I had two very different experiences at the Irish Farmers Journal’s Tullamore Farm open day held recently.The first was just before I started the session on stage with Padraig and Joan Grogan: the farming couple who have agreed to lease their farm to the Irish Farmers Journal for 15 years for the project.

Among the 3,500 people who turned up, a person came up to me whom I hadn’t seen for two years. At the time they were facing a decision to walk away from their farm, because their parents would not deal with the succession issue.

“Nothing has changed,” this person added, obviously upset as they held back tears. “I have just been hanging on in hope, but I have to make a decision now,” they added. I said I would visit them if their parents agreed. Last time they would not!

Contrast that to the on-stage conversation with two people on the other side of the succession equation. Padraig and Joan Grogan have been farming the family farm for over 40 years. They have four grown children, who are following their own careers.

The conversation

“When did you start the succession conversation?” I asked.

“It certainly didn’t happen overnight. We were toying with ideas for a while,” answered Padraig, who is now 63.

“I think that as we get older, we get less confident in our ability to make decisions. This could be on the farm, but in time our decisions to make succession planning are impacted. You have to start the conversation early and have a plan set out,” added Joan.

The succession conversation was clearly an open one in the Grogan household. “We had talked to each child, initially separately, but also when they came home for holidays together. It was clear that none of them wanted to return home to farm at this stage. We did not discourage them, but simply gave them the option,” said Joan.

“We were never going to sell the farm. When the Irish Farmers Journal brought up the option to lease the farm, we considered it carefully. We discussed it with our children,” said Padraig.

The lease option means the farm will be invested in and improved, giving them and their children options when the lease is up in 15 years’ time. “Or 14.5 years now,” said Padraig, laughing.

A question of trust

The key point they made about the negotiations is the importance of trust between both parties.

“Our family has always had a good relationship with the Irish Farmers Journal (Padraig’s brother John worked with the Irish Farmers Journal), but during the negotiations everyone was fair. We built on the relationship by discussing issues openly around the kitchen table,” said Padraig.

With everything about the lease now public, I have heard some farmers think they could have got more per acre.

“We felt the rent of €140/acre was fair. Of course you could get more for your best land, but it is an average price for all the land that counts,” said Padraig.

The Grogans get the current basic payment and greening, with any new coupled/headage payments going to the Irish Farmers Journal. Land rental price feeds into the risk and rewards relationship between landowner and lessee.

If prices are too high, the risk of the farmer to actually get a reward is much greater. This in turn feeds into higher risk to the landowner, in that the farm will not be invested in or –worse still – not getting paid.

One welcome addition to the risk/reward balance in the lease is that the capital expenditure was split, with the Grogans paying 40% and the Irish Farmers Journal paying 60%.

“Why would you not commit to continuing to invest in your own farm? It is being improved and the improvements will still be there when the lease is over,” said Padraig.

IFAC input

James Farrell of IFAC also had an important part to play in the arrangement. On stage, he discussed the importance of planning the transition.

“The tax-free income from the land lease is very attractive. Farmers also have to plan carefully, as they can be left with a large tax bill if they don’t,” he said.

“We are still finalising the transition. Padraig will continue to farm, and we will look at using the new five-year income averaging to minimise any bill.”

During the conversation, Padraig and Joan thanked a lot of people who they felt worked towards where they were on the day. I think the two that deserved the most gratitude were Padraig and Joan themselves. It is obvious that the decision has started a new chapter in their lives. You can see they are already enjoying it.

The farm has been set up by the Irish Farmers Journal to highlight efficient beef and sheep production. However, it is also a good template for succession planning and the need to start the conversation early. CL