 24: 7occupation, every business task and decision depends totally on you and as a consequence you are, ‘always on’.

This total immersion in the farm business can be a very positive influence on a developing business where every opportunity presented to grow and increase profitability is availed of by the ambitious ‘always on’ farmer owner.

However, on the other hand it often becomes an addiction resulting in the farmer owner staying on too long, this becomes a huge negative factor in a farm business. Knowing when to retire is a difficult but necessary question to address for all farmers.

From my experience there are 5 development stages in the ‘Personal & Business Life Cycle for farmers and their businesses (see table 1).

Table 1:  Personal & Business Life Cycle – Development Phases

StageAgeDevelopment Stage
10 to 25 yearsEducation
225  to 35 yearsExperience
335  to 55 yearsMake it break it
455  to 65 yearsCoast along
565 years +Going backwards

Stage 1  – Education

From birth to 25 years of age people get their education and a grounding on how to tackle life. These formative years determine our personal lives and careers. Some children follow in their parent’s footsteps from a career and hobby viewpoint, others are influenced elsewhere and follow a different path. The important element is figuring out which path to follow.

Today, Irish farmers are exceptionally very well educated. This education is gained from pursuing the practical route or academic route, either way they are very well equipped for taking on the business of farming. 

Stage 2  – Experience

It’s a fact that 80% of what you learn in a career is from ‘on the job’ experience. Nowadays, most farm successors work abroad or on another farm for a period of time before coming home to the home farm business. This is the perfect marriage of education and experience and is essential for any ambitious young farmer.

Your parents may be good very good farmers, but they don’t know everything. There is a big world out there, this is the opportunity to go and experience it, learn some new ideas and bring those ideas back home to challenge the parents and the way they manage the farm business.  

Stage 3  – Make it or break it

Many young farmers assume control of the farm business before their 35th birthday, due to the young qualified farmer exemption from payment of stamp duty. Armed with their education and experienced they take on the responsibility of running the family farm business. Some are more ambitious than others but in general the risk in successfully taking over the established family farm business is minimal, especially when compared to a start-up business in farming and other in sectors.

This is the period where non-committed farmer successors are exposed, as they fail to maintain or grow what generations before them have built.

For the first time in generations there is an opportunity to commence farming in Ireland without owning or inheriting land. Dairying had expanded significantly since the removal of milk quotas in 2015 some of these businesses have no successors and this presents an opportunity for the landless farmer to get onto the farming ladder. The present profitability of dairying is such that the sums often add up to convert an existing beef or arable farm into dairying. Clearly there is much more risk in these ventures but on the flip side the rewards are good too if you make it work.  

This is the stage where you ‘make it or break it’.

Stage 4  – Coasting along

When most business owners reached 55 years of age the brain tends to revert to a more conservative mode when making decisions. The exuberance of youth has passed and the 30+ years of experience tends to dampen the ambition.

Farmer owners in this age bracket tend to coast along without damaging the farm business but they don’t add to it either. It is the perfect time to bring the new ambitious successor onboard to question and plan the path of the business over the next 30 years.

In my opinion, this is the best period in any farm business. The combination of experienced parents with a questioning ambitious successor will take the farm business to the next level and future proof it for the generations to come.

However, it is important to get good advice at this time to avoid friction that would have a negative effect on the business. It is vital that both parents and the ambitious successor mutually agree on a plan for the next stage of development of the farm business. There are three parties to satisfy in this plan a) parents b) successor and c) the farm business, it is important to assess all the options and ultimately settle on one to progress successfully.         

Stage 5  – Going backwards

When most farmers reach what is regularly called pension age (presently 66 years of age) it is time to hand over the reins, regardless of how active or healthy you feel. Running the farm into the ground or overseeing its decline is not good for body or soul.

I believe you owe it to yourself, your family and the industry to protect what you have built and hand it over for the next generation to take it to the next level, be they near family or not. The policy makers could take this message on board and reconsider CAP support for those in the 70+ year bracket.   

In summary, the message for farmers is to know when your time is up, hand over the reins and retire, the industry, the family farm, your family and more importantly yourself will reap the many benefits.