Nuffield scholar Peter Craven comes on the show to discuss family succession and host Peter Green also speaks with Devon farmer Richard Darke about his family's succession journey.
In this episode host Peter Green speaks to Nuffield scholar Peter Craven about family succession on farms and how to do it well. Listen to next week's bonus episode for more information on the 'family charter' which Peter refers to throughout this episode.
Peter Green is also joined by Richard Darke, who farms with his sons Matt and Sam in south Devon.
In this second series of Farming Focus we're asking the question 'does my farm have a future?'.
Farming Focus is the podcast for farmers in the South West of England, but is relevant for farmers outside of the region or indeed anyone in the wider industry or who has an interest in food and farming.
For more information on Cornish Mutual visit cornishmutual.co.uk
For our podcast disclaimer click here.
Timestamps
00:01 Cornish Mutual jingle
00:15 Peter Green introduces the episode.
00:43 'Peter's Future Farm in 60 Seconds'
02:04 Peter introduces Peter Craven.
03:03 Peter Craven comes in - to what extent are family businesses still the bedrock of farming?
03:33 How did Peter C become interested in succession?
05:17 Why don't we like talking about succession?
05:48 How to make time for talking about succession?
07:04 Introducing the family charter.
07:50 Cornish Mutual jingle.
08:00 Peter Craven's Nuffield travels.
10:10 What is the danger if a family gets succession wrong?
11:16 The importance of listening.
11:44 Peter Green is joined by Richard Darke, who farms with his sons Matt and Sam near Kingsbridge in Devon.
12:44 Why did the Darke family need to start sorting the succession topic?
14:18 Sorting out succession.
15:50 What was the risk for the Darke's if they couldn't solve the succession issue?
17:02 Farmers should talk about succession at an early stage, says Richard.
19:08 What questions should listeners ask themselves about planning for the future?
20:50 Make sure the family feel included.
22:05 Showstoppers.
23:22 Practical tip from Peter Craven.
24:22 What skills or attributes will farmers of the future need to be successful?
25:25 Peter Green rounds up.
Cornish Mutual, farming insurance experts.
Hello and welcome to episode two of this new series of Farming Focus, the podcast for southwest farmers brought to you by Cornish Mutual. I'm your host Peter Green and in this second series we're looking at the future of farming. To start each episode I'm sharing one thing I'm doing on my farm to help it thrive in the future and I have to do this in less than a minute.
So before we head over to our guest It's time for Peter's Future Farm in 60 seconds.
Succession per se feels a little way off. I turned 40 last year and my twins are six. Conscious of the need to give it thought, but inevitably our ideas will change over the next couple of decades. I'm increasingly struck by by the importance of clarity around roles in any business. When my parents were killed in a car accident, I was fortunate to inherit a farm with experienced and longstanding staff, but there was uncertainty around roles.
What worked well was being honest and open about our intentions with the business. and their roles. This extended to unpopular courses of action like selling the suckler herd at the time. Looking to the future, I aim to be clear in my mind about the areas of the business where I am best focusing my time and where other people have stronger skills, knowledge or experience.
And use that to plan tasks. I've also talked about worst case scenarios with my wife and to a lesser extent, the team. I have an updated will and powers of attorney and the all important crib sheet, a piece of a four paper with details of the people to call if I was outta the business, tenants, vets, contractors, solicitors, et cetera.
Hopefully that gives a snapshot about the way I'm structuring my business to make it fit for the future.
Also of relevance to my farm and so many farms across the region, we're focusing this episode on family businesses and managing succession. And later we'll also be featuring the story of one farming family in Devon managing to do this well. My guest today is Peter Craven, who's based in Norfolk and currently works for NIAB.
He's a member of the NFU's Potato Forum and a liveryman of the Worshipful Company of Farmers. He recently presented his Nuffield Scholarship Findings in Exeter and his topic asked. How to progress a family business from good to great. What is greatness and is there a formula for family success? I'll be asking Peter this today.
I should also say that Peter's own family farm is in Lincolnshire, which he managed for over 20 years. Peter, welcome to the show. Uh, hopefully it won't be too confusing having two Peters on one podcast, but let's dive straight in. To what extent are family farms still the bedrock of the UK agricultural industry?
Thank you for inviting me. And that was some introduction. So thank you. Um, bedrock of society of farming society. Absolutely. So, uh, 97 percent of farming businesses in the UK are family businesses. So understanding family and business is very important. And, uh, I mean, you've just nicely talked about what you're doing, which I think is an awful lot more than the many.
Um, but so important in planning for the future and succession as a subject. How did you become interested in that? And, and why? So it started, uh, my sort of Nuffield journey started on a Westfield company of farmers course. And We were looking at Jim Collins, good to great book. And we were talking about some of the theories in that.
We then had this guy turn up called Sean Rickards. He was a NFU economist. He's quite controversial and he really did shake me with a comment. And he said that 60, 000 UK farmers to going out of business in the next seven years, and we were talking about subsidy. And how it was going to be gone by 2028 and what that was looking like and how a lot of people are reliant on those subsidies.
You can say whether he's right or wrong but I mean I joke so what if he's half right? Um, these are still incredible numbers and understanding that sort of pressure on families in business. Uh, he was just really talking about subsidies at the time, but we've got extreme weather conditions. We've got labor shortages, we've got rising input costs.
We've got sort of volatile markets. I mean, there's all this stuff that's stacking up. Yeah. And that's also on the top of getting on together. So I mean. Uh, getting on as a, as with family, you'll know, just getting on with your own family can be hard, but working alongside family, it's tough. Um, I was finding it hard getting on in, uh, with my, my family.
And I really wanted to see how did the best families in the world. Get along better. I mean, how do they get on with each other? How do they make it work? The friction that can be caused in farming businesses and the sort of butting heads as some people might say, how do you get around that? How do the best families navigate that?
My experience from countless conversations with farmers of all ages from businesses of different shapes and sizes is that we don't really like talking about succession as an industry. Why do you reckon that is? Well, we're spending all day together. We're working hard alongside each other, often shoulder to shoulder.
And these are quite difficult conversations to have. They need honesty, openness, and that this conversation about the future is something that we don't often have time, or we don't make the time for. The businesses that you have seen and spoken to, how have they made time for it? Because I was thinking earlier today, how would I make that time?
Where would it come from? And you can't make time, obviously. It's realizing that, uh, this is really important. And it, and it came to me when I was in New Zealand and I was looking around, uh, this is a particularly big farm at the time. And the guy that owned this farm, he borrowed an awful lot of money from the bank and the banks were.
They weren't really worried about the, the amount of money. And this was sort of 65 percent of the value of his business was borrowed. And you think, crikey, that's a frightening number. And, but the bank wasn't worried at all. The business is running really well. It was, um, they were all over the numbers and the key financials.
They're reporting regularly to the bank. The banks are worried about the family. And the guy I met, he pulled this sort of document out of his top drawer and said, have you seen this before? And it was called the family charter. And he, he, he put it to me as a way of protecting ourselves from ourselves.
And it was really a way to get along. And so the banks, they weren't particularly worried about. The numbers they were worried about if Bob and Jim can't get on together, what does that look like for them? Yeah, so in high level terms the family charter is another tool in the toolbox that we can use and hopefully We only use it in extreme situations.
I guess it's just a guide. It's a bit of a fallback No, I mean when I then then I thought crikey. What is a family charter? I've never heard of it So I went down a proper rabbit hole, looking all over the world. What are these family charters? Turns out that everybody's using them. I was like the only person that never heard of them.
I'm talking to family business associations in countries all across the globe. I mean, we can come back to this as well when we, um, speak more in our bonus episode. And, and that's something we'll dive deeper into, you know, on the family charter. Um, On the bonus episode, which people can catch up on next week, Cornish mutual farming insurance experts working to protect the farming community since 1903.
Just thinking about the different places that you traveled to Peter, what were the real standouts that you discovered? Probably one of the best people that I met was a guy called Hort Schultz, and he was the COO and president of the Ritz Carlton. And I was interested in him. I'd read a book. He's written a book on excellence wins.
He'd won some awards in America. It was a presidential award for excellence or business excellence called the Malcolm Baldrige Award. So he was at the top of their game. And I wanted to see how he motivated his people. And he was telling me there'd been a big study in America and looking at motivation.
And he said that number seven on the list was money and just throwing people another dollar an hour is not what helps people, um, motivates them. He said, number one is a sense of belonging. And number two. Is a sense of empowerment and he said these are the two things that we should be focusing on Um, but then in his next breath, which I mean he spoke for two hours incredible guy I have for this incredible chat Um, he said we the the 90 percent of people the businesses in the world 90 percent of businesses They've got no idea where they're going And he said it's a massive problem because we can't lead anyone else unless we know where it is.
We're going and he had all sorts of analogies on this, but it's so obvious. Uh, and this is some of the biggest problem in, in farm families is we don't really talk about the future too much. And so it's something that the charter addresses and it starts to look at. And we say vision. I mean, it's a crazy American word.
I mean, just let's talk about a plan or the future. Um, but where are we going? What's our direction? And, and that's really interesting. I think that that motivation, the reason why we get out of bed every day as farmers in a Pretty tough industry with not a lot of cash coming in. You know, it, it does, it's a really interesting question.
I don't think it's one that we think about that much. So that I find that point about sort of understanding people's rationale. Really interesting. You know, how can we lead if we don't know what that is? What is the danger, then, if a family gets succession wrong and doesn't manage to do all those things that we've talked about?
Goodness me. So, on my travels, it hasn't all been unicorns and roses. Uh, there has been some shocking cases where things haven't been handled very well. So I, uh, learnt a new word on my Nuffield travels, which I'd never heard before. Uh, which is fraticide. And, uh, this word frat from fraternity, brotherhood and side as in suicide, homicide.
And I think you can guess when you put those two together. I spoke to somebody in Ireland and I think there's been three cases of this in the last three years in farming families. So, I mean, it doesn't get much worse than that. So this is, uh, okay, that's extreme, but getting on with family, it can cause, I mean, it just causes friction.
And sometimes this friction, um, doesn't have to be there. There is another way to talk about and understand. And often it's just, when we talk about communication being a problem, and it was explained to me, the importance of communication isn't the talking bit, which I seem to be doing a lot of at the minute, it's the listening bit.
And I think when people don't feel that they've been heard and understood. That's a big problem. Well, we're now going to hear from a family who have had to give a great deal of thought to succession and are building a business for the future. Cornish Mutual. Farming insurance experts. So I'm joined by Richard Dark who farms with his sons Matt and Sam near Kingsbridge in Devon.
The farm is a mixed business with dairy, sheep, beef and arable enterprises over more than a thousand acres and has been in the family since the 1960s. The family recently won both the Family Run Farmer of the Year Award and the overall Southwest Farmer of the Year Award at the 2023 Southwest Farmer Awards.
Today, however, Richard's going to give us an insight into their succession planning story. Richard, welcome to Farming Focus and first of all congratulations on those prize wins. Thank you very much. We still can't quite believe that we've won such a prestigious award, but it's nice to get a. A bit of, uh, notoriety and thanks for what we're trying to do down here.
Really. That's it. Yeah. Worthy winners. I'm sure. Can you give us some background to your succession planning situation and the challenge that you faced? You know, what, what was the catalyst for the business to start addressing those issues? So we're a limited company, uh, which involved a lot of shares and, uh, some of the shares were allocated to six grandchildren, uh, by my grandfather as a gift before he passed away.
Uh, so there was quite a messy shareholding, which when you looked at it in a broad sense, where. Divided, uh, right down the middle into two family groups and then, um, through illness, uh, one of the major shareholders decided that he would be best in his interest to leave the farm and, uh, involved, um, pretty well a 40 percent shareholding.
And then his three children were dragged away, uh, alongside that shareholding. We will obviously then looked at quite a large amount of capital, leaving the business, which set our heads scratching and having the very difficult discussions as to the value of the farm and what the shareholding was worth.
And then how we were going to pay off that shareholding cause a lot of very, very awkward discussions between. The two parties, all of which are obviously family members. Which made those discussions even harder, really. Yeah, I'm sure. So, uh, we, we did manage to sort out that division in the farm and through restructuring of the farm, we managed to find the capital to pay off and get that 50 percent shareholding.
Sorted out that then concentrated our minds as to how we would deal with succession further down the line and quite often. Well, I think in most situations with it, where there's a negotiation, both sides need to almost feel like they've, they've had to compromise more than the other. And I guess that's, that's where you had to get to.
Uh, we've now concentrated the shareholding. Into a single family and that has clarified and simplified the whole situation with the shares. Within the family, we are in total control of the business now, myself and the two sons. So it's short term pain, or say short term, 30 year pain with the capital that we've had to borrow.
And we've also had to deal with increasing interest rates as well. So the negotiations, I would say, right from the word go when we started, which we're having general discussions when we've sort of bumped into each other in the road. To the hardcore finalizing of the deal, I would say probably took easily four years.
Yeah. It was a long time. Yeah. Yeah. That's takes a real toll on the family, but, um, so we've heard a bit about the solution there. Um, you did manage to walk away and you paired the business right back, albeit with, you know, a significant amount of borrowing to service, but what was the risk if you didn't manage to solve that succession question?
That was the split in the shares. So we were then still landed with my father with a majority shareholding and myself and my brother and sister with minority shareholdings. So we still had to make sure that dad's majority shareholding was sorted out really. He'd obviously been involved in the painful process of sorting out the, uh, the deal.
With the 50 percent shareholding and in the end, he was really good and passed his shareholding, gifted it to me that enabled us to pay off the two minority shareholders in the end, and we've. Ended up with all the shares in one place, and they are now ready to be handed down to my two sons now. So what advice would you give to other Southwest farmers when planning their succession solution?
So it's a simple case of starting to talk about it at a very early stage. You will hear of so many of our next door neighbors that, um. can't talk to father or grandfather, even if it's just a quick, you know, what do you think dad? Or what do you think grandfather about such and such? And, or how do you think it's going to be going in the future?
It's just a quick phrase that might just get that conversation going that which might may well lead to sitting down around the table. At lunchtime or whatever, and then another little bit of conversation could be added to make it more comfortable really, and it's also involving professionals at an early stage to get the right advice to make sure that you don't start going down a particular route.
When it might not be appropriate, really. Yeah, absolutely. That's great advice. And without leaning too heavily on a, on a farming analogy, as you say, it's about just sowing the seed, isn't it? Just putting an idea in someone's head and letting them mull it over and, um, then developing that, uh, over time.
Marching farther into the kitchen and sitting him down and saying, going into a very in depth conversation about what you want and what you don't want and how it should be sorted out is definitely not the way to go. Yeah, there's no lunch until we've sorted this, don't do that. Don't do that. Brilliant.
Richard, thank you so much for being so open and honest and telling us so much about yours and your family's story. I know that it's going to be really useful for people to hear. And I think there's going to be a lot of resonance with other situations from, from farmers across the Southwest. So thank you very much.
I hope that helps. Thank you. Cornish Mutual, farming insurance experts, helping you make your farm safer with tailored health and safety services that safeguards you, your family, employees, and your business. That was Richard Dark from Kingsbridge in Devon. So Peter, what questions should listeners be asking themselves when it comes to planning for the future, and especially when they're thinking about that transition between generations?
There's three questions really that the charter is trying to address. So number one, um, do we want to remain as a business together? And if we do, how are we going to do that? The other question that's often raised is, is who are we calling family? And this can cause quite a lot of problems. Um, we've got, um, adopted or stepchildren.
How are we including them? And what are we sharing with them? So keeping too much, um, away from people, uh, causes this sort of conspiracy theory almost, and, and it's sharing enough information so that people know what's going on. So for example, here we go, uh, a daughter. I met, uh, she wasn't in the business, uh, and she found out that her parents were building a, uh, well, her brothers in the farming business were building a, uh, distillery.
Um, she was in the parish council meeting when she realized this. She hadn't realized her own family were doing this. Oh, my goodness. And, and she said, this has been a real problem for us. And actually they've started having much more open conversations. I mean, she, she wasn't involved in that business, but she still would have liked to have known.
And this family charter includes everybody. So it's not just, uh, those people that work in the business is trying to include everybody and bring them all in together. Um, you don't have to, you can, you can agree what you're going to share, but it's, it's to, to, to make the family feel included. And so if you want a family that gets on, you have to include them and you have to spend some time together.
So what you're, what you're talking about there as well is that it's important to recognize that stakeholders come in different forms. It's not just people with equity, it's people also with an interest. Absolutely. So there's three circles here and, uh, something I, uh, I've got in my report. You might give a link or something to help people find that in the show notes.
Yeah, but there's, uh, it's really family business and ownership, and you think of it's just family and business, but this ownership part is quite important and it's understanding where we are now, where people sit within those circles. Cause the, and that they're overlapping, but also where they are in the future.
and how that might work. So it's not really ramming down the throat at succession. And this has got to be the thing that we're dealing with. This is dealing with lots of things. So it's not just about succession. It's a bringing together a family to helping them understand, learn, get along better. And unfortunately that's Almost all we have time for today, but before we ask today's guest, our closing question, uh, it's just time for our showstoppers.
These are just a few key points that our listeners might like to take away from today's podcast. And it's, it's not, uh, been easy for me to try and distill these down. I think the first thing that comes to mind and we spoke about it quite early on is, is really trying to understand people's different perspectives.
It's not enough to just have a business that's performing well, if there's other dynamics at play with other stakeholders in that business. So understand that any group of people, whether it's in a family farming business or Okay. Or a different sort of organization will have different personalities and most importantly, different reasons for doing what they do moving on from there.
I think using that empathy, you know, it's really important to understand that communication is just critical and, you know, seek first to understand and then, then to be understood, nobody likes surprises. So, you know, talking with. Honesty and openness and fairness. As, as you talk about in your report, Peter, that, that all helps to build trust.
And I think then you come on to, well, are we in a position to perhaps create a simple document or a charter? And that's where we record these sort of hopes, these visions, people's roles, details around how people can join and, and leave that group. And before we go, what one practical tip would you give to farmers?
Based on our discussion today, just one, I met a lovely guy, uh, in America, really, really interesting guy helping farm families. And he said, when you're going to make decisions as a farm family together, because of the hierarchies at play and, uh, some of the sibling rivalry and all of the rest of it in the pecking order, he said, get everybody to come into the room with two solutions.
And immediately. that you're, you've set the scene that there's more than one way to skin a cat. Everybody's now of a different mindset that even grandpa hasn't got the, he hasn't even got one idea. Suddenly there's a more of an open sharing environment to, and a learning and a listening environment. I'm now going to ask the final question that we're asking everybody this series.
In three words, what skills or attributes will farmers of the future really need to be successful? So I would say first word, listen. Um, second, you've got to listen. Final, a third word is listen. Okay. So I think it's really important to listen. Uh, and when you're listening to repeat back to people and to paraphrase, so listening to show that you've listened.
So if I say to you, and I repeat back what I've heard, and now I say, okay, so I've heard this, this, this, and you can say, Well, no, I said that as well. And then, and then all of a sudden you've acknowledged that you have listened to what they've said. I would say listening is something we don't do enough of.
We don't make enough time to listen. We don't prioritize listening. We're great at talking. We're great at arguing. Uh, we're great at all of that debating, but listening to fully understand what somebody said. make them feel heard and, uh, and then go from there. Cornish mutual farming insurance experts.
Well, that's it for today's episode. A big thank you to my guest, Peter Craven, and also to Richard dark for coming on the show available from next. Tuesday, we'll have a bonus episode for you in which Peter will explain more about the family charter, how it might help your family and how to draft one.
Then we'll be back the following Tuesday with another full episode focused on diversification and its role in future farming businesses. In the meantime, why not keep the conversation going and start a discussion with your family or farming friends about succession. If you have any feedback or any ideas for questions, you'd like us to put to guests or any questions for us, you can send us an email to podcast at Cornish mutual.
co. uk or find us on X or Twitter, Instagram, or Facebook using the handle at Cornish mutual. If you haven't already, please subscribe to the show on your favorite podcast platform, but also give us a rating and review. This really helps in encouraging more people to subscribe. Check out the show notes for more information on today's episode, including the link to our podcast disclaimer.
You've been listening to Farming Focus brought to you by Cornish Mutual. I've been Peter Green. Until next time, it's goodbye from me and everyone in the Cornish Mutual podcast team. Cornish Mutual. Farming insurance experts.