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Driverless Tractors and giving up control

23 Sep 2019

I was watching a driverless tractor effortlessly at work in a field recently, and it made me think about control.

All the necessary preparations had clearly been done to programme the tech tractor before setting away the seemingly autonomous mechanical beast, but at all times it was apparent that someone could still take control and manually manoeuvre the tractor if needed.

Giving up control can be very difficult, from the movements of machinery to the running of the farm business.

I am often asked about the best way to bring the next generation into a family farming business, and whilst there is no definitively right or wrong answer, there are a number of things to think about to ensure the future success of the farm.

If we take a traditional farming partnership as an example, if the next generation are to become partners, how will this be structured? Will they be salaried partners, or do they need to be incentivised by becoming profit sharing partner? If the latter, and the farmland is an asset of the partnership, will the next generation take a share in the capital value of the land, or will it be ring-fenced for the existing partners?  If the next generation are to take a share of the farmland, could this leave the existing partners in a vulnerable position if the new partners decide to leave the farming partnership at a later date?

Despite their rather technical nature, these are all essential considerations when thinking about introducing the next generation into the partnership.

For example, if a new partner is salaried, will they become complacent and not work as hard as expected by the existing partners? If the new partner is instead to be a profit sharing partner, can the existing partners afford to potentially dilute their share of the profits if the bottom line does not increase with the introduction of the new partner?

Tractor Tracks

When introducing the next generation into the partnership, it is also important for the existing partners to understand that the new partners will have a say in how the farm business operates. Are the existing partners ready to embrace possible changes which the next generation may be eager to implement, including possible diversification into non-agriculture activities or the introduction of more modern technologies and methods into the business?

When considering the introduction of the next generation into the partnership, it is also necessary to think about the future for the existing partners. If the existing partners intend to step away from the business in the not to distant future, are there mechanisms in place to enable them to do this, and will it ensure the exiting partners have the financial resources they expect and need?

The answers to all of these questions are often varied and unique to the circumstances of those involved in the business. It can therefore be very helpful to have open and honest discussions at the outset to ensure that everyone is aware of the hopes, ambitions and expectations for the farm business itself, as well as for the individuals involved in it.

At Hay & Kilner, our multi-disciplinary Rural Team can call on the expertise of our Private Client and Corporate solicitors to assist in all aspects of farm business succession planning and corporate governance. To find out more, call 0191 232 8345.