This is our last in a three-part series addressing the needs of clients in the agricultural industry. Learn more from a farmer whose tech-savvy approach is giving agriculture a new image and a dedicated advisor looking to build a thriving business serving farmers’ immediate financial needs.
A BREATH OF FRESH AIR
Farmers are servants to the seasons, facing a myriad of challenges as they tend the soil, grow their crops and raise livestock. It’s a labour of love. Just ask 29-year-old dairy farmer Andrew Campbell. Relentless effort and constant attention to rigorous farming routines are demands of the job and despite the sacrifices, his devotion doesn’t waver. He runs a dairy operation outside Strathroy, Ontario. But he’s not just focused on milk production at Bellson Farms. He’s got his sights set on a broader horizon.
Campbell also specializes in helping farmers learn about social media and advocacy. He’s the owner of Fresh Air Media, a social media forum aimed at providing today’s farmers with inspiring education sessions and communication tools. As a former radio reporter, he keeps up to date on the latest agriculture news and is taking his admitted Twitter addiction to a whole new level.
Using #farm365, Campbell’s pledged to send out a tweet, Twitter message and a photograph every day of 2015. The London-area dairy farmer’s latest media campaign might be one of the most engaging public awareness strategies the agriculture industry has seen in years. Gaining momentum as the tweeting farmer, Campbell challenges people to expand their understanding about the role agriculture plays in our daily lives but also seeks to make real and honest connections between the farmer and the consumer who buys his product. Now with 16,645 followers and growing, it looks like those relationships are establishing solid roots.
Part of Campbell’s education process is to unravel misconceptions and abandon traditional stereotypes. That means revealing the progressive reality of the family farm. Campbell’s passion for an enlightened opinion teaches us that farmers want to be understood, not just appreciated.
FINANCIAL REALITIES ON THE FAMILY FARM
The way farmers do business has evolved over the past couple of decades. Advances in technology have helped farming operations expand production levels, increase acreage and improve efficiencies. And while we’ve seen the average age of the farmer increase over the past several years, Campbell thinks with stronger grain prices, higher returns on beef production and optimistic supply management outlooks, the appeal for younger farmers to join the business might tip the scale. This reality highlights the need for sound financial advice on succession from the older generation to hands of the younger one.
As more younger farmers take an interest in assuming control, conditions will be ripe for advisors to help clients put financial plans in place that consider their future needs.
Goal setting is a priority many businesses don’t always take the time to properly address. “Farmers need to set their goals realistically — we know what we want to achieve, that is, to increase in size, to be more efficient, to be productive, but these aren’t the only factors we need to look at. Most dairy farmers will say they want to produce more milk — that’s more of a wish. The goals that matter will be the ones that are aligned with a strategy,” Campbell says. Farmers need to look at the bigger picture to identify long-term financial objectives and how to realize them.
With financial advisors at the table walking farmers through the transfer of assets, estate planning and how to factor in non-farming siblings — they can facilitate the process, simplify discussions and acknowledge the emotions that will be a large part of any conversation.
A FARMER TURNED ADVISOR – WHY SUCCESSION PLANNING IS IMPORTANT
There’s a big difference between farming and other businesses. Considerably larger capital investments are required (land values, dairy and poultry quotas for example). And for financial advisors like Randy Butt who are looking to serve the farming niche, it’s important to understand what drives growers and producers. The 26-year-old Sun Life Financial advisor grew up on a dairy farm outside Ingersoll, Ontario and has a working knowledge of the challenges farmers face. With this background, he combines his passion for delivering financial security with a solid understanding of clients’ needs.
When talking with farmers, Butt says it’s important for advisors to build trust. Butt starts with basic needs first, laying the ground work for a solid rapport by providing critical illness and disability insurance product solutions that can help cover loan payments if farmers become ill. He also knows that farming isn’t just a business, it’s a lifestyle — one that can consume clients with day-to-day operations at the expense of thinking ahead. The advisor’s role is to become part of that immediate focus to help ensure the value of planning for the future doesn’t get lost.
THE VALUE OF ADVICE
When children get involved in the family business, there’s an expectation that one day they’ll take over because they’ve assumed the farming lifestyle. There are challenges with succession planning that advisors can help address.
A thoughtfully prepared intergenerational wealth transfer plan takes a look at the farm structure — who owns it, who the partners will be and how it will be shared or divided. With this plan in place, farming children can feel more secure they’ll be able to generate enough revenue to outweigh their farming debts.
Butt says farmers need to talk with advisors often, instead of relying on passive or reactive planning. Circumstances on the farm can change at any time. Revisions to tax laws, commodity price decreases or increasing debt loads are some of the potential risks that require a close watch by an advisor who takes a proactive approach. If farmers don’t plan ahead, they can miss opportunities like estate freezes or capital gains exemptions.
Typically, the larger the farm, the larger the debt load; and the greater the need will be for life insurance to cover debts. Life insurance is a good option to fund buy-outs if one of the farming partners dies or it can be a funding vehicle to satisfy bequests to non-farming children.
A NEW GENERATION OF FARMERS
Socially connected and driven by innovation, younger farmers are nurturing progressive financial realities. They’re not just looking to preserve the family farm, they want to pioneer new and meaningful ways to grow the business. Understanding their goals and legacy wishes of the generation preceding them will help you earn trust and deliver useful advice.
No matter where a farmer starts, having early conversations about transferring assets, knowledge and management, is important. The financial details can be complicated, but conversations don’t have to be.
If you want to check out the series, take a look at our first article featuring a local farmer’s story of what it’s like to run a thriving family cash-crop operation. You can also get sales tips and succession plan strategies in our second article where we talk to Sun Life Financial sales director Ed Jacob about farming insights. If you need more information, please talk with a Sun Life Sales Director.