Author: Client

Even the closest and most functional family will have rows from time to time. A farming family is no different, and sometimes what can start as a minor issue can snowball into a much bigger dispute that risks the family unity and the farm. This is why working through conflict is so essential to the long-term future of the family farm. In this article, we give you an overview and tips on how to manage conflict on the family farm.

Common conflicts

Conflict happens when people cannot accept another’s differences, and this leads to a dispute. If left unresolved, a disagreement in the family will create tension and lead to divisions as different members take sides.

We work with many family farming operations, often helping develop and agree on a succession plan, which is when conflict often happens. Family members disagree on who gets what, who does what, and what those who aren’t on the farm get from the business.

Often we see a conflict between generations and whether the younger will take over the farm regardless of how good they are at farming or business. The next generation may not want to take on the farm, or the older generation may have a hard time handing it over, causing tension if there differences in opinion on how to run the farm and what is produced.

There can also be conflict in the way others handle conflict. One may manage conflict by shutting down conversation or not talking, while another wants to talk it through. This can lead to a toxic atmosphere that makes the tension worse and can erode trust – also a vital part of a successful operation.

How to handle conflict

The first step is to recognise how you handle conflict and understand that others in your family will handle conflict differently. It’s essential to communicate how you manage conflict with the family to know where everyone is coming from.

Another important consideration is to deal with conflict early because the longer it’s left to simmer, the more toxic and difficult it becomes to resolve. The solution is to sit down and talk through mediation so that everyone has their say. At the start of this meeting, everyone should agree on their role in the discussion and whose responsible for what.

We run mediation sessions with our clients, allowing family members to discuss without one being in control of the discussion. A successful session is an open environment where everyone clarifies and explores their interests, issues and underlying needs.

It’s also helpful to focus on negotiation and solutions so that everyone is involved and can agree on the resolution. We also keep these discussions confidential to allow family members to talk through their frustrations freely.

We’ve given a simple outline here; however, working through conflict is delicate and complex. SproutAg runs mediation workshops to help families continue to do what they love – run the family farm.

• Cash flow and business analysis are a key part of planning
• Be realistic about your business goals
• Compromise

You’ve had the first family meeting to talk transition planning, laid out your goals and aspirations for the farm, so what’s next? The next step is to test these goals and aspirations to see if they stack up.

When we work with a family to test the viability of a transition plan, we always undertake a deep-dive analysis of the farm’s finances and estimated cash flows over a five to seven-year period. Cash flow forecasts are critical to understanding what the farm’s yearly average cost of operation is. They are also used to run scenarios to test the different goals or aspirations each family member has.

For example, a goal to double the farm size in 3 years sounds great, but if the reality is achieving this goal relies on too much debt, you risk sending the business broke. In this case, the plan becomes 50 per cent growth.

Another consideration is whether you support mum and dad in retirement and what their lifestyle goals are. If they want a champagne retirement but the farm only has a beer budget, it’s better to know this upfront to better prepare for it, so they are looked after without burdening the farm’s operations.

This analysis is also an opportunity to lay down timelines on when the best time is to transition and whether the farm should grow over time. More often than not, they prove the family operation is more robust staying together than splitting.

A rigorous analysis of the farm’s future cash flows, business plan and scenarios is especially important for families who want to pass the farm down through generations. It shows them the impact of their goals and the viability of the business.

As we’ve said in previous articles, the key here is communication, negotiation, compromise, and acceptance that your goal may not be realistic. This approach will put the family operation in a position that it can afford to transition and compensate family members for their work and provide for them in retirement.

Transition and succession planning is an integral part of your family farm’s success. Talk to your local SproutAg representative to find out more about your succession and transition planning workshops.