Opinion: Lack of succession planning can stifle ambition
© AdobeStock/LIGHTFIELD STUDIOS We open this week’s column with a quote from our old friend, Sheikh Rashid bin Saeed Al Maktoum, the late ruler of the United Arab Emirates:
“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.”
I feel his pain! When I saw the invoice for the last service on my Discovery, I thought I’d need to sell land and ride around on a camel myself.
Land Rover pricing is enough to bring tears to even the eyes of an Arab billionaire.
See also: Succession planning expert Q&A: What farmers should know
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This wasn’t Sheikh Rashid’s point, though. Nor, as an oil magnate, was he making a prediction about combating climate change.
His point was that inherited wealth inevitably runs dry unless you have also bequeathed to your beneficiaries the knowledge, drive and opportunities that earned it in the first place.
And here is the big challenge for those who own farming assets. How do you make a success of succession? The transfer of title deeds involves tough decisions, but it’s a simple legal process.
A family’s true wealth is in its kindness, values, experience and ambition, and this stuff can’t be passed on with the help of a solicitor.
Traditionally, most farmers pass the assets – often very substantial assets – from one generation to the next with little objection from the taxman.
While I get the stewardship arguments for keeping land in one family for many generations, the older I get, the less I feel able to defend it as correct.
Partly this is because I don’t agree with primogeniture – a system that is blunt, unfair and disruptive to family cohesion.
It’s also because nepotism is bad for business in the same way that you wouldn’t learn much about work ethic or wealth creation from a lottery winner.
I feel that the next generation of food producers should be occupying land based on their merit, not their chromosomes.
Inheritance tax relief could even be viewed as a state subsidy to encourage passing land from father to son.
It encourages landowners to keep assets until their death, which blocks talented and enthusiastic new entrants.
Recently, my ideology has been cast in new light. I don’t have children of my own, but my sister’s eldest son is heading off to agricultural college at the start of next term.
He has discovered a passion for the industry. I confess that, somewhere deep down, I get a warm feeling about it.
I remain unclouded by sentimentality. It is unhealthy to enter a family business until you have learned about yourself from adventures, education and experience.
That’s a position I summarise as: “Please go and make some mistakes, out of sight with someone else’s money.”
I will enjoy watching and supporting him, and all my other godchildren, as they learn how they want to make their mark on the world.
I reflect, a little painfully, that it won’t be long before it is time for younger people to use the capital and customers that I currently consider mine.
If we don’t make space for our successors, we risk stifling their ambitions and damaging our relationship with the leaders of the future.
After all, one day I’m going to need someone to pick me up from my nursing home and take me out for a ride on that camel.