A farm might be a business, but running a business isn’t the same as running a farm. Many people are born into an agricultural legacy and taught how to run a farm right from the start. For others who gain an interest in agricultural business, there is more to learn. And while there are similarities between the two, there are also unique differences in running a farm.
When you’re born into agriculture, you likely have generations before you that built the business to what it is today. A big question that is on the mind of many farm operators is “how do I pass this operation to the next generation?” Farm succession is a serious concern that requires some careful planning.
Historically, when the average farm size was smaller and asset values lower, succession between generations wasn’t as complicated. Nowadays, with bigger farm operations and higher asset values – it can get tricky to navigate. So where do you start? What if you are taking over a multi-generational farm? How does that differ from someone starting new?
If you are part of a multi-generational farm, then farm succession will likely include a cash payment from one generation to the next. And if you’ve never owned a farm before, you need to make sure you find the right mortgage and the right financial institution that understands your needs best. Farm mortgages differ from traditional residential or commercial mortgages. Their overall terms are more unique, require a larger down payment, a good credit score, and you need to demonstrate a strong ability to service your debt.
Once you have your mortgage sorted – or perhaps at the same time – you’ll want to set up a business banking account that reflects the size and scope of your farm. If the farm is in transition from parent to child, then your Kindred advisor will help familiarize you with your account, including introducing you to some great tools and programs to help simplify your banking needs! One of those is automated payroll with Wagepoint, or by setting up a farm book to keep accurate records. These could be the key to you spending more time getting your hands dirty with farm work, and not busy work inside and in front of a computer!
Did you know there are government resources tailored to help farmers manage their businesses? AgriInvest is a savings account that provides farmers with flexible coverage to manage periods of reduced income. If farmers qualify, they deposit their money into an AgriInvest savings account and receive a matching government contribution!
These tools and resources aren’t just for large-scale or multi-generational farms. If you’re looking at purchasing, or already have, a hobby farm producing food boxes or garden plots to community members, these are also available to you! Your agricultural business journey is uniquely yours – so no matter where you are, hobby farm or multi-generational, our team of agricultural account managers in your community understand the business challenges you face and the opportunities ahead.
With 60 years of agricultural banking experience, we know what farmers need to manage their finances. In fact, several Kindred team members grew up on farms, have family in agricultural, or live and run farms of their own! Because of this expertise, we’ll work together with your best interests in mind to explore options, set goals, and grow your business!
Meet with a member of our Business Banking team today to learn more about our wide range of products and services that are tailored to your agricultural banking needs. Kindred can help you Make Peace with Your Money®.
Additional source:
Daly, Bryan, and Caitlin Wood. “How to Get a Farm Mortgage.” Loans Canada | How to Get a Farm Mortgage, Loans Canada, 27 June 2024,