The Importance of Succession planning for your Farm

6 December 2023

Many farming businesses are facing succession challenges. It’s not just helpful but a crucial step in securing the future of your business, your land, and your family. We’ve discussed this in articles before but why does succession planning matter so much, and what are the factors you should consider?    

   

Succession planning is essential for family-owned or operated farms, which are common here in New Zealand. Farming is more than a job, it's a lifestyle that goes from one generation to the next. But as farm owners age, they need to plan for the handover to the next owner.   

   

Without a plan, your business and family could suffer. You could face problems like:    

• losing your edge and vision;   

• hurting your image and trust;  

• lowering your performance and profit;  

• dealing with legal and tax issues; and  

• causing family and stakeholder conflict.  

    

A good plan can benefit you in many ways, such as:    

• retaining a strong team and leadership;  

• making sure your business lasts and thrives;  

• increasing the value and appeal of your business;  

• preserving family harmony and legacy;  

• avoiding tax and legal troubles; and  

• being customisable to your situation and goals.  

 

It needs clear and open communication, input, and cooperation from everyone involved, like family, staff, advisors, lenders, and buyers. It also needs to be adaptable to changes and chances.  

   

Differing preferences    

The younger generation may not want the family farm or have different goals or values than their parents. They may also lack skills, money, or other options.  

 

Ageing farm owners    

Stats New Zealand says farmers' average age rose from 42.5 in 1986 to 51.4 in 2013, with sheep and beef farmers close to 60. While there is limited recent data there is no indication this has reversed and if anything, it's likely to have accelerated.   

 

Market environment    

The business environment changes constantly because of technology, globalisation, consumer trends, regulation, climate change, etc. These factors may pose threats or opportunities for existing businesses or potential successors.   

   

High land values and low returns   

New Zealand farmland is very expensive and hard to buy for new farmers. Prices are mostly stable except for some areas where the government encourages carbon forestry. To own a farm, people need a lot of money or a good succession plan.  

 

Succession strategy   

A common problem for farm owners is the lack of a clear and communicated succession plan. They may also struggle to find the tools or resources to execute their plan. According to Alchemy Consulting, 20% of New Zealand business owners plan to sell within the next two years and up to 10,000 businesses could change hands over the next five years, many of which are in the agriculture sector.   

   
How do you create a successful succession plan? Follow these steps:  

   

  •  Start early. Begin the process at least five years before the transition or sooner. This gives you more options and flexibility.   
  • Communicate clearly. Share your vision, goals, and plans with your family, successors, managers, and advisers. Listen to their feedback and concerns.   
  • Develop talent. Find and train potential successors within or outside the family. Set clear criteria and methods for choosing and assessing them.   
  • Contingency plan. Prepare for unexpected events, such as death, disability, or resignation of the leader. Name an interim successor and define their role and support.  
  • Consider the non-farming children. They may not get an equal share of the farm, but they should get a fair deal that does not harm the farming business or cause family conflict.  
  • Seek professional support. Succession planning involves legal, financial, tax, governance, and human resources issues. Experts can help farm owners deal with these issues and offer objective advice.  

   

Succession planning is not just a ‘nice-to-have’, it's a ‘must-have’ for New Zealand farmers. It's the best way to secure the future of your farm, your business, and your family legacy. Don't wait until it's too late, start planning today. You'll be glad you did!  

   

We have the expertise to help you – contact us now to discuss how you’re planning the future of your farm. 


Becoming an employer of choice

15 October 2025
How to attract great people to your business and how to keep them. Three tips to help you rise to the challenge to become an employer of choice.

What the IRD Expects from You as an Employer

10 October 2025
As an employer, there are several obligations and expectations set by the Inland Revenue Department (IRD) that you must adhere to. Understanding these requirements is essential for maintaining compliance and avoiding any potential penalties. Let's take a closer look at what the IRD expects from you as an employer. Register as an Employer Before you hire your first employee, you are required to register as an employer with the IRD. This is a crucial first step in ensuring that you can meet all tax and payroll obligations. Accurate Record Keeping The IRD requires you to keep accurate and detailed records of all employment-related transactions. This includes: Employee personal details Wages and salary paid Payroll dates and methods PAYE deductions and remittances Details of benefits or allowances provided to employees Maintaining proper records helps ensure that you are reporting and remitting the correct amounts to the IRD. Deduct PAYE Tax You are responsible for deducting PAYE (Pay As You Earn) tax from your employees' pay. This involves calculating the correct amount of PAYE and ensuring it is deducted from each employee's salary or wages before their net pay is provided. Pay Employer Contributions In addition to PAYE, you may also be responsible for contributing to your employees' social security and retirement benefits, depending on the country you operate in. These contributions are typically paid in conjunction with PAYE tax. Issue Statements and Forms At the end of the tax year or upon employment termination, you should provide each employee with a statement showing their total earnings and PAYE deductions. Additionally, filing the appropriate end-of-year PAYE schedules with the IRD is required. File Employer Returns Employers are required to file regular returns with the IRD, which could be monthly, quarterly, or annually, depending on specific regulations. These returns should accurately report all payroll activities, including PAYE deductions. Handle Tax Codes and Changes It's crucial to apply the correct tax codes for each employee's circumstances. Any changes in employment status or tax code must be updated promptly to ensure accurate tax withholdings. Comply with Audit Requests The IRD may audit your business to ensure compliance with employer obligations. As such, being prepared to provide all requested information and records in a timely manner is vital. Adhering to these expectations from the IRD is not just about compliance; it's about fostering a transparent and trustworthy relationship with your employees and the tax authorities. If you need assistance with understanding or managing your obligations as an employer, consider reaching out to a professional accountant. Our team is here to help you navigate these responsibilities seamlessly, ensuring peace of mind and allowing you to focus on growing your business. Feel free to contact us for further information or assistance.

Starting a sole trader business

7 October 2025
Thinking of starting your own sole trader business? The Sole Trader Toolkit from the Ministry of Business, Innovation and Employment has all the basic advice you might need.
SHOW MORE

To discuss all your account matters please call us on 09 438 1001