FCC AgriSuccess March 2017

AgriSuccess

M A R C H 2 0 1 7

FARMBOYS

FARM SUCCESSION SKIPS A GENERATION

MARCH / APRIL | 2

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PRODUCER PROFILE

Farmboys: Farm succession skips a generation

Bryan and Kyle Maynard of P.E.I. bought a turn-key farming operation from their grandfather, overcoming some challenges in the process.

IN THIS EDITION

FEATURES9Hiring a consultant: 5 questions you need to ask

The questions may seem basic, but producers don’t always ask.

10Use on-farm trials for informed decision-making

On-farm trials can be used to answer many important questions as long as the trials are properly designed.

COLUMNS3YOUR MONEYHow will you spend your retirement years?

You need to know what you want to do in retirement to calculate how much money it’ll take.

8GAME CHANGERSBig farm-input players getting even bigger

What producers should know about the pending mega-deals.

14CASE STUDYGood farm succession plans allow for change

A succession plan is thrown into chaos when one of the kids unexpectedly decides to farm.

16ASK AN EXPERTThe ever-changing role of women in agriculture

Hear from four presenters from last year’s Advancing Women in Agriculture conferences.

18ECONOMIC INSIGHTSCanadian agriculture is a trading powerhouse

Three factors that impact Canada’s role as a leader in world markets.

19TECHNOLOGYCell boosters keep you connected

A cell phone booster might be the answer to your dropped calls and poor smartphone performance.

COVER STORY

4With pride in agriculture and a positive yet realistic outlook, AgriSuccess is dedicated to helping Canadian producers advance their management practices. Each edition aspires to present content that is:

• engaging

• motivational

• innovative

• actionable

Est. 2004, Edition 75

Editor, Kevin Hursh Original photography by GregHuszarPhotography.com Photography and articles may be reproduced with permission. Please contact us at [email protected].

Cette publication est également offerte en français. Consultez fac.ca/agrisucces.

The editors and journalists who contribute to AgriSuccess attempt to provide accurate and useful information and analysis. However, the editors and FCC cannot and do not guarantee the accuracy of the information contained in this journal and the editors and FCC assume no responsibility for any actions or decisions taken by any reader of this journal based on the information provided.

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AgriSuccess

M A R C H 2 0 1 7

2 | FCC.CA/AGRISUCCESS

“Truth is stranger than fiction,” wrote Mark Twain, and that’s no doubt true when it comes to farm succession issues. You’d be hard-pressed to invent the complex family dynamics and financial situations that exist in real life. But we’re going to give it a try.

Starting with this edition, we’re introducing an article that features fictional farm families facing real-life succession issues. Our thanks to BDO Canada for providing these case studies.

Why not just tell the stories of real families? We do that in many of our other features, but these tend to be successful transitions that didn’t get heated. Not many of us would like to see the messy side of our family dynamics printed in a magazine for everyone to see.

Fiction also helps with simplicity. To tell a compelling story and provide useful succession advice in less than 900 words requires scenarios that are more straightforward than what typically exist in real life.

Even though the families are fictional, the situations and characters are unlikely to be as eccentric as many real-life situations. Truth really is stranger than fiction.

Hopefully, you’ll see elements of your own succession situation or that of your friends and neighbours within these stories. And hopefully, there will be nuggets of information you can use.

Dabbling in fiction is new for us, so the feature is likely to evolve a bit over time. Let us know what you think of this approach and if you have any suggestions, feel free to pass them along.

As always, we welcome all your feedback and story ideas. Email [email protected] or tweet @kevinhursh1. n

FROM THE EDITOR

KEVIN HURSH, EDITOR / Kevin is a consulting agrologist, journalist and editor based in Saskatoon, Sask. He also operates a grain farm near Cabri, Sask., growing a wide array of crops. hursh.ca

CONTRIBUTORS KIERAN BRETT / Kieran is an Alberta-based writer who’s been covering agriculture-related topics, from production to finance to marketing, since 1989.

ALLISON FINNAMORE / Allison is a freelance agricultural journalist and social media enthusiast based in New Brunswick. She is the editor of FCC Express and contributes to publications nationwide. Finnamore.ca

PETER GREDIG / Peter has a background in agricultural communications and is a partner in mobile app development company AgNition Inc. He farms near London, Ont.

LORNE MCCLINTON / A writer, journalist and photographer, Lorne divides his time between his office in Quebec and his Saskatchewan grain farm.

LYNDSEY SMITH / Farm writer and ag communicator with a love of social media, Lyndsey often writes about the complexity of farming and the interplay between farmers and consumers.

Fictional family, real-life situation

MARCH 2017 | 3

My father sold his dairy operation when he turned 64, but actively continued to grow small grains and oilseeds with me on our farm near Yellow Grass, Sask., until he turned 80.

Decades of milking left him with a pair of bad knees that made walking painful. As a result, he had little interest in travel. He occasionally attended the Royal Winter Fair in Toronto, went to farming conferences and tradeshows, and visited family and friends. His favourite recreational pastime was reading.

On the other hand, my great aunt Jenny sold her ranch in central Florida after the death of her parents. Excellent health, deep pockets and no dependents allowed her to indulge in her love of travel for more than forty years.

My father and my great aunt chose to spend their retirement years in vastly different ways, requiring very different income levels.

It’s important to know your retirement goals and how you plan to fund them.

“The first step is to brainstorm a bit with your spouse about what each of you might like to do when you retire,” says financial writer, broadcaster and author Bruce Sellery.

Couples might have different dreams. A husband might prefer to stay close to home. His spouse, on the other hand, might want to travel and see all the sights they were too busy to see when they were fully engaged with the farm. If they have divergent goals, they’ll need to hash out a compromise.

Having these types of conversations starts to make retirement more tangible, Sellery says. They create the clarity people need to calculate the cost of their retirement.

Start by determining how much income you’ll need for day-to-day living. You can find all kinds of retirement income calculators with a Google search. After that, work out how much extra you’ll need for your special goals.

Taking action to make your retirement goals a reality is a big step for some, Sellery says. A farmer’s sense of identity is often tied to the job. So if you’re no longer a farmer, you need to redefine who you are as a person – and that takes a lot of courage. n

YOUR MONEY

VIDEO: Reinvent Your Retirement fcc.ca/Reinvent

How will you spend your retirement years?BY LORNE MCCLINTON

A farmer’s sense of identity is often tied to the job.

Bruce Sellery recommends you ask

yourself:

How do I want to spend my time?

What experiences do I want to have?

What kind of hobbies do I want to pursue?

Where do I want to live?

What kind of home do I want to have?

What kind of contribution do I want to make to my family?

BRAINSTORMING YOUR

RETIREMENT OPTIONS?

4 | FCC.CA/AGRISUCCESS

PRODUCER PROFILE

FARMBOYS

FARM SUCCESSION

SKIPS A GENERATION

BY ALLISON FINNAMORE

MARCH 2017 | 5

Knowing an opportunity when you see it is key to building a successful business, say two Prince Edward Island brothers. So are preparation and confidence in your skills.

When the opening came to purchase their grandfather’s farm near Summerside and walk into a turn-key potato operation, Bryan and Kyle Maynard knew it was their chance.

“When the opportunity came up, we were both excited to take this on,” 31-year-old Kyle says of the 2015 farm purchase. The choice was either buy the farm or let it go. “We figured it could be something we’re good at.”

“I feel we had the expertise and experience to give us the right mix for success,” adds Bryan.

The brothers grew up on the farm, and Kyle went on to become a licensed machinist. He eventually moved from the shop into the office of an aerospace company where he became a customer service manager, dealing with international clients and gaining financial experience.

Meanwhile, Bryan, who is 33, continued to work alongside their grandfather, gaining invaluable first-hand experience. Call to action

Their grandfather owned Arlington Farms and was a processing-potato grower for Cavendish. His decision, at age 80, that it was time to retire was a call to action for the brothers. They immediately went to work creating their business plan, securing financing and putting opportunity to work for them.

With product from the previous year still in storage – and the planting for the year ahead already laid out – Bryan and Kyle found themselves in a good position.

“We were in a unique situation where we hit the ground running,” Bryan says. “We had a contract to sell to the same client. A lot of the same employees were staying around.”

Taking over the operation was fast once the sale was complete, but moving from inception of an idea to purchasing the farm to completion of the sale was anything but. Negotiations began in

PRODUCER PROFILE

FARMBOYS

FARM SUCCESSION

SKIPS A GENERATION

WHY FARMBOYS FARM

“ You can’t do this because you think you want to. . . only do this if you can’t stand not to.” – Bryan Maynard

Hear their story from the Farmboys themselves in North Cape Coastal’s YouTube video.

Staff are on site and ready to go at sunrise

6 | FCC.CA/AGRISUCCESS

PRODUCER PROFILE

2014 and went on for about four months before an agreement was reached between the brothers and their aunt, who was negotiating the sale on behalf of her father. Transition planning

“It was a very open transition,” Kyle recalls. “The biggest thing we had to figure out was, is this even possible? Can we service the debt?”

By the time they reached an agreement, they owned 70 per cent of the assets of Arlington Farms. Farmboys Inc. – a name that’s a tip of the hat to their father Kent, who died in a farming accident in 1993 – was formed. “That’s what our father raised – two farm boys,” Bryan says.

Today’s farm is 3,000 acres, with about 1,400 acres of potatoes, 1,200 acres of cereals and the rest going to forages.

Even after the negotiations were over and the papers signed, the transition to full ownership was a challenge, Bryan says. Arlington Farms owned the stock from the previous growing year and still had employees on its payroll to handle that crop. Meanwhile, Farmboys was working towards full operation.

Part of the sales agreement, however, provided a detailed transition plan that outlined just about every scenario the two farms could encounter during the changeover. The agreement even covered snowstorms.

“It would have been difficult to get up in the middle of a snowstorm and wonder who is responsible for cleaning the yard. It can be an issue if you let it be an issue, but stick to your transition plan and it’s OK,”

Bryan says. He notes the plan outlined which farm staff did the clearing, who paid the employee’s wages and who paid the tractor’s fuel when the yard was cleared of snow. Farm adjustments

In the business they created, Kyle and Bryan say they’ve deliberately adjusted their cropping plan. Bryan had noticed over the years that about 25 per cent of the crop was always a challenge – whether during planting, harvest or sometime in between. When the Maynards were going through the purchasing process, they opted to reduce potato production by 25 per cent, making the operation tighter.

“It seemed like Arlington Farms was always about 25 per cent too thin,” Kyle says. “It would require investing in more equipment as well as more help to remain Arlington Farms size.” Farmboys wasn’t ready for either yet. “In the years to come, we’ll definitely look at growing. But now, this is much more manageable. It allows us to focus on quality rather than quantity. If we want to grow, I feel we’ll be more groomed for that later.”

Bryan and Kyle say they were fiercely competitive with each other as children, whether it was during a hockey game in the yard in the winter or playing baseball in the summer.

Today, as they walk the same farmyard they played in, they’ve redirected their competitive natures to take on potato farming. n

Follow Allison: @A_Finnamore

A conveyor frames some of the potato storage

MARCH 2017 | 7MARCH / APRIL | 7

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GAME CHANGERS

Business consolidation is an ongoing process, but the mega-deals announced in agriculture over the past year have been unprecedented.

A merger between Dow Chemical and DuPont. ChemChina is purchasing Syngenta. The takeover of Monsanto by the German chemical giant Bayer. The merger of Agrium and PotashCorp. All are multi-billion-dollar deals.

Producer groups have raised concerns over the consolidation, citing less competition and reduced incentive for innovation. Others say the mergers and acquisitions will generate efficiencies and create players better able to fund research and development.

Although his company is involved in facilitating more mid-market-sized business deals, Andrew Muirhead of Origin Merchant Partners based in

Toronto understands the incentive for companies to become larger.

“It’s a scale game and companies are always looking for growth,” Muirhead says. “This is especially important for publicly traded companies and particularly if returns for shareholders have been disappointing like they have been for Agrium and PotashCorp.”

To counter commodity price declines and increased economic volatility, companies look to merge with other players to add new products and geographic reach.

However, there are a number of important points to remember regarding the mega-deals.

As the mega-deals are reviewed by regulatory authorities, producers and producer groups should ask questions and make their concerns known. There’s a great deal of uncertainty over how each deal will proceed and the process will take time.

REGULATORY APPROVALS

Competition bureaus in many nations will

need to approve each deal. Having so many

big deals pending could bog down regulators

and slow the process.

DIVESTITURES ARE LIKELY

To gain approval for a deal, it’s common to

see certain assets sold to a third party. For

instance, some observers have speculated

that major ag chemical companies might not

be allowed to own two herbicide tolerant

canola systems.

BIG PLAYERS CAN LEAVE A VACUUM

According to Muirhead, growth for the sake

of growth hasn’t always been a good strategy.

“Big companies sometimes ignore market

opportunities that smaller players can exploit.”

Smaller companies can often be more nimble

and go after niches that aren’t being serviced.

MARKET POWER CAN BE FLEETING

“More potash production by other companies

in other nations is one of the forces driving

PotashCorp and Agrium into each other’s

arms,” Muirhead says. In the crop protection

industry, chemical patents eventually expire.

Meanwhile, smaller companies continue to

grow and innovate.

AGRICULTURE ISN’T UNIQUE

Business consolidation is happening in many

other sectors. It just so happens that many

of the blockbuster deals currently pending

are within agriculture. n

Big farm-input players getting even biggerBY KEVIN HURSH

“ It’s a scale game and companies are always looking for growth.”

MARCH 2017 | 9

FEATURE ARTICLE

As Canadian farms have become larger and arguably more complex to run, a new class of agricultural consultants has emerged. These include not only lawyers and accountants but advisors in areas such as production, marketing and technology.

Terry Betker is one of them. President and CEO of Backswath Management Inc., he and his team advise farm family clients in areas such as finance, human resources and succession.

If you’re in the market for a consultant, Betker believes it’s worth taking the time to ensure you get the right person for you. Here are five questions to ask.

WHAT ARE YOUR QUALIFICATIONS? “You

want to know how much experience they have in their

field,” Betker says. “It’s not impolite to ask. It’s just

good business.”

CAN YOU PROVIDE REFERENCES? Ask for names

of producers your prospective consultant has worked with.

This might seem obvious, but Betker himself is asked for

references only occasionally. “You don’t have to call all the

references that are provided,” he says. “But if you ask for

names and don’t get any: red flag.”

DO YOU UNDERSTAND WHAT I NEED? Misunderstandings around scope of work can be

a cause of friction between farmers and consultants.

Betker recommends the two parties draft, review and

sign an engagement letter with all the details.

WHO ELSE IS ON YOUR TEAM? If you meet one

person for the interview, but someone else comes to the

farm, it could get the project off to a rocky start. Ask for

names and qualifications of all personnel who would be

involved. “You want to know who’s doing your work,”

Betker says. “If the farmer knows who’s on the team,

they don’t have to wait if the primary contact is travelling

or not available. They can call another member of the

team and have their questions answered.” That’s also

important in the event the primary contact retires, leaves

the firm or is unable to continue working.

WHAT WILL THIS COST AND WHEN DO I PAY? Ask

what the consultant will charge, and at what points you’ll

be expected to make an interim or full payment. A farmer

can ask to hold back a portion of the fee – perhaps 15

per cent – based on successful completion of the project.

“While generally common in industry, a holdback is not

that common in farm management consulting,” Betker

says. “For larger consulting projects, it wouldn’t offend

me at all to be asked.”

Make sure you know not just the amount of the fee, but

the basis for it. Is the fee calculated hourly, by project, by

farm unit managed or some other way? “It’s important

for the farmer to try to avoid equating value with

time spent,” Betker says. “Value and time often aren’t

connected in a linear way.” n

HIRING A CONSULTANT:

5 questions you need to askBY KIERAN BRETT

10 | FCC.CA/AGRISUCCESS

FEATURE ARTICLE

USE ON-FARM TRIALS FOR INFORMED DECISION-MAKINGBY PETER GREDIG AND KEVIN HURSH

Whether you grow corn, canola, forage crops or vegetables, you likely have unanswered agronomic questions – questions that properly designed on-farm trials might answer.

But you need to do the trials properly and follow through, or it’s likely to be a waste of time.

Would a fungicide application increase yield and preserve crop quality? What’s the optimum seeding rate for this crop? Does granular inoculant perform better than peat inoculant applied to the seed? What about that brand new foliar fertilizer?

Each company wants to shine the best possible light on its products, so company information has to be taken with a grain of salt.

On his farm near Carman, Man., Brent VanKoughnet of Agri-Skills does field-scale trials for various companies as well as trials to satisfy his own curiosity. He’s a big advocate of producers doing the work to reach conclusions for their own farms.

“What in management planning drives you crazy? What do I need to do to be smarter in the next production season?” VanKoughnet asks. He advises producers to turn their top questions into replicated trials.

In Ontario, Peter Johnson has spent his entire career challenging farmers to prove him right or wrong on their own farms. After many years as the wheat lead with Ontario Ministry of Agriculture, Food and Rural Affairs and now as the resident agronomist with RealAgriculture.com, Johnson is convinced it has never been easier to plan on-farm trials and harvest meaningful data.

“It drives me nuts when I hear farmers or see tweets that announce huge yield differences resulting from field-to-

MARCH 2017 | 11

FEATURE ARTICLE

field comparisons that aren’t valid. We shouldn’t be making major decisions based on poorly designed or random comparisons,” Johnson says. “We can do better.” Technology makes it easy

“A well-calibrated yield monitor essentially turns a farm into a research centre, but farmers have to set up the project properly to get anything useful out of it,” Johnson says. “It’s not about splitting a field in half or comparing one whole field to another. It’s all about replication, and with RTK auto steer and accurate yield monitors it’s much easier today than in the past to do it right.”

For his part, VanKoughnet prefers to back up yield monitor data with weigh wagons, and fortunately more grain carts now come with weigh systems. As well, regular GPS auto steer without RTK can be adequate if the combine header is narrower than the seeder or sprayer.

Both researchers say the secret is replications; at least three or four per location. By using A-B lines on GPS guidance, it’s possible to do each treatment separately. For example, one treatment would be done first on A-B strips 12, 15 and 18. The rate or treatment is adjusted and applied on strips 13, 16 and 19. The third treatment goes on strips 14, 17 and 20. This creates a trial that is easy, but generates more meaningful results than splitting the field into thirds for each treatment. Field strips versus plot trials

Most research is done in small plots with numerous replications. While that approach has advantages, VanKoughnet believes long skinny strips running the length of the field help incorporate and manage variability. However, care should be taken to avoid old field edges and fence lines. Wheel tracks from other operations can also skew results. You need to build trials with approaches that remove potential bias.

“If you have a three- or four-bushel-per-acre improvement it may seem small, but if it’s stable across all replicates, it’s real,” VanKoughnet says. “A big yield improvement on just one strip might not be.”

Johnson is a big believer in collaborative learning. “Find four or five other farmers in your area and have everyone follow the same trial plan and share the data at the end of the year. The Iowa Soybean Association on-farm network posts suggested trials on their website, and they often get over 100 producers who will follow through and share the results. That is powerful.”

The Manitoba Pulse & Soybean Growers Association has a similar approach with its on-farm network. Producers can participate in specific trials, with established protocols organized by a dedicated research partner. Test your precision ag prescription

An increasing number of growers are working with agronomic companies to apply variable rates of fertilizer and sometimes seed. Soil tests, aerial photographs and topographical maps are among the factors used to build the variable rate prescriptions.

VanKoughnet recommends replicated trials to test whether the variable rate prescription is actually making you money. Just do strips with your non-variable regular rate of fertilizer or seed and compare them to adjacent strips that use the prescribed variable rate.

“I’d recommend going with a company that has a verification strategy,” VanKoughnet advises. “Why invest in a technology unless there’s proof?” n

Follow Kevin: @kevinhursh1 Follow Peter: @agwag

4 THINGS TO CONSIDER IN ON-FARM

REPLICATED STRIP TRIALS

Keep it simple

Compare only two or three treatments in a

single replicated strip trial.

Replicate treatments

Replicate each treatment a minimum of four times

in the trial.

Maintain consistency

Keep all management practices, except those

used in treatments, the same.

Avoid bias

Use randomization whenever possible.

Source: Iowa Soybean Association

1

2

3

4

VIDEO: Getting the Most from Field Manager PRO 360 fcc.ca/FMPRO360

12 | FCC.CA/AGRISUCCESS

IN THE OFFICE

ONE-PAGE BUSINESS PLAN Farmers with a written business plan average a return on assets five times higher than those without a plan. It might be as short as one page, but it should include these four elements:

Stated direction: A vision or goal for the farm business.

Identified trends: Both positive and negative trends, external from the farm, which could or will impact the farm business.

Action items: What needs to get done to achieve the vision for the farm? Who is going to do what, and when will it be done by?

Selected financials: Financials and ratios that are meaningful, measurable, and able to be monitored and compared over time (profit per acre, pounds of gain per day, liquidity).

AT A GLANCE

Source: Rob Hannam, Synthesis Agri-Network, and PledgeToPlan.com

Source: Farm Management Canada

Only 26% of farms have a written business plan

Did you know?

COMPILED BY LYNDSEY SMITH | Find Lyndsey across social media platforms as @realloudlyndsey

HUMAN RESOURCES

4 THINGS YOU CAN DO TO ATTRACT TOP TALENT

Think big picture. The right hire could fill multiple roles, but only if you understand the needs of the farm. Spend time clearly identifying all the work gaps before hiring staff.

Use your personal networks. Don’t underestimate your own people’s reach. Use social networks and word of mouth to speed up the search (bonus: staff found this way already have a reference you know).

Promote your farm’s competitive edge. Farming competes with several industries for top talent. Make sure you identify why someone would want to work for you; be proud of what makes your farm a great place to work.

Stress feedback and communication. Provide formal and informal feedback, offer praise and appreciation when deserved, and commit to making staff feel comfortable talking to the boss (you or otherwise). Source: Evan Carmichael and Ontario Ministry of Agriculture, Food and Rural Affairs

MARCH 2017 | 13

INDUSTRY SNAPSHOT

STORAGE TRENDS

Commercial grain storage capacity in Western Canada is finally trending upward again after the severe decline of the early 2000s. While the number of licensed primary elevators remains steady, total capacity is now about equal to the early 1980s (around 7 million tonnes), with more elevators to be completed in the coming year.

STAGGERING STAT

Only about 7% of the land base in Canada is used for agriculture production. Of that, about 70% is suitable for crops.

Source: Statistics Canada

AT A GLANCE

Opportunity is missed by most people because it is dressed in

overalls and looks like hard work.

Thomas A. Edison

7% 3 THINGS TO KNOW ABOUT THE CANADIAN LAMB INDUSTRY

It’s the only red meat with an increasing consumption trend in Canada

Ontario is Canada’s largest producer and accounts for 54% of processing

Canadian imports were $173 million in 2015 – 59% of which came from New Zealand

Source: Ontario Sheep Marketing Agency

4,000,000

2,000,000

0Man. Sask. Alta.

Source: Canadian Grains Commission

Licensed primary elevator capacity (tonnes)

20122016

One of Canada’s premier financial authors and broadcasters, Bruce was a speaker at FCC Forums across Canada in 2016-17. Learn a five-step approach to money management with his book Moolala.

See Bruce’s tips for brainstorming retirement options in Your Money on page 3 of this issue.

BRUCE SELLERY

MONEY MANAGEMENT

14 | FCC.CA/AGRISUCCESS

$

$

$

CASE STUDY

GOOD FARM SUCCESSION PLANS ALLOW FOR CHANGE

THE SETUP

Bill and Donna had done it right. They had worked hard and built a successful mid-sized grain operation. But it was apparent early on that taking over the farm was not in the cards for their three children (two daughters and a son). The interest wasn’t there, and the kids had moved away from the farm after university to build their lives.

With the next generation out of the picture, Bill and Donna started thinking about a wind-down plan in their early 50s. Both enjoyed good health and were still enjoying actively farming. The plan was to retire at 60 and live in a small house newly built on a lot severed from one of the properties.

For tax reasons, the farm was set up as a corporation and all the equipment was owned by B&D Farms Inc. When the time came, the plan was to have an auction and disperse the equipment. All owned farmland was held outside the corporation to maximize capital gains exemptions. Bill and Donna planned to sell one property upon retirement to provide a comfortable nest egg. They were in no hurry to sell the rest of the land, and planned to use land rental income to supplement their investment and savings.

A comprehensive will established how the estate would be executed. The land would pass to the three children – who were made aware of the plan – and all were comfortable with the way the plan was laid out. Life was good.

THE WRENCH

Then their son Brandon and his new wife Amy, at Thanksgiving dinner at the farm, announced they wanted to come back to run the farm and raise a family. There was talk of converting the farm

The following fictional case study, the first in a series

from BDO Canada, provides insight into how a

rock-solid retirement plan can be tested when family

dynamics change. The intent is not to provide a definite

correct course of action, but rather to illustrate that the

process can be emotional and complex, and highlight

tax and planning issues to consider.

MARCH 2017 | 15

CASE STUDY

They wanted to ensure their plan was flexible enough to accommodate another change.

PODCAST: Host Kevin Stewart learns why being open to change is essential for success. fcc.ca/OpenToChange

to organic and even starting a bed and breakfast. With their retirement date only a few years away, Bill and Donna felt like the rug had been pulled out from under them. Brandon’s sisters Kate and Diane were not impressed with Brandon’s about-face, and felt Amy’s urban background didn’t provide a realistic perspective on running a farm business. Fireworks ensued.

Brandon’s new-found interest in farming meant major changes to Bill and Donna’s retirement plans. It would also mean significant change for Brandon’s sisters down the road. While they were reluctant to discuss it with Brandon, one of Bill and Donna’s immediate concerns was to make sure the family farmland would not fall into Amy’s hands if she and Brandon’s marriage were to end. The tidy retirement and succession plan was getting messy in a hurry.

Through discussions with their accountant and a lawyer, they were able to draft an agreement clearly defining what would happen in the event of death, divorce, insolvency, disability or any other situations that would necessitate another shift in the plan.

CHANGING DIRECTION

Bill and Donna held a family meeting, and it was agreed that Brandon would have the opportunity to slowly integrate into the existing operation. The biggest challenge facing both families was how to make an operation that had supported only one family now support two. Aging equipment would need to be replaced, and there was still the matter of where Brandon and Amy would live. The severance of the lot and construction of the new retirement house would have to happen years sooner than planned.

They decided to sell the home property to Brandon and Amy for a slightly discounted price, taking into account the Income Tax Act that enables transfer of farm property to the next generation, potentially eliminating tax through the intergenerational provisions and capital gains exemptions. Brandon and Amy sold their house in the city and borrowed from the bank to provide enough money for Bill and Donna to build their retirement home. Bill and Donna took back a 15-year mortgage for the remainder owing on the farm.

In exchange for Brandon and Amy’s labour, Bill and Donna provided the existing equipment for them to use. Bill proposed that custom work could help update the equipment and provide some additional income for Bill and Donna. The organic farm and bed-and-breakfast proposals were put on the back burner until

there was some financial stability, and Brandon and Amy learned the ropes.

Bill and Donna were pleased that the operation would have a chance to live on for another generation, but they weren’t willing to completely sacrifice their retirement plans. They also wanted to ensure their plan was flexible enough to accommodate another change of heart by Brandon and his wife. They needed certainty there was a mechanism that would get them out of the new succession plan – before they even got in. It took time, and it involved some difficult discussions, but Bill, Donna, Brandon and Amy, and both sisters agreed it was a necessary exercise to complete before any further problems arose.

Bill and Donna also updated their wills so Brandon would receive the shares of B&D Farms Inc. and their daughters would receive the new house. While each of the three children would receive some of the land, the wills made provisions for Brandon to have a chance to buy it at fair market value from his sisters if he chose.

THE LESSON

Things don’t always go according to plan. People, situations and expectations can change – sometimes quickly. A succession plan is rarely written in stone. It’s more often a living, evolving and sometimes complex undertaking. n

BDO Canada LLP is a national accounting and advisory firm serving producers from offices across Canada.

@BDOCanada_Ag | BDO.ca

16 | FCC.CA/AGRISUCCESS

ASK AN EXPERT

The ever-changing role of women in agriculture

Advancing Women in Agriculture conferences are planned

for March 6 and 7 in Calgary, and October 30 and 31 in

Niagara Falls. Some previous conference speakers were

asked to respond to this question:

How is the role of women in agriculture changing, and what are the best ways to capture the opportunities?

Agriculture, period, is changing! However, there’s also a strong recognition that the presence of women is increasing. We’re starting to see greater presence of women in senior leadership roles, serving on boards, and I guess you could say we have started to change what the “old boys’ club” looks like.

I want to be very specific. Throughout my career, although I felt I was working in a male-dominated industry, I never let that be an obstacle. Rather, I always tried to view it as an opportunity – recognizing it was so important to prove myself on merit and ability.

Personally, as a mother, wife and employee, I believe it’s absolutely imperative you choose the right partnerships. Without the right partnerships and alignment on expectations, I believe it is impossible to manage it all. Even at the best of times, the choices are difficult.

Don’t lose sight of the importance of good friends, mentors, leadership development, collaboration and authenticity. Finally, be passionate about what you’re doing and own your choices.

CHANTELLE DONAHUE

Vice-President, Corporate Affairs, Cargill Canada

Q

MARCH 2017 | 17

ASK AN EXPERT

Today, women dominate as graduates from agriculture faculties and agri-related fields of study. This creates a more diverse talent pool for employers to choose from. In addition, most employers today are committed to creating inclusive and diverse workplaces. How can women capture the many opportunities that agriculture offers?

• Focus on your current role and

relentlessly deliver on the projects in front of you.

• Never doubt you can take on a “stretch role” to learn and grow.

• Don’t be embarrassed if you don’t know everything. If you want to learn, you have to be willing to show vulnerability and ask questions.

• Speak up when you have a perspective or experience to share.

• Exude confidence even when you don’t have it.

• Walk into a room as if you own it.

• Seek out mentors.

Women face additional pressures at home. Get extra help for the second shift (wife, mother, grocery shopper, supper cooker, chief homework helper, lunch packer and bedtime reader, not to mention house cleaner and laundry guru).

TRISH JORDAN

Director, Public and Industry Affairs, Corporate Engagement,

Monsanto Canada

Today’s agriculture industry is changing incredibly quickly, and new opportunities are coming up every day. Whether it’s in production, marketing, trade, education or finance, we need enthusiastic, talented people who can help our industry meet its full potential. And considering women have always been vital contributors to family farms, it’s not surprising that we’re also taking leadership roles in all these areas.

I think it’s the best of both worlds. Women bring a deep passion to their roles – and a fresh perspective on how to move our industry forward.

This is an amazing time for Canadian agriculture. The role our industry plays in feeding a growing global middle class cannot be overstated. Collectively and individually, we need to put our best foot forward. My advice? For men or women, it’s the same: The most important thing is to constantly look for chances to expand your skills and competencies. The opportunities will arise. Be ready for them!

SOPHIE PERREAULT

Executive Vice-President and Chief Operating Officer,

Farm Credit Canada

I wouldn’t say the role of women in agriculture has changed over the years. I’d say that we are taking on more of a leadership role – from being the farmer’s wife who took care of the animals on a daily basis to managing the farm full time.

I attended the Advancing Women in Agriculture conference in Toronto, where there were more than 430 women in attendance who were involved in the ag industry: from farmers, bankers, crop and equipment specialists and cash croppers to CEOs, and everything in between!

With agriculture accounting for 6.7 per cent of Canada’s GDP in 2013 and one in eight jobs being in agriculture, there are so many ways for women to capture the opportunities in our industry. Some just might have to step out of their comfort zones and put themselves out there!

Farming is such a rewarding career. I look after a laying hen and pullet farm, and it’s the greatest feeling knowing the eggs my hens produce every day are enjoyed by people all over Canada. n

TONYA HAVERKAMP

Egg Farmer, Listowel, Ont.

18 | FCC.CA/AGRISUCCESS

In 2015, Canada was the world’s fifth largest exporter of agriculture commodities, a status we’ve held for years. Being a leader in world markets gives Canada bragging rights. But that leadership is also important to the long-term health of the industry.

Being a big-time trader gives us a competitive boost when disruptions occur in global trade (for instance, when trade disputes arise or when one supplier’s commodities become relatively more expensive for countries to import). This happened last year when U.S. wheat exports declined and Canada was able to pick up the slack.

There are a number of factors that make Canadian agriculture a trading powerhouse.

Competitive advantages• Canada can fill gaps in supply because

we have a diversity of commodities available and the well-developed infrastructure to store and deliver it.

• Canada’s agriculture exporters benefit from well-developed trade relations with some of the world’s largest importers (e.g., the U.S., China and Japan).

• Our political and economic stability and the quality of our commodities and products can all boost our trade with new/emerging trade partners.

Reliance on the U.S.

All the above points matter, but our ranking as the world’s fifth largest exporter is in large part due to our

proximity to the U.S., the world’s largest single-country market, and the integration of the two economies.

Diversifying Canada’s exports will mitigate the risk of disruptions in global markets, and will enable us to take advantage of possible trade opportunities in non-traditional markets. China is a good example of a growing market, and individual European countries may provide more growing opportunities as the new political landscape unfolds.

Growing demand for food

World economic growth has slowed, as has export growth of many commodities. However, while the shape and sources of new demand may shift in the new economic climate, export leadership will become increasingly concentrated. The Organization for Economic Co-

operation and Development projects that the top five exporters of each agriculture commodity will account for at least 70 per cent of total exports in 2025. Canada should be one of those top five for a number of commodities.

For more on Canadian agriculture trade, download the FCC Ag Economics annual report on trade: Canadian Agriculture’s Productivity and Trade at fcc.ca/AgEconomics. n

FCC AG ECONOMICS

Get regular updates and unique perspectives on national and global economic events that impact Canadian agriculture.

fcc.ca/AgEconomics

ECONOMIC INSIGHTS

Canadian agriculture is a trading powerhouse

Canada was the world’s fifth largest agriculture exporter in 2015 Share of top 10 agriculture exporters, 2015 Source: UN Comtrade

�gure 1 �gure 2�gure 5

USA 14.8%

China 7.0%

Netherlands 6.4%

Brazil 6.2%

Canada 5.7%

Spain 4.3%

Mexico 2.8%

France 3.9%

Australia 2.9%

India 3.5%

Other 42.6%

MARCH 2017 | 19

TECHNOLOGY

I can’t think of anything more frustrating than a dropped call. For those who live and farm in areas with perennially weak mobile connectivity, it’s a serious problem.

It’s not just the phone. Most of the functionality the smartphone offers is compromised when the signal fails. Cell boosters or repeaters can help by amplifying the signal. It must be stressed that these devices cannot create a signal where none exists, but they can often take a weak, single bar and boost it to a usable three- or four-bar connection.

It’s fairly simple to source and install a cell booster in your truck, car, tractor, etc. Ideally, you would select a model that can be moved from vehicle to vehicle. Most have a magnetic antenna that is mounted to the roof of the vehicle. With a cradle-style booster you insert your smartphone into a cradle and use hands-free gear or the speakerphone option on the phone. The disadvantage of this type of booster is that only the phone in the cradle benefits from the signal boost. Those riding with you will not benefit. There are wireless models that enhance and broadcast the signal within an area so multiple phones can benefit, but they tend to be more expensive.

If you’re like me and have limited home Internet and Wi-Fi options, you can install a cell booster for your house, shop, barn or other buildings to maintain mobile connectivity so you don’t have to step outside to use your smartphone. Installation involves putting up an external receiving antenna on the side or roof of

the building to capture the existing signal and send it, via cable, to the booster or amplifier mounted inside. The boosted signal is then transmitted throughout the building via a second antenna. Depending on the size of the building and the construction materials, you may need numerous antennae to keep pushing the signal to all parts of the structure. In general, the bigger the coverage area, the more expensive the booster.

As with most electronic devices, there are numerous buyer’s guide and “top ten” product reviews available, so it’s fairly easy to do some research on what model makes the most sense for your situation.

Cell phones communicate with cell towers on different frequencies, so before you buy a booster you need to know which frequency your cell phone uses. Your carrier can help you with that. Make sure the booster you buy is compatible with your mobile carrier and that it covers multiple frequency bands including 800 MHz, 1900 MHz, 2G, 3G and 4G.

Prices range from under $200 for a single-phone cradle booster to several thousand dollars for a commercial-scale wireless booster that can service dozens of phones and cover an entire property. You can check products and prices at stores that provide electronics and/or cell phones. n

Cell boosters keep you connectedBY PETER GREDIG

Wireless models enhance and broadcast the signal within an area so multiple phones can benefit.

READ MORE about the latest Canadian Radio-television and Telecommunications Commission ruling on Internet speed and performance in Closing the Broadband Gap at CRTC.gc.ca.

20 | FCC.CA/AGRISUCCESS

FROM FCC

Flexible financing key when acquiring equipment

In farming – as in any business – managing costs, maintaining cash flow and understanding tax implications are crucial in running a successful operation. When decisions involve farm equipment and machinery, producers from every sector can face the same question: How do I know if I should buy or lease?

The short answer is, it depends.

Leasing pros and cons

Leasing tends to have lower annual costs – freeing up cash flow – and contrary to what many believe, lease financing is available for both new and used equipment. There’s usually lower up-front cash outflow than a purchase down payment, and most producers can write off 100 per cent of the lease payment. At the end of the lease you won’t own the equipment, but a lease removes ownership risk if the equipment devalues. On the down side, hours of use (before penalty) are limited, and payments are subject to GST/HST.

Why buy?

For producers who are focused on building asset equity, purchase may be the better choice. There’s often a thriving market for like-new or slightly used equipment at reasonable prices – a benefit whether you’re looking to buy or sell. You can typically write off interest payments and capital cost allowance as expenses for tax purposes. Terms do tend to be longer than leasing – up to seven years for used equipment and 10 years for new – which can tie up cash flow and commit you to a piece of equipment for longer than you’d like.

Get pre-approved

Ask your lender about being pre-approved. FCC Equipment Financing, for example, offers pre-approval for both lease and purchase financing, so you know your budget and terms right up front.

There are many myths out there about equipment financing, so be sure you do your homework, investigate all your options and get professional advice from someone familiar with your operation before you close the deal.

Buy or lease?

VIDEO: Buy or Lease Farm Equipment: Which Option is Right For You? fcc.ca/Flexibility

MARCH 2017 | 21

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MARCH / APRIL | 21

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