Solutions could help tackle succession planning challenges in horticulture

Succession is a complex issue with opportunities to gain equity in the horticulture industry challenging. Industry dynamics, poor information availability and reliability, and people dynamics contribute to the situation.

Previous research has focused on the factors affecting succession and succession processes. Perrin Ag and Massey were contracted by the Ministry for Primary Industries to investigate a range of financial and business models suited to horticulture, both nationally and internationally, that could facilitate the incoming generation succeeding in horticulture businesses and building equity.

The study, Business Succession in the New Zealand Horticulture Industry released late last year, identified twenty-one models that could help pave the way for the next generation to build equity and assets.

Massey University Senior Lecturer Iona McCarthy says the research looked at a range of options suited to those with limited capital starting out through to those purchasing their own horticultural business. A family case example “story” was provided for each option.

“These models ranged from contracting and leasing through to options that require considerably more investment capital, such as ground leasing, equity partnerships and sole ownership. Most models are already used in New Zealand or overseas.”

The study also takes an in-depth look at eleven other possible models, including sole trader, long-term lease, ground lease, ground lease on Māori freehold land, vine rights, sharefarming, equity partnership, managed syndicate, joint venture, contracting, and cooperatives.

Equity partnerships, which are becoming increasingly popular for family succession, enable multiple owners, easy asset transfer, and structured governance and management.

The report also puts forward financial and industry recommendations that could help facilitate succession and remove barriers.

Perrin Ag Senior Consultant and Researcher Dr Liz Dooley and Ms McCarthy identified factors that could lead to increased and/or more effective succession, such as cost reduction, the availability of finance, better opportunity awareness, more opportunities available, better knowledge of models, and assistance with the process.

Dr Dooley says raising awareness of the options is important and that both industry and Government have a role to play in responding to the recommendations of the report.

“We recommended providing succession support and upskilling for growers and the incoming generation to increase knowledge and understanding. We hope the information identified in this report will also be valuable as part of this education process.  

“Better understanding may also encourage growers to provide opportunities, and the incoming generation to be proactive, which we have strongly encouraged.”

The report also recommends looking at on-line platforms for succession such as those used in the UK, Ireland, USA and Canada to match landowners who have no successors with people wanting to enter the industry.

The service could also incorporate mentoring support, technical assistance, networking opportunities and information on succession mechanisms and processes.

For more information, read the full report here.

Lee Matheson

Managing Director
Principal Consultant

B.Appl.Sc (Hons), FNZIPIM (Reg)

Lee came to agribusiness consultancy via the unlikely pathway of a suburban Wellington upbringing, an Honours degree in plant science and a six-year career in the financial markets. In his role as the firm’s MD, Lee doesn’t get out on-farm as much as he used to but makes the most of it when he does. While having swapped the paddock for the boardroom, Lee continues to provide advice in the areas of farm business strategy, farm system innovation, corporate governance, investment analysis and economic research.

Outside of Perrin Ag, Lee loves to spend his time coaching rugby, watching his three kids play sport and gardening with his wife Haidee.

“I love the challenge of empowering people in our primary sectors and the excitement of seeing clients achieving their aspirations. If we can encourage farmers to engage with their consumers, take a more active involvement in their supply chains and view their businesses through a wider lens, then I think our industries have a great future.”