Henry Hays, at age 60, sounds like a farmer who couldn’t be happier with the way life is turning out.
He is well along in successfully transferring control of Hays Ranches at Hardisty, Alta., to son David.
His workload on the 6,720 acre operation that includes 325 cows, a breeding heifer herd and a small feedlot has been reduced as David takes on more responsibility.
Henry has enough free time now to dabble in local politics.
“I believe our partnership works well because our hearts are in it,” he told a farm succession conference Aug. 7 organized by the Canadian Farm Business Management Council.
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Hays also had advice for the older generation: “give up control. I’m happy.”
Ontario dairy farmer Chris Buchner, 56, had a story to tell that was far less cheery.
A planned 10 year exit by one of three brothers from the $10 million operation, negotiated in 2002, became a panic in 2004 when youngest brother Glenn became spooked by the prospect of a world trade deal that undermined supply management. He decided to leave within the year.
Along the way, there were several mishaps including a poor choice of farm succession adviser.
The uproar led to family tensions and anger, fears that the farm would have to be sold and a realization that the mountain of debt accumulated to triple the herd size in 1997 to 190 milking cows made an acceptable settlement on Glenn’s terms almost impossible.
“There were many sleepless nights as you played out all the possible scenarios in your head,” he told the conference. “Don’t get into a negotiated succession plan.”
Although it did not happen as quickly as Glenn wanted, the three brothers were able to work out an exit plan for him in part by extending the debt repayment schedule and reducing the land base.
The arrangement came at some cost to the farm’s financial base.
Buchner said the next hurdle will be planning how to pass the farm from him and brother Paul to their children.
Low profit margins and rising asset values make it more difficult to pass on large farms in a way that keeps them viable and yet makes sure the older generation is compensated.
“In the end, it requires a level of sacrifice on both parties involved to make an intergenerational transfer work,” he said in a paper delivered to the conference. “I have no idea when the sacrifice becomes too great to bear, but we are getting too close.”
The presentations were both sides of the coin presented during the two days in an Ottawa hotel.
There were stories of parents hanging on too long, refusing to give up control or to develop a reasonable and viable succession plan.
John Anderson, a KPMG succession consultant from Kingston, Ont., said the lack of a plan can mean the end of a farm operation.
“Sadly, it may well be the end of that business as known,” he told an interviewer. “If the family farm, for example, is looking at 1970s technology and dad’s 70 years old and we’ve got no plan, we’ve had no plan and no one’s discussed it, the probability of being successfully transferred to the next generation is very minimal.”
More on board
There also were tales of a growing farmer awareness of the need for advice and a well designed strategy.
Agriculture Canada, through its renewal program under the agricultural policy framework, helps fund plan development.
Lois James, director of the department’s renewal division, said close to 400 succession plans have been completed under the program with hundreds more in the works.
For the Hays family, transition planning began in 2001 before the APF.
The ranch has grown, David is successfully learning the management ropes and his brother and sister not involved in the ranch will get their proper and proportionate inheritance through a life insurance payment when their father dies.
“Personally, I truly believe that Hays Ranches is in good hands,” Henry said.
