With an increasing number of farmers selling up, it’s providing advisors with an opportunity to grow their books of business.
Changing demographics on the farm are creating a boon for advisors, helping clients invest cash that would normally have bankrolled the next generation of farmers.
“When farmers are working, they have a lot of financial instability, crop failure, prices and other factors can get out of their control,” Kathy Waite, an advice-only planner in Saskatoon, told WP in an interview. “You would think it would make them able to handle market uncertainty; but I find they understood farming risk but they don’t understand investment risk.”
The advisor’s comments come as a recent RBC poll suggests 62 per cent of farms are due to change hands in the next few years but only 30 per cent of their owners are thinking about formal succession planning.
A large part of the problem is that the increasing number of farmers approaching retirement have children opting for city life. The phenomenon is expected to lead to the single-biggest farm selloff in Canadian history.
According to the latest from StatsCan, released in February, the number of agricultural producers under the age of 55 decreased from 265,495 to 152,015 between 1991 and 2011. The trend is providing ample business for advisors in the Prairies and elsewhere in Canada where farmers face these challenges.
“The age pyramid is shrinking with fewer farm operators under 50 years old,” the StatsCan report shows. “The trends of fewer operators and fewer farms show no signs of reversing and could indicate significant turnover in farm assets in the future.”
“As the number of younger farmers continues to shrink, it is also reasonable to expect that significant amounts of farm assets will be bought by remaining farmers.”
As a result, farmers often look to rent their land to another producer, but often struggle due to a number of factors – no youth, high costs.
“Some have been sucked in by one of their kids’ friends or an acquaintance who sells mutual funds to realize later its more volatile than they wanted or need. I’ve had a 73-year-old clients in seven-year DSCs with no cash position held for taxes due and emergency. They have to go to OBSI and they’ll probably be dead before that gets resolved.”
“It can be hard to get good advice, they are used to living on $70,000 and now have 1.2-million in bank. They don’t want to go to local credit union because their friend’s daughter runs it but they also don’t want to keep driving three hours to city. I’ve been able to capitalize by staying mobile and going to farms.”
“When farmers are working, they have a lot of financial instability, crop failure, prices and other factors can get out of their control,” Kathy Waite, an advice-only planner in Saskatoon, told WP in an interview. “You would think it would make them able to handle market uncertainty; but I find they understood farming risk but they don’t understand investment risk.”
The advisor’s comments come as a recent RBC poll suggests 62 per cent of farms are due to change hands in the next few years but only 30 per cent of their owners are thinking about formal succession planning.
A large part of the problem is that the increasing number of farmers approaching retirement have children opting for city life. The phenomenon is expected to lead to the single-biggest farm selloff in Canadian history.
According to the latest from StatsCan, released in February, the number of agricultural producers under the age of 55 decreased from 265,495 to 152,015 between 1991 and 2011. The trend is providing ample business for advisors in the Prairies and elsewhere in Canada where farmers face these challenges.
“The age pyramid is shrinking with fewer farm operators under 50 years old,” the StatsCan report shows. “The trends of fewer operators and fewer farms show no signs of reversing and could indicate significant turnover in farm assets in the future.”
“As the number of younger farmers continues to shrink, it is also reasonable to expect that significant amounts of farm assets will be bought by remaining farmers.”
As a result, farmers often look to rent their land to another producer, but often struggle due to a number of factors – no youth, high costs.
“Some have been sucked in by one of their kids’ friends or an acquaintance who sells mutual funds to realize later its more volatile than they wanted or need. I’ve had a 73-year-old clients in seven-year DSCs with no cash position held for taxes due and emergency. They have to go to OBSI and they’ll probably be dead before that gets resolved.”
“It can be hard to get good advice, they are used to living on $70,000 and now have 1.2-million in bank. They don’t want to go to local credit union because their friend’s daughter runs it but they also don’t want to keep driving three hours to city. I’ve been able to capitalize by staying mobile and going to farms.”
