Governments are told they should do “something” to help young farmers get started and facilitate the transfer from one generation to the next.
It’s hard to argue with, until you try to come up with exactly what governments should do.
The Agricultural Producers Association of Saskatchewan has made intergenerational transfer the No. 1 point in its provincial election policy document. Most farm families would concur that this is an important issue.
“Modern agriculture presents young producers and start-up operations with unique challenges, primarily the significant amount of investment required for acquiring farmland, equipment and other assets,” says APAS in its document. “Another challenge is the shortage of working capital.”
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And what does APAS recommend? Nothing specific.
“Work with the agricultural community to develop concrete strategies to assist beginning producers, including access to start-up capital, financing and farmland,” is the first recommendation.
The second is: “Develop innovate policies to assist with succession planning and the transfer of family farm operations between generations.”
Never has there been more wealth within farm operations, mainly because of the rapid appreciation of land values. Should this really be viewed as a problem?
A lot less capital would certainly be required if land values had stayed flat for the past decade, but few would want that to happen. You can’t have it both ways. You can’t have a profitable industry and expect land values to remain low.
The only way to become a farmer in most cases is to have family already farming. This hasn’t changed much over the generations. If Ma and Pa are going to transfer the farm to one or more of their kids, it won’t likely be as quick, easy or profitable as just putting the farm up for sale to the highest bidder.
In many cases, family dynamics and communication are the big issues. The older generation doesn’t really want to let go, and the younger generation may want a sweeter deal than what Ma and Pa think they can afford. Non-farming kids might feel like they aren’t getting a fair share. It’s a huge issue within many farm operations, but again, what exactly are governments supposed to do?
The answer certainly isn’t government support for large, low-interest loans.
We already have the lowest interest rates in history with lots of lenders eager to lend money as long as there’s collateral and repayment capacity. And while the start-up farmer may not have a lot of assets, the farm is worth a lot of money.
If Ma and Pa want the farm to stay in the family, and usually they do, then they need to make it work for the kids taking over the operation. And the kids need to realize that they’ll have to work hard and accept some risk.
Many farms are too small to be viable as stand-alone enterprises to support the next generation. That has always been the case, and no government policy in a democratic society is likely to change that reality.
And exactly who should receive government support? If it’s aimed at young people, do you cut it off at 35 years of age or 40 or 45? Do you provide support only to those with a net worth below a certain threshold?
Until and unless farm policy groups can come up with specific proposals, intergenerational transfer will continue to be a motherhood and apple pie issue. Everyone can agree that it’s important, but there’s no tangible role for government.
