Edition 193: Friday May 25th, 2007.

The Farmingshow Straggle Muster

Gidday from the Farmingshow team.

Another week passes and again, a far amount of territory covered on the Farmingshow. This week was notable for Fonterra's 2007-08 forecast payout announcement, (you'll find audio of the full press conference here) along with a bloke with a farming background who just happened to row across the Atlantic and walk unaided to the South Pole in his spare time - more on him later in the Muster.

In this week's edition we feature our Farmingshow mate Don Fraser from Fraser Farm Finance with a little family advice.

Have a read and as always we always welcome your thoughts in return.

Till next time... be careful out there!

Jamie and Nick

Family Demands and Can They Be Managed Better?

With Don Fraser, Fraser Farm Finance

With my work in the rural sector, I am becoming increasingly amazed at the children's demands and pressure that is being put on parents to "move over", give equity and so on. Matrimonials are also an area of increasing discord.

Let's explore some of the issues.

Farms are becoming more valuable every day.

With only 39 days of stored food in the world (less than in the 70's, when we had about 18 months to 2 years), it is clear that those who own land that produce food, will continue to be more wealthy. Nobody is talking about the short supply of food, but soon the reality will strike home. This demand is pushing up product prices which in turn will push up demand for land, with an obvious result.

The clamour for a share in the wealth and assets of farmers is going to increase.

Families are arriving home, whether from the city or overseas, wanting to find free residency on the family farm and free food. I know of one case where the children moved back home to stay with their ageing, farming parents and demanded food, lodgings and money. The insistences got so great they became physical and then they got the parents' cheque book and wrote themselves cheques. The police were called and could do nothing, advising it was a 'civil' matter.

These parents are not on their own. I have heard of similar cases where children have been involved financially and wanting a bigger share of the cake. Companies have been formed and unequal equities been put in and equal shares in the company expected and taken by the children.

Another issue of concern that I have encountered is the number of cases where the father has worked the farm all his life, made a huge asset for everybody, started to slow down, only to then be confronted with a lot of unresolved family issues. Maybe he was always out working (highly likely), maybe he didn't have such a good relationship with his family and as a result his wife was much closer to the children. To be compliant and to try and build the relationship, he may have appointed them as Trustees, Company Directors and so on. He then wants to make some decisions, buy more land, refinance, buy a beach house, go for a big trip or whatever, only to find his own family is blocking him.

More than that, by now his wife may be supporting their children's decisions to block him, she has had the ear of the children for many years and may be resentful of the lack of care or time he may have afforded her. Consequently, he may have the concerns about the longevity of his own relationship! It almost seems that the father gets put out in the 'Bull Paddock', so to speak, and the family takes control with the support from mum.

This often happens in marriage breakdowns too. I know because it was absolutely frightening to be on the receiving end, I can tell you.

Now I do need to be clear, this does not happen all the time and I can only salute women and their contribution to agriculture and the family but allowing our children to override us does seem to be an increasing trend.

So what are the solutions?

Well I think that the 'system' may have watered down the father figure's authority and leadership role. There is a large body of thought that men are becoming more feminine and women more masculine. Maybe men lack good masculine examples of leadership in industry and farming.

We all say that we want our children to have a better life than we did so what do we do, we give them more and they expect more and then they start claiming ownership of our assets. I mean, there is a whole new generation out there who are demanding everything from their parents.

The lawyers see it as a commercial opportunity for fee charging when wealthy farming families get into dispute. They are doing as instructed of course, but it is all money spent elsewhere.

Trusts are also a clear way of holding assets for the next generation.

The only way that I can foresee to improve these situations is for fathers to have meetings with the family. Set clear guidelines and explain exactly what they want and expect. This may include that the structures are in place for their retirement and the assets will only go to the children once they have both departed from this life. Make it clear that the children are not to interfere in the running of the assets and so on.

It may be advisable to have 'Professional Trustees' who can make logical and non emotional decisions and not to appoint your children as Trustees!!

In summary, transmission of wealth from one generation to the next is being accelerated as family start demanding and claiming ownership earlier.

We need to be really clear on what the issues are for us and lead, have meetings and clearly state our position and expectations. We should think carefully before we give interest in property to our children and be very careful about making promises to them about giving them property and so on.

We need to think about all this and plan to stay out of the "Bull Paddock" and try to lead and maintain the respect of our children.

More so, we need robust structures in place to take the property to the next generation without interference from them whilst we are alive.

These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is the Principal of Fraser Farm Finance and a consultant to the Farming Industry. Contact him on 0800 777 675 or visit his website.

Farmingshow Newswire

We've again searched the depths of the World Wide Farming Web to bring you farming news from home and abroad. Here's just a few of this week's big stories:

Fonterra payout will boost rural economy
Dairy giant Fonterra's 27 per cent projected payout increase to farmers will provide a welcome boost to the rural sector and will help alleviate pressure on the country's current account deficit, but it could also prove inflationary, economists say.Link to: NZ Herald

Farmers respond to poor sheep returns
Market signals are being responded to behind the farm gate. Poor lamb prices and sheepmeat marketing is taking its toll on the producers in this industry, and some have had enough.Link to: Scoop

Battle looms for milk
Would-be milk processors are unperturbed by Fonterra's big milk payout forecast this week and the looming contest to lure dairy farmers to supply their new factories.Link to: The Press

Dairy Trust green light
Affco shareholders have voted overwhelmingly to formalise its business deal with subsidiary Dairy Trust, a new dairy processing company, and its takeover bid for a cheese manufacturer.Link to: Rural News

For more from the week that was, click here for the Newswire.

Farmingshow Quote of the Week

"We were overdue for a significant recorrection in dairy prices because of the very weak US dollar. It's been weak globally for some time and dairy prices had not changed to reflect that. So the substantial step up, we believe, is due to the fact that it is that delayed reaction to a weak US dollar." - Fonterra CEO Andrew Ferrier on Fonterra's forecast payout announcement this week.

Prime Cuts

The best bits from the Farmingshow week.

Mon: Henry van der Heyden Listen :: View Monday's Show
The Chairman of Fonterra previews Wednesday's announcement of the 2007/08 forecast payment and says it will begin with a 5.

Tues: Ross Hyland Listen :: View Tuesday's Show
The brains behind innovative Waikato dairy stockfeed company, Seales Stockfood, reckons a $5-50 payout is on the cards for next season with global dairy stockpiles at an all-time low and demand at an all-time high.

Wed: Jamie Fitzgerald Listen :: View Wednesday's Show
One of today's key note speakers is a man with a farming background who just happened to row across the Atlantic and walk unaided to the South Pole in his spare time.

Thurs: Paul Brown Listen :: View Thursday's Show
The Managing Director of South Island Dairy Farmers is naturally delighted by Fonterra's announcement of a forecast payment of $5-53 for the 2007-08 season.

Fri: Colin King Listen :: View Friday's Show
Is a three-times Golden Shears champion, a former member of the Meat Board and a current National member of Parliament. Today we find out why he traded his handpiece for life in the Beehive.

From the Farmingshow.com Archives

John Mabb Listen :: Visit Farmingshow.com Archives
13/11/06 - Meat and Wool New Zealand's UK marketing manager joins us to talk rugby, the Falklands War and marketing New Zealand lamb chops in London!

The Week Ahead

Monday 28th
Philip Duncan - Weather commentator
Tony Leggett - NZ Farmers Weekly
Oliver Walston - UK correspondent
Roger Henderson - MWNZ Monitor Farmer
Eric Roy / Steve Wyn-Harris - Rural debaters

Tuesday 29th
Helen Clark - Prime Minister
Glenys Christian - Dairy Exporter
Phil Reid - Ballance Agri-Nutrients
Gary Walston - Meat and Wool NZ
Nathan Guy - National Rural MP

Wednesday 30th
Winston Peters - Minister of Foreign Affairs
Peter Hook - Farm consultant
Tony Haisman - Farm accountant
David Stevens - Deer farmer
Cameron Bagrie - National Bank/ANZ Chief Economist

Thursday 31st
Live from Gisborne Monitor Farm Field Day
John Key - National Party Leader
Chris Russell - Australian correspondent
Tony Egan - AgriQuality CEO

Friday 1st
Bob McDavitt - Metservice Weather Ambassador
Don Carson - Rural correspondent
Jim Patterson - Wool correspondent
Barry Soper - Political Editor
Chris Dawkins - MWNZ Monitor farmer

You can get your lunchtime bite of farming every weekday afternoon from Noon to 1pm on a radio station near you:
Nation-wide on Newstalk ZB in Alexandra on 95.1FM, Ashburton on 873AM, Blenheim on 92.1FM, Gisborne on 945AM, Greymouth on 99.1FM, Oamaru on 1395AM, Queenstown on 89.6FM, Taupo on 95.9FM, Timaru on 1152AM, Tokoroa on 1413AM, Wairarapa on 846AM, Wanaka on 90.6FM and Wanganui on 1197AM.
Hokonui Gold in Southland and West Otago on 94.8FM
Radio Clutha in South Otago on 96.9FM
Central FM in Hawkes Bay on 93.5, 96.6 and 99.4FM.

Or visit our home on the web at farmingshow.com.

Shut The Gate

Catch you next Friday. Have a great week farming.

Jamie, Nick and the Farmingshow team