Successful farm succession: the vital role of family businesses
In an article originally published in The Conversation Europe, Rania Labaki, Associate Professor at EDHEC and Director of the Family Business Chair, and Maryem Cherni, Lecturer and Researcher at UniLaSalle, analyse the strengths of agricultural family businesses in a sector facing major challenges.
While some might think that family-run farms are a thing of the past, they are in fact the dominant business model in Europe. In 2020, they accounted for slightly more than 9 in every 10 of the EU’s 9.1 million farms.
According to the UN’s Food and Agriculture Organization (FAO), family farming plays a key role in making our food and agricultural systems more inclusive, sustainable, resilient and efficient. As custodians of landscapes, wildlife, communities and cultural heritage, family farmers factor in social and emotional considerations in their decisions in a way that big profit-driven agrobusinesses do not. So how can we not only best keep them alive, but help them thrive?
Our recent research gives some clues. In particular, it shows that while policy makers often focus on relieving young people from the obstacles they might face when taking over the family farm, such as rising land prices, red tape and professional hardship, relationships between the two generations are just as important, if not more.
Growing challenges
The family farming model is facing a crisis. Between 2020 and 2010, the EU saw the number of its farms drop by approximately 3 million. The vast majority of those lost were family-owned.
Compared to the past, the transmission of family farms has become more complicated due to structural and societal challenges. The work is seen as demanding, and yet hardly pays. In 2019, farmers reported putting in an average of 55 hours a week in their primary job, compared with 37 hours for the average worker. Although some young people care passionately about carrying on the family farm, many would rather keep their professional and private lives separate. Our society’s tendency to denigrate the farming world - what the French call “agribashing” - also doesn’t help.
In addition, the European Union’s Common Agricultural Policy (CAP) creates its own set of problems. In a complex landscape, in which European countries’ agricultural sectors vary considerably according to economic, social, and environmental factors, the policy plays a critical role by seeking to harmonise member states’ policies and support farmers in areas such as food production, land management and stewardship. But the CAP has come under fire for its gruelling bureaucratic processes and long waiting times, which prevent many from enjoying its subsidies.
By awarding subsidies proportionally to farm size, it is also accused of favouring large farms over small and medium-sized ones. Because family farms are much smaller on average (11.3 hectares of agricultural area in 2020) than non-family farms (102.2 ha), they bear much of the brunt.
Such frustrations are increasingly reaching boiling point. This winter, farmers took the streets across Europe to protest against red tape and call for CAP reforms to make the subsidies system more transparent and accessible to those who need it most.
Making an impact
Despite these challenges, younger generations show enthusiasm for farming, whether or not they come from a family of farmers. As indicated by results of a survey about intention of students in agriculture engineering in Institut Polytechnique UniLaSalle to engage in agriculture entrepreneurship career presented at a UniLaSalle seminar in October 2021, the desire for “stimulating work” that cares for the environment drive many to the countryside.
For example, as part of a survey about gender issues in agriculture entrepreneurship in France, a 34-year old woman farmer said she felt: “A fairly strong personal revelation that I want to take action […] because the agricultural sector is vitally important for society, for the world, for the role it has to play in tackling the challenges of climate change”.
Marianne Gamet, a third-generation member of a family of champagne producers, believes that “the new generation can make a difference”. She’s adamantly opposed to selling shares in the company to outside investors, and takes pride in a product that has been passed on from earlier generations.
To make farming sustainable, many opt to diversify their activity, turning to alternatives such as methane gas production, photovoltaics, agricultural tourism or even educational gigs. In our research, we came across examples such as: - Cyprus-based oil oil company, Oleastro, which was the first to produce organic olive oil in the country, and broadened its customer base through an Olive Oil Museum, festivities, and workshops; - The Golden Donkeys Farm, which develops milk products in Cyprus, including face cremes, liqueurs, delights, and chocolates and organises donkey rides in the farm and craft workshops; - Les Délices du Jardin d'Ainval in France, which focuses on growing “forgotten” vegetables and organises farm and educational visits to students and other participants.
Last but not least, the entrepreneurial spirit associated with family businesses is a big draw for many young people.
Retiring at the right time
For transition within the family to be successful, a healthy relationship between predecessor and successors is key. This requires each party to understand the other’s expectations, as well as to effectively adjust roles and decision-making. Earlier generations also need to be able to support the post-transmission phase and withdraw from the farm at the right time. They need to prepare for the transition by creating the right conditions for the young generation to take over, in particular by switching to farming practices that appeal to them.
These adaptations include the organisation of work and, when appropriate, hiring employees to improve conditions on the farm by reducing drudgery and constraints. By delegating technical tasks, farmers can free up time for the strategic and sustainable aspects of the business. Elders also have an interest in reducing physically demanding work to show that farming requires a broad skill set compatible with many career opportunities.
Marius Voeltzel, a 32 years old producer of pulses in the Eure region in France and creator of the Pousses de là brand, illustrates this dynamic: “My mother’s message to me and my brother has always been clear. If we want to set up our own business, we can take over part of the farm, but only if we have a project in mind that aims to contribute something new. This approach is stimulating for me, because it forces me to think about how I can make my own distinctive contribution to the farm. My mother has also been supportive, providing the necessary tools and physical help for my brother and me from the moment we arrived on the farm.”
Such words are proof that policy-makers ought to pay attention to valuing the entrepreneurial, organisational, and psychological dimensions of family farms just as much as administrative and financial support. In the long run, they stand as the lifeblood of our European agriculture.
This article by Rania Labaki, EDHEC Associate Professor and Director of the Family Business Chair and Maryem Cherni, Professor at UniLaSalle, has been republished from The Conversation under Creative Commons licence. Read the original article.
