Laying the foundation for a sound farm succession

What’s done is done. And this is certainly the case with farm successions. This insight led to the establishment of the Rabo Successors Horizon programme for young agricultural entrepreneurs in the Netherlands. The one thousandth entrepreneur has now begun completing the first step in this process. ‘It is an important moment in the lives of both the sons and daughters and the parents.’

26-year-old Erik van Dasselaar is having a meeting with an organisational adviser from De Boer c.s. at the local Rabobank Randmeren office to discuss his personal qualities and motives. At the same time 25-year-old Gerwout Netjes strolls into the same local Rabobank in Nijkerk (the Netherlands) to take the first step in the Rabo Successors Horizon programme. This makes him the one thousandth agricultural entrepreneur to take part in a so-called Mirror Meeting since the programme’s initiation in 2007. Van Dasselaar is participant number 999.

The Mirror Meeting is part of the Rabo Successors Horizon, a programme for young successors in agricultural businesses. The confidential conversation about personal qualities is followed by a meeting with the bank’s adviser concerning the so-called financial scan. It is an analysis of the forecasted financial health of the business after the succession. This is then followed by five group meetings with other young entrepreneurs in the making.

Personal and professional development

‘The Rabobank Successors Horizon provides participants with the opportunity to achieve personal and professional development during the years leading up to the succession. It strengthens entrepreneurship and the relationship with our bank. It also lays the foundation for a financially sound succession, also in relation to the family’, says Ruud Huirne, Director of Food & Agri Netherlands at Rabobank. Approximately 3% of all the agricultural businesses in the Netherlands are involved with an succession each year. In the Rabobank vision Banking for Food, business succession is regarded as essential for agriculture and food production in the future.

Who are these young entrepreneurs who are embarking on the Rabobank Successors Horizon this afternoon?

"With this programme we build a bridge between the acquiring and transferring parties. We take both of their interests into account."

Gert Bolink, Business Clients Manager Rabobank Randmeren

Room to grow

Erik van Dasselaar completed a secondary agricultural science programme and is now running the business in partnership with his parents and his brother. They built a new barn around five years ago. They milk 95 cows and there is room to grow. Besides the dairy farm, the family has also had a slaughterhouse annex butcher’s business for thirty years. Van Dasselaar senior is still young at 53, but he is already thinking about the business succession.

Careful consideration to succession

Gerwout Netjes, who has completed an agricultural science degree programme, is operating a business with 150 dairy cattle in partnership with his parents. They relocated to their current premises several years ago after they were forced to leave their former premises to make way for a water storage area. The family gave careful consideration to the topic of succession at that time; otherwise they would have not moved the business. A transfer of the business will be on the agenda within five years. Netjes Senior is aged 61.

Bridge between acquiring and transferring parties

‘With this programme we build a bridge between the acquiring and transferring parties. We take both of their interests into account. We serve and guide the parents who are giving up their land position and we guide and advise the successor’, says Gert Bolink, Business Clients Manager at Rabobank Randmeren. Johan Braad, who is an Agribusiness Account Manager in his team, explains: ‘This enables us to become acquainted with the potential business successors and their plans at an early stage and lets us build a relationship with the entrepreneur. This has real benefits for the entrepreneur because we can discuss his or her plans within a broader context. Thanks to the Rabo Successors Horizon we take a place at the table at an earlier stage and can help think about the choice of structure and consequently also the ultimate need for financing.’

Photo: Young farmer Gerwout Netjes (2nd from left), organisational advisor Anton de Boer (centre) and Rabobank employees Henk Jan de Kat (left), Johan Braad and Gert Bolink (right).

Working towards the succession date

The financial issue is touched on briefly this afternoon when Account Manager Braad speaks with Erik van Dasselaar and Gerwout Netjes separately for a few moments about the upcoming discussion of the financial scan. Both of the young entrepreneurs have already been making calculations for the scan. They have a picture of what their company will look like after the succession and of what they want to do after that. Both are interested in acquiring more land so the business can grow in terms of the number of cattle and the volume of milk production. Account Manager Braad encourages this train of thought and places it in perspective: ‘It is important that you first work towards the succession date, but it is also good to know where you want to go with the business after you have acquired it.’

High value, low returns

What’s done is done. This is especially true with a business succession that involves emotions, family ties, income for the transferring parties and opportunities for the acquiring party. ‘This is an important moment in the lives of both the acquirers and the parents. The parents still remember vividly how it was when they took over the business thirty years ago’, says account manager Braad. ‘The value of agricultural businesses is high, but the profitability is low. This means that an succession often comes down to a matter of both parties wanting the best for each other.’ The parents want the best for their child or children, but also need to have an income after the succession and the other family members also have to be behind the plan.

Both young entrepreneurs understand this perfectly well. Netjes puts it this way: ‘As a son you should want to leave your parents in a good position. They have to worry about finances no longer. They are, after all, doing this for you.’

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