How family charters could strengthen farm businesses

Being in business with parents or siblings can split farming families apart, but a simple document could hold the key to strengthening those relationships and the business itself.

Not a year goes by without the pages of Farmers Weekly featuring reports on court judgments involving a farming family dispute. 

See also: Common farm partnership accounts errors and how to avoid them

The reasons for fallouts escalating to civil courts vary, but could some of that costly and upsetting litigation, and the breakdown of family relationships, have been avoided had a document called a family charter been in place?

Charters, also known as constitutions or governance documents, are a common feature on family farms in New Zealand, Australia and the US, but exist in only tiny numbers in the UK.

Stifling innovation

A more likely scenario here is that the farm will have one decision maker, in most cases the oldest male.

That autocratic setup can stifle innovation and development as it doesn’t allow for ideas from other family members to be heard.

Involving the wider family, and adopting a charter that sets out family values, clearly defines individuals’ roles and responsibilities, the management structure and future ownership, can result in more successful and sustainable businesses – and ultimately a happy family. 

There is evidence that UK farms are tuning in to this, for example by adopting a board structure, but Peter Craven, head of agriculture at Natural England, estimates that only 1% of farming businesses have a charter. 

Why so few? Peter, who has seen first-hand the benefits charters have delivered for farming businesses overseas, believes it’s because families are often afraid of the actual process of formulating one.

“They worry that if everyone talks about their hopes and dreams they might not like what they hear, that those hopes and dreams might not be aligned and, if that is the case, how that will be dealt with,” he says.

It is often those discussions, not the charter itself, that can be the most valuable, though.

“There has to be an element of unpacking, a niggle or two, but once fathers, mothers, brothers and sisters have had a chance to have their say, a line must be drawn in the sand,” says Peter, who researched family charters as a Nuffield Scholarship topic.

“Allowing people to feel heard and understood is a great starting point to move forward from.”

Charters have both benefits and challenges, but if one had been in place in his own family’s farming business, Peter says it could have avoided issues which ultimately led to him pursuing a different career path – before joining Natural England he worked on the farm for 20 years.

“Having different qualities is good when you are in business with family but it can also be divisive and when communication breaks down, as it can in so many situations, when you are not able to make decisions well together, that affects the business and, as a consequence, profitability.”

Bank pressure

It was the abrupt removal of government subsidies in New Zealand that first resulted in the widespread adoption of family charters among farmers there.

To survive and thrive post-subsidies, farms needed to be agile and innovative, and many applied for bank loans to drive forward with their plans.

As a pre-requisite to authorising those loans, banks insisted that clients created a family charter.

“The banks needed to be certain they would get their money back and discovered that the weakest link in those farming businesses was the family – if the family couldn’t get on it didn’t matter how good the business was,” Peter says. 

“The banks stipulated that farmers couldn’t borrow money without first having a family ­charter.”

What is a family charter?

A charter captures as a formal written agreement the values, principles and rules of a family and their business.

Charters are usually one of the tools alongside succession planning solutions, such as wills, trusts and corporate structures, for achieving a family’s objectives.

Unlike those other documents, it is not legally binding; it simply gives guidance on governing how the family and the business function.

Its purpose is to build trust between all family members and to add clarity and alignment.

Peter visualises it as a road map that helps a family tackle the challenges that arise in any business.

While they exist as a formal document on only a very small number of UK farms, Peter suggests every farm has an informal charter – without knowing it.

“It will exist in their heads because every family member will have their own thoughts on how the business should operate, what the future should look like, but no one talks about it.

“If they take the next step and formalise it, they could instead all pull in the same direction rather than pull at right angles. That will create a stronger business and family.”

It will override supposition too.

“There can be lots of theories within a family farming dynamic of what others are thinking, but you can allay an awful lot of fears by sharing some of this stuff rather than letting people dream up what they think might be happening.”

A charter can also give clarity to succession, a topic that farming families still shy away from despite the well documented issues that can arise by ignoring it.

“Some family members might have an expectation that they will get the business, others an expectation that they won’t, but if no one talks about it no one really knows what will happen next,” says Peter.

A charter can involve sons, daughters and other family members who don’t work on the farm but have skills that could strengthen the business.

“Siblings might work in marketing, for example, and using their skills to add value might be exactly what the business needs to grow, so why not utilise some of those peripheral skills and professionalism, to at least have that conversation,” Peter adds.

Writing a charter

Issues relating to the business, family and ownership should be included within a charter.

Some family members might be in the business and have ownership, others who are in the business but don’t have ownership, and there will be family without either, so this must be reflected.

The farmers Peter met in New Zealand, Australia and the US said that when structuring their own charters, the core principles most wanted the document to reflect was for the family to be happy, to get on with each other, and to do well.

“Why not write that down in the charter? Put it at the top of the page as a way of uniting the family,” he advises.

“The document should narrate where you want to go as a family farming business, address anything that could stop that, consider the challenges and issues that the family could fall out over.

“A charter can be simple or as complicated as you want to make it, but it is best to keep it simple. It is a living document, to be updated as the family and business evolve, not one to be written once and filed away.”

What to include

Understanding the family’s direction and discussing its vision is an essential base for a family charter.

In Peter’s opinion, family values should be a central theme in every charter.

These might be different for each family member, but decide on some shared values – those that everyone agrees are important for the business.

“Tease those out because values drive behaviour and behaviour drives decision-making and everything else,” he says.

Reflecting on the past is a good starting point. “Discussing the history and how the family business started helps preserve the family’s heritage, guiding principles, and shared identity,” says Peter.

Learning from the past also helps inspire unity and offers valuable lessons for present and future endeavours.

Two questions should be addressed, he adds: whether the family wants to remain as a family in business, and who is considered to be family.

“When the initial discussions take place it may become apparent that a family might not want to remain in business and the question that then follows is, ‘how are we going to do that?’

“That might be formulating a plan to grow the business with the intention of splitting it, someone might want to leave the business and be happy to step back.”

Who is defined as family in the context of the business must be considered too, he says.

“If a son or daughter has married, their spouse becomes family, but in terms of the business, should they be included in the decision making as they will have huge sway on how their partner thinks and acts.”

Good communication, having clear roles, responsibilities and accountability are important to many families in business.

Setting out in the charter which overall areas apply to each family member prevents conflict but also helps to navigate the business forward.

“Documenting which aspects of the business each member is responsible for will prevent everyone from stepping on each other’s toes but it’s also important to prepare the next generation if the business is to move forward and succeed,” says Peter.

The document should address how the charter will be policed and conflict managed. It should assume there will be conflict, and provide a roadmap out of the situation.

“People may fall out but how do they manage it? Do they bring in a third party or a non-executive director, as quite often people behave differently when there is a stranger in the room?” says Peter.

In terms of succession, it can include how to upskill the next generation, he adds.

“Is the person or people you intend to hand the baton to in a position to receive it? Could they hold the baton if you gave it to them or, if not, could you nurse them into it?”

Updating a family charter

Within families, change is constant, and that is true in the business environment too. Therefore a charter should be periodically updated to reflect this.

This ensures the charter remains current and relevant. Revisiting it every year is advisable.

“Has anything changed? What’s working, what’s not? You start to normalise this conversation if it is done annually rather than storing up problems,” says Peter.

Should charters be included in college and university curriculums? Peter studied agribusiness management at Wye College, where he learned a lot about farming and farming businesses.

But, as he points out: “What they don’t teach you at college is how to get on with the family you will be working with.

“Every farming family in the country will struggle with this problem from time to time, some more than others.

“Yet there is nobody teaching the next generation how to deal with it, and situations can creep up on them.”

In the US, this thinking is being integrated into college degrees.

There is a saying that you shouldn’t get into bed with someone if you don’t know how you are going to get out of it again so what does that look like if you get into bed, into business, with your family?

Is professional help needed to create a family charter? Whether a family can create a charter without the help of a professional will depend on the dynamics within that unit.

If family members are respectful of each other, it is often not necessary to bring in a third party, Peter advises.

“Respect is a bit like air in the room: it is not a problem until there isn’t any of it.”

You need to maintain a level of respect in the conversations you will have, so people feel listened to and understood, that they feel they can be open and honest.

“If you can create that situation then you are fine to create your own charter. If you are at daggers you are going to need some assistance.”

He signposts the Succession Alliance, a group of Nuffield scholars and industry professionals who recognise that families need guidance to prevent conflict, or on how to navigate their way out of it if that conflict already exists.

Workshops will be held later this year to help families with these difficult conversations and take those first steps.

When to create a family charter

Peter likens a charter and the best time to create one to planting a tree.

“When was the best time to plant a tree? It is always several years ago but, failing that, it is today, and the same is true of a family charter.”

Case study: The Tavernor family, Shropshire

The Tavernor family © Roly Tavernor

Formulating a charter isn’t meant to be a rapid process – for the Tavernor family it will have taken a year or more to get the document finalised.

Shropshire dairy farmers Roly and Mary, and their four children, David, James, Emma and George, started the process in December 2024 and should be in a position to complete it after one more family meeting.

James is the only sibling involved in the business but there was never any question of the others being excluded from contributing to the charter, says Roly.

“We couldn’t have done it without involving everyone,” he says.

Family values and allowing each member the opportunity to contribute and be heard has long been important to the Tavernors.

“We had Monday meetings when they were kids,” Roly recalls.

He hopes the charter will never die and, as a living document, it will draw in others as and when new members join the family.

Roly admits the process has been harder than he anticipated, but says the exercise, and the ultimate outcome, has been very valuable.

“For us it wasn’t about the need to create harmony but about avoiding disharmony in the future, by being open and by allowing everyone the chance to have their say.”