Analysts say more than $50 billion in farm assets are expected to change hands in the coming years.
Meanwhile, surveys show nearly 88 per cent of Canadian farmers lack a formal succession plan.
Beau and Cashe Stevenson, two young farmers from northeast Saskatchewan, talked about the difficulties involved in transitioning a farm to the next generation.
Three generations are actively involved in the Stevenson farm – brothers Beau and Cashe, their dad and their grandpa.
The farm consists of three enterprises in the St. Brieux area – grain, a cow-calf operation and the 4500 head Hi-Lite Feedlot.
Grandpa is looking to eventually retire, but Beau and Cashe said tax laws have complicated the process.
Beau said the realization came while trying to buy the feedlot shares off the companies owned by their father and grandfather.
"And what we found is the government has made it so difficult on families passing down generational wealth or passing down assets. So if you don't sell your entire company and get completely out, you'll be taxed at an unbelievable rate, like to the point where you're giving half to the government. And there was a way for grandpa to get out of the tax, but then we would take that tax burden and have to pay for everything personally, instead of through our corporations.So he's got to wait until he's completely done and ready to retire." Beau said.
"And even seeking the best of the best, the lawyer we were seeing was like $500 an hour and he didn't have many answers for us either, other than someone's got to pay it or grandpa's got to fully retire, so it does suck." he added.
For land and farming assets owned within a farming company, the personal $1.25 million Lifetime Capital Gains Exemption does not apply.
Beau and Cashe express appreciation to TD Agricultural Services for that institution's help with transition planning and the brothers have advice for the many other young people dealing with transition issues.
"Lots of preparation, lots of research isn't going to hurt anybody." Cashe said.
"And communication is key," Beau added. "Like you got to communicate, everyone's got to be on the same page and try and have those difficult conversations.
But I also think too, that as young guys, we have to try and communicate our expectations and what we want, but we can't be naive and think that…just because you feel like you're deserving of your portion of the farm or land or whatever…if you don't own it, you have to accept kind of the reality of what your grandpa or dad or your family wants to do.
And you got to try and just run your own individual operation or farm based on the communication and kind of the understanding of what they're planning on doing."
Beau also said they would have made a lot of progress in their succession plan "if it wasn't for the tax that we'd have to pay, so it really slowed our progress down."
Both also advise young people to keep building their own farming operation, finding ways to succeed rather than just relying on a transition.
Below is the full interview between Beau and Cashe Stevenson and Kevin Hursh, Chief Agricultural Editor of SaskAgToday.com.
