Three succession stories

Charles Keddy, a well-known member of the Annapolis Valley’s agriculture community, was moderator for a panel discussion on farm succession at the 2023 Scotia Horticulture Congress, held Jan. 23-24 at the Old Orchard Inn near Wolfville, N.S. He said the topic is important because the average age of Nova Scotia farmers is now 56. (There were guffaws from the audience when Keddy suggested that he is helping to keep the average down.)

He made an observation about the industry that some would consider heretical: “It’s almost now that farming has become an inherited right, as opposed to a chosen occupation for a young person,” he said. “It’s unfortunate, but with the cost of farming, of getting into a farm operation, of starting the way that I started … with a couple of apple trees and a piece of land, or with a hand hoe and a pocketful of dreams – it’s almost impossible these days for a young person to do that. So I think we have to start being very creative on succession.”

Organizers of the congress could have booked a financial advisor to give a presentation on this topic. Wisely, they instead recruited farmers who have been involved in the process. While there is a role for third-party professionals in helping agriculture businesses transition to new ownership, people who have experienced it first-hand understand the interpersonal and emotional implications. Succession involves having conversations that are tough for some families, and that’s why the necessary planning is sometimes delayed, eventually causing anxiety or discord, and limiting the available options. Keddy introduced three panelists who spoke candidly about their very different experiences, highlighting some common themes and some lessons for others who may be grappling with succession.

First up was Jordan Eyamie, a member of the industry who is genuinely at the lower end of the age spectrum. Eyamie gained work experience on her family’s berry farm in Ontario, then studied horticulture science at the University of Guelph. Soon after graduating with a master’s degree in 2019, she was recruited for a job as inventory manager at Webster Farms in Cambridge, N.S. This fourth-generation farm – which grows rhubarb, dry beans, raspberries, and strawberries – was in the midst of a unique succession process, having recently been purchased by Annapolis Valley First Nation (as recounted by Emily Leeson in the June 2018 issue of RD). With 15 full-time staff, a similar number of local seasonal employees, and as many as 60 temporary foreign workers, it’s a substantial operation. Brothers Chris, Greg, and Brian Webster stayed on to help the new management team learn the ropes.

“The transition has certainly not been a cake walk for either party,” admitted Eyamie. “I can’t imagine how difficult it would be to sell your legacy to someone that isn’t family. Understandably, some of the brothers had a challenging time letting go, and this was because they knew that problems would arise if we took a misstep.”

Eyamie was given more responsibilities, and soon took on the role of farm manager. Along the way, she received invaluable mentorship from the Websters, who taught her about “the importance of listening,” as well as the fundamentals of planning and decision-making.

“Learning about the employees has been just as or even more important than learning about the crop management side of the farm,” she said, noting that some of the staff have been employed there for decades. “These are some of the hardest-working and most knowledgeable people that I know. I have leaned on them heavily for information…. I can’t stress enough that without the experience of the staff, this farm would not exist.”

Eyamie observed that while the workers helped to maintain continuity, there was a need to make organizational changes, as opposed to trying to replicate the distinct roles that had been played by the three brothers. Also, the farm’s new owners have a somewhat different vision, which includes engaging members of the Annapolis Valley First Nation and promoting long-term food security in the community.

“We are not the Websters,” Eyamie said, adding, “I’m always aware of the shoulders that we stand on, and the knowledge and experience that they have.”

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The next panelist, Geneve Newcombe, spoke about a more common type of succession: an intergenerational transfer – this one a work in progress. Her husband Craig and his brother Brian are the principals in Cornwallis Farms Ltd., a dairy, egg, and broiler chicken operation in Port Williams, N.S. She noted that the farm dates back to Deacon John Newcombe, one of the New England Planters who obtained a land grant in 1761 after the Expulsion of the Acadians.

“Some would say it’s been given or handed down to each generation. We like to use the word ‘entrusted.’ We like to think the farm was entrusted to us to make our living from, to earn an income from,” Newcombe said.

The families began having conversations about succession eight or 10 years ago. “The biggest thing we would emphasize is communication,” Newcombe said. “You have to talk to your children – not only your children that are interested in the farm, but your children that don’t want to farm, or are choosing other career paths. They need to know what your vision is, and your plan – because it is a large farm, it is a profitable farm, and everybody has to be on the same page.”

Having professional help was critical in developing a system. “Accountants are the architects, and lawyers are the contractors that put it together,” said Newcombe. “Our decision in the end was once the child is interested in farming, reached the age of 30, and had five years’ continuous experience on the farm, then the father could transfer shares to that child.”

The families signed a shareholders’ agreement in 2017, and the first share transfer will take place this year. The youngest member of the next generation still has time to decide. Newcombe said two of her three children opted out, instead completing advanced professional degrees.

“We supported them in their education and their careers, and I think they both realize they probably take home more per year than their father, and they realize that farming, especially with livestock, is seven days a week, 365 days a year,” she said. “Our attitude was that the farm is to make a living off of, not to get rich off of, and I think as long as their brother or their cousin doesn’t ever sell the farm, there’s no issues there. They’re both good with that.”

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The final speaker was Rod Farrow, who was beamed in virtually from the Bahamas – perhaps a sign of successful succession. Farrow’s perspective was particularly interesting because he has gone through the process from both sides, buying in and selling out, within a span of about 40 years.

Farrow was not an inheritor, but a farm employee who worked his way up. He was born in England, and as a young man he did some travelling, holding jobs on orchard operations in five different countries. He established a good relationship with the owners of Lamont Fruit Farm, a 600-acre apple operation in New York state, and in 1986 he returned to take a permanent position there. Over the years he was given more management responsibilities, and he became a partner in 1999, then full owner in 2013.

Farrow pointed out that the farm went through a difficult period after suffering major damage from a storm in 1998, forcing the fifth-generation owners to make changes that included succession planning. So when he became owner, getting started on succession was a priority. He started as soon as it was clear that neither of his own children were interested in carrying on the business. He admitted it was hard to hear his son say, “Dad, this is your dream,” but he knew it was important to move on, which meant looking to two key employees who were capable and ambitious.

“You’ve got to think about the business structure and how it can possibly work, given the large sums of capital, how you get a process moving to bring the young person, who doesn’t have equity, to a point where the bank would possibly be willing to lend them millions of dollars,” Farrow said. “This is quite a long thought process. It takes a lot of design and a tremendous amount of commitment.”

Farrow said the previous owner had approached this process in a spirit of generosity, and he decided to do the same. In both cases, it involved establishing a separate operating company that rented orchards at reasonable rates. Driving profits into the operating company allowed the incoming owners to build equity before working toward the land purchase.

“It’s easier to do earlier than later,” he said. “It’s the only real way to get to where you need to be.”

Farrow highlighted the need to develop a clear operating agreement specifying the responsibilities of all parties, to avoid conflict. He said one of the hardest parts is determining an annual fair market value for both the operating company and the land, to determine what the shares are worth – not necessarily based on true market value. On the part of the seller, there has to be a commitment to make the transfer work, though the exact timing cannot be predetermined.

Like the Lamonts before him, Farrow had to contend with unforeseen circumstances as he approached the end of his tenure. A minor stroke forced him to accelerate the transition – but the system was in place, and the final sale occurred in 2018.

“Start early, and train your people to be the best they possibly can, because you never know,” he said, adding that good employees should be given the opportunity to learn from failure. “Promote them early, and support them.”

Ultimately, farm succession is about acknowledging the economic realities of agriculture. “It is extremely difficult to get in from the ground up,” Farrow said, “if you start with a shovel and a tree and good intentions.” DL