More than a quarter of UK farmers are considering quitting farming or at least scaling back, according to a survey conducted by NFU Mutual.
The rural insurer’s annual Voice of the Farmer poll shows that number has increased to 28 percent in 2022, up from 20 percent last year.
It comes as the average age of farmers continues to climb. Of the 1,654 farmers questioned, 57 percent were over 65 years old and only 5 percent under 45.
These figures highlight the importance of succession planning, said Sean McCann, chartered financial planner at NFU Mutual.
And farmers are taking that on board, with 47 percent of the survey farmers now having a succession plan in place, and another 18 percent recognising the value in having one.
Mr. McCann admits that how and when to hand down the farm can be daunting, especially given the uncertainty around input prices and the future of agricultural policy.
But handing over the farm to the younger generation doesn’t necessarily mean giving all the assets away on day one, he advised.
“It can be helpful to think about the management and ownership of the farm as separate issues, giving the younger generation more of the day-to-day management, but retaining ownership of the assets until a later date,” he suggested.
“Only by talking about these issues and thinking ahead as much as possible can you start securing the financial future of your farm and your family.”
Farm size appears to be an influential factor in succession planning.
Of the farmers surveyed, 58 percent with less than 21ha did not have a plan or did not believe it was relevant to them.
But more farmers are making financial provisions to make stepping back from the business easier, with 75 percent having a pension, rising from 66 percent in 2019.
Diversification
Diversification is also becoming more common, with one-third of the farmers polled running other commercial activities on their land.
As a result, income from diversified activities increased by nearly 10 percent in 2022.
But when it comes to succession planning, throwing diversification into the mix can make the process more complicated, particularly around inheritance tax planning.
Mr. McCann recommends seeking advice on the tax reliefs available in this situation.