Elton John once sang, “I should have stayed on the farm / I should have listened to my old man.” It makes one wonder - are kids staying on the family farm anymore?
The most recent Census of Canadian Agriculture (conducted in 2016) paints a picture of the Canadian farming landscape we’ve become quite familiar with:
- fewer but larger farms
- farms that require ever more capital to operate
- an aging and still mostly male operator profile (although the proportion of female operators did rise from 27.4% in 2011 to 28.7% in 2016)
- a longer-term movement in operating arrangements from sole proprietorships or partnerships towards corporations, although the percent of agricultural operations that were incorporated still stands at only 25.1%.
All of which points to a looming farm succession crisis, or at the very least a significant challenge for today’s farm owners. For the first time ever, the 2016 Census took a look at the state of succession planning in Canadian agriculture, and it’s not good. Only 5.7% of sole proprietorship and partnerships have a written succession plan, compared with 16.3% of family and non-family corporations.
So, what does this mean for the groups poised to ‘take over the family farm’: Gen Xers, born between 1965-1980; millennials, born 1981-1996; and even Gen Z kids, typically portrayed as those having birth dates between 1995 and 2010? And, are those of us who supply inputs and other goods and services to this evolving sector ready to adapt?
An alternative study reaches different conclusions
In 2016, Agri Studies Inc. conducted a study titled “Navigating the Decision-Making Dynamics of Multi-Generational Farms”. The results provide a look into the challenges facing Canada’s farming future, and the mindset of today’s operators towards succession, ownership transfer, and working together in a multi-generational framework.
The study identified that over half of commercial operations in Canada are indeed multi-generational, defined as a farm with two or more generations working together. The authors also identified two distinct ‘generations’ – an older generation, with an average age of 60, and a younger generation, average age 33.
A new generation of farmers means new sets of values
Of particular significance to agri-marketers, are the following insights:
- More kids are returning to the family farm than leaving – for the first time since 1971. This young generation is also in high demand, with solid opportunities in industry and academia, as well as the chance to return to the family farming operation.
- With this trend, there are more on-farm conflicts between the younger and older generations than ever before. Do agri-marketers have a role to play here?
- In terms of values when it comes to input pricing, the younger generation tends to value Competitive Price, while the older generation values Consistent Price. The older generation is also more likely to value Service, Relationship, and Buying Local.
- When it comes to equipment and capital purchases, Best Price appears to be more important to the younger generation, while the older generation thinks more about Best Value. The younger generation is much more likely to think about the Right Sized equipment and Buying New.
- Technology is the single purchase category where the primary decision was more likely to be with the younger generation.
- Succession planning, when it finally gets into full swing on a farming operation, takes about eight years to take effect. In this study, 53% of respondents report having a written succession plan in place, with extra-large operations (80%) at a significantly higher level than small farms (35%). These numbers are much more positive than those reported by the Census. The study identifies 79% of farms as being ‘in transition.’
As agri-marketers, it’s critical to be aware of these trends and to think of creative new ways to serve the evolving, transitioning farm marketplace. The future of Canadian farming appears to be in good hands – but the old ways of thinking and doing business will likely not serve Gen Next well. Are we also ready to evolve, transition, and keep up?