Less than half of farmers have a succession plan and the percentage hasn’t moved in three years, according to new research.
NFU Mutual’s annual survey found that just under half of farmers (48%) have a succession plan in place in 2023.
More than a third don’t have a plan because they don’t think it’s relevant to them, while 16% admit it is is relevant but they haven’t got round to it yet.
The rural insurer's Voice of the Farmer survey interviewed a representative sample of more than 1,700 farmers from across the UK.
It comes after farmers continue to see great certainty, including the post-Brexit transition in subsidies, rampant inflation, slow pace of policy, and changing prices to food, fertiliser and fuel.
Gregor Belcher, farming specialist at NFU Mutual, called on farmers to make succession planning a priority against this backdrop.
He said: “Deciding who to hand the farm down to and how to do that drops down the priority list when there are more immediate needs to tackle.
"But even in tough environments, the importance of future-proofing the farm does not disappear.
“In some cases, these challenges will have triggered a need to start thinking about succession, but even those farmers who don’t believe a plan is relevant to them can put in a series of small simple steps to protect their farm.”
Farms without a natural successor can still protect themselves, NFU Mutual says, including Partnership Protection and Key Person Insurance.
Sean McCann, chartered financial planner at NFU Mutual, explained more: “Thinking of the ‘what ifs’ is a useful starting point, especially if you’re in a partnership.
“One of the great risks of a business partnership is that one of the partners may die, with his or her share of the business passing to someone else.
"That person may have little interest in the business or - at worst - may be hostile to your objectives."
He added: “Equally, a partner who suffers a serious illness may want to retain the option of continuing in the business or be compensated for their exit from the business.
“The ideal solution is to have a partnership agreement in place that sets out what happens if one of the partners dies, becomes seriously ill or wishes to exit the business.
“This, together with each of the partners having up to date wills in place, will help ensure the business ends up in the right hands at the right time.”
Another key consideration is how farmers are going to fund their income in later life, NFU Mutual says.
However, an increasing number of farmers have some financial security in the form of pensions, investments or savings.
Over the past four years, the percentage of farmers with pensions has increased from 66% to 77%, and pensions have been identified by farmers as one of the most important financial management priorities.
Mr McCann said: “Pensions can provide an independent source of income for the older generation, giving them the freedom to take less from the farm.
“This can be particularly important when two, and sometimes three, generations are relying on the farm for their livelihood."
