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Family farms are finding their way

It’s more than the legalities. The culture of Canada’s farm families is evolving too, and on many farms it’s keeping up quite nicely, thanks

For Josh and Lee Moats, succession planning has focused on keeping their relationship strong and vibrant.

Brett Meinert, of Shaunavon, Sask., knew early on that his son Barclay was hoping to take over the family farm. “He bought land three days after he was old enough to own land, when he was eighteen years old,” Brett says. “We knew at that time that he was going to farm — there was no question about it.”

Barclay was sure of it too. From age 13, he’d been stashing practically everything he’d earned into saving for a down payment on land of his own, and by 18, he’d practically enough to do it. Admittedly, he went through his father’s banker, and his father secured the loan, but Barclay had earned that help by showing perseverence and commitment to reaching his farm goals.

There wasn’t a formal succession plan, but Brett and Barclay were figuring out how to work together, and for over the next decade, the two ran parallel operations on their respective land. “He did his stuff and we did our stuff co-operatively,” Brett says. “In other words, he used our machinery for free and supplied labour for us, but there was no formal agreement.”

But like many other farming families in Canada, by the time Barclay was in his mid-30s, the senior Meinert generation realized they needed to get serious about making plans for the future.

To begin with, they sat down with MNP and found out exactly what their business was worth — but that was only the start of the process.

Brett also made a point of giving his son the chance to be in charge of some aspects of the operation while the transfer was on­­going, to make sure he had some management experience before he was running the whole thing.

“The first tangible thing we did after we started succession planning was we bought a high-clearance sprayer,” Brett says. “And I says to my son, ‘I’m not going to learn how to drive that. That’s your baby. You figure it out.’ So there was one piece of the operation where he had absolute authority.”

It was always clear to Brett Meinert that his son Barclay would farm one day. The question was how best to help him grow into it. photo: Supplied

But the biggest question this family faced was how they were going to pass on the farm in a way that was fair to all their children — one who wanted to continue farming, and two who did not.

“Ultimately, my wife and I had to decide whether we had three children, being our biological children, or four — three biological children and one farm,” Brett says. “You’re not supposed to think about it that way. You’re supposed to be cold and calculating — business is business, period — but that’s not the case. There’s way too much blood, sweat and tears in there for it to be treated in that manner.”

In the end, the senior generation decided to conceptualize their succession planning in terms of what it would take to give each of their children the means to make a living because, as Brett put it, “equal is not necessarily the same thing as equitable.” The millions of dollars of assets tied up in the farm — inventory, land and shares — are worth significantly more on paper than what they spent on their other two childrens’ higher education, but it was all for the same purpose in the end.

According to a Statistics Canada report released in 2016, there are over 193,000 farms in Canada, and 72 per cent of those families plan on transferring farm ownership to their children someday — and 38 per cent plan on transferring ownership within the decade.

However, that same report found approximately 92 per cent of farms had no written succession plan in place. Fewer than five per cent of sole proprietorships, which account for just over half of all Canadian farms, had a written plan.

Meanwhile, Lee Moats, who currently farms outside of Riceton, Sask., is in the process of transferring his family’s farm to his son Josh and daughter-in-law Lindsey, after starting as early as he could to plan what this generational transfer would look like.

“We started planning to pass the farm on to our children when we were involved in our own generational transfer,” Moats says. “Joshua is the fourth generation of our family to farm on this farm. So we’ve had some experience with intergenerational transfer, and I would say that experience has been very good at informing us as to some of the things that have worked well, and some of the things that maybe haven’t worked so well.”

Moats also emphasized the importance of communication and shared goal-setting when it comes to finding solutions that are successful for both the incoming and the outgoing generations.

“What’s your primary goal?” Moats asked. “If you have a goal at the top of the page that’s the same for everyone, then you’re working towards that together. In our case, I am highly motivated to have our farm sustain itself within our family. So the goal is for our kids to farm our farm and own this land.”

For his part, Josh Moats counts himself lucky that his parents are so focused on the farm’s sustainability across generations — in his social circles, he frequently hears complicated, unhappy stories of generational transfers gone wrong.

“I’m really blessed to have a strong synergistic relationship with my parents,” he says. “From talking to people throughout the industry, I know that’s not the case for a lot of people. There’s often tension between generations on the farm, but we haven’t really experienced that. Everything we do, we’re in it together, and we look after each other’s interests. Each generation has the other’s best interests at heart.”

The consequences for failing to plan a generational transition or having it fall through can be both financially and emotionally devastating, both for the younger generation looking to launch their career and the older generation looking to retire.

“In Western Canada, you’ll find that nearly 70 or 80 per cent of farmers are over 60, and a huge proportion of those have no generational transition strategy,” Josh Moats says. “Their only way to get out of farming is just to sell.”

Over the years, Josh has found his path towards taking over the farm — still in progress, as he works off the farm and returns to do what he can there in his evenings and weekends — mirroring his father’s generational transfer.

“My dad worked a full-time job as a professional agrologist… and did the whole farm thing as well,” he says. “So he had a very intense lifestyle. Looking at that as I grew up, I thought ‘Oh, there’s no way I can be like that, that’s ridiculous.’ I didn’t really start to come around until after my first year of university, when I went back to the farm to work for the summer. And now I’m a farmer and I’ve got a full-time job like my dad.”

But Lee Moats has been intentional about taking the best of what he has learned from previous transfers — as noted, his son will be the fourth generation of this family to run the farm — and leaving behind the less successful parts.

“When I came to the farm, in 1982, my parents were still relatively young,” he says. “And we put a plan together that would care for my parents’ needs and also give opportunity to my brother and myself. That long planning horizon was really important, because it gave me an opportunity to work off the farm to accumulate some of that money I needed to invest in the farm.”

While Josh says his family has made a number of untraditional decisions during this process — for example, Josh and Lindsey now live in the house Josh’s parents will retire to when the younger generation moves to the farm — he is confident that this is what works best for everyone involved, and is already starting to think about what this could look like for the next generation of the Moats family.

Josh explains the strategy. “My dad’s whole goal throughout his career has been to find a way to fund the transition of the farm, so the incoming generation doesn’t have to pay out the outgoing one. His goal is essentially to pay off the farm twice, not once. It’s pretty amazing. And that attitude has transferred to my wife and I. We’re already thinking about, if we’re going to have a resilient and successful sustainable business, we do have to be thinking about paying it off twice.”

While many factors — timelines, finances, the scale of the operation, the personalities involved — influence how successfully a generational transfer will go, both Lee Moats and Brett Meinert says the most important thing was starting early.

Brett Meinert, who has a different outlook on succession than his own parents, says that the best way farmers can set their children up for success is to begin the financial and educational work as soon as possible.

“Start thinking about succession the day you have any assets, frankly,” he says. “My parents were not quite as open-minded as I am in terms of succession — I still owed my mother money on some of the land I was buying from her at the same time that I was figuring out how to pass the farm onto the next kid.”

Lee Moats agrees. And when considering what is best for your children and your farm, he adds, sustainability has to be the watchword.

“Prepare the ground early, set up your affairs,” Lee says. “Make your plans with intergenerational transfer in mind.”

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