Apr 24, 2014
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Swallowing Your Pride – Can Family Farms Still Afford to Be Split Up?

By Shaun Haney

It has always been the practice in agriculture if more than one sibling decides to take over the family farm that the farm will be split into separate entities.  I know that in my own family’s case in the late seventies, my grandfather and his brother split the farm into two separate companies.  Traditionally this allowed each sibling to run their own operation and have autonomy.  Across Canada I still see this happening today and it is a practice that many farms can no longer afford.

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In my opinion just splitting the farm for the sake of splitting the farm is a decision that needs to be weighed more heavily in today’s farming environment.  Margins are getting tighter, competition for land is higher and equipment is getting more expensive.  Why would you give away the scope of your farm operation just because you want to make all the decisions.  What other industry does something like this?  I’m drawing  blank to be honest with you.  Think of the mega family business in Canada and think about if they would of split the operation every time there was a sibling disagreement.  We would have no Molson, McCains or Thompsons.

Family farm operations need to understand the environment today and realize that the family farm unit can no longer afford to split and go in different directions.  Splitting a 10,000 acre western Canadian grain farm into 3 separate units is economic lunacy at its finest.

The only way that this splitting can still happen nad be successful is if the separate companies still decide to work together to lower costs.  For example, sharing employees, equipment, and building structures.  I bet if you asked most farmers that are considering or have recently split the farm they did not fully think the new separate farm units were actually financially weaker than the unit as a whole.  I suggest you swallow your pride and really think about what will make your farming operation successful and chances are that it is not breaking into in half and going your separate way.

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About Shaun Haney

Avatar of Shaun Haney
Shaun grew up on a family seed farm in Southern Alberta. Haney Farms produces, conditions and retails wheat, barley, canola and corn seed. Shaun Haney is the founder of RealAgriculture.com.

7 comments

  1. Right on Shaun. the economies of scale is very important for financial success. but there is this basic farmer mentalitly/desire to own somthing. This often comes from a spouse who perhaps wants to know that no matter what happens in the volitale bizz of farming they have their own…house,land,bank account or somthing that they feel is theirs.When it is all owned in a corprate type structure with shareholders you dont get that same sense of ownership. i think if that is important to some it may still work well to have the farm as a multi owner unit but you do need to allow for somthing to be outside of that..like owning your house or a home quarter personally.

    • Avatar of

      Great thoughts Leighton, I agree that if you are apart of a family corporate structure to have your own outside assets. I know several farms across Canada where people have no assets of their own except for the business. Creating equity outside of the business is a good idea, especially if the business suffers a financial setback. Creating the “all in” scenario can be dangerous for your family

  2. Splitting up the farm is a complex issue. The real groundwork for success happens in the set-up stages when there are fierce conversations about expectations of ownership, an exit strategy, and shared vision and goals for a profitable business that turn into actionable, well written agreements .
    Emotions and conflicting values really muddy up good decision making.
    I would suggest that if you currently are dissatisfied with the structure of your farm that you start talking respectfully to each other, with curiosity and find out how the owner expectations are changing.
    Farms are not a piece of pumpkin pie that is cut into four equal pieces (farmers like large pieces).
    Elaine Froese
    Author of “Do the Tough Things Right..how to prevent communication disasters in family business.”
    Grainews columnist and farm family coach.

    • Avatar of

      In your experience Elaine do you think that farmers are able to share or is it just that natural entrepreneurial mindset that says, “I want to go at this alone without my brother” ????

  3. Shaun- I went through this very situation in the early ninties with my brother. He wanted his own peice of land with the benfits of using “shared” ie my machinery. It seemed this all changed when he got married–like Leighton stated above the wife wanted security and I couldn’t blame her. But the immediate impact was fracturing the business – a mixed dairy and grain farm. The end result was he left the farm and I carried on with my father. Had we split things then–i believe niether of us would have made it to year 2000.

    • Avatar of

      Thanks for sharing your personal story Reg. I think that there are many readers that have had this very same experience. I think that many struggle with this battle of mine versus ours and what is best for the “old” family and my “new” family.

  4. Another angle to this storey is when one sibling takes over the family farm and the other siblings that aren’t involved in the business decide they want to “cash out”. It’s virtually impossible for the family member that is running the farm operation to simply write a cheque and send them on their way. Often this can lead to a forced sale or a significant downsizing of the farm land and assets. There is still this misconception by some that believe farming is a very lucrative business and don’t appreciate the hard work, extreme risk and tight margins that are the reality of farming today.

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