In this installment of our blog I'll explain why we are working with Cultivate Farms.
Highclere farm is held in a 1/3 share and a 2/3 share. One of the owners (the 1/3 share) wants to get out of the farm and the other (the 2/3 share) wants to stay. That's me, I want to stay. This is a common farm succession dilemma; there are more kids to hand the farm on to than the farm can support, or some of the kids just don't want to farm and want to use their equity to improve their lives in other ways.
In the old days they solved this with the tradition of the eldest son inheriting the farm (or family fortune) and subsequent sons and any daughters pursued their future elsewhere. These days all the kids expect a fair solution and many a court battle and split family have resulted from an inability or unwillingness to properly address succession.
In this case the Deed of Agreement that covers the farm is relatively simple. If one party wants to exit and the other wants to stay, they have the farm valued and offer their share to the remaining party. If the remaining party can't buy them out, then the exiting party tries to sell their share to someone else for a period of two years. If the share does not sell in that time then the farm must go up for complete sale at the end of the two years.
Being "asset rich, cash poor" as they say, I was not immediately in a position to buy the 1/3. Selling 1/3 of a farm is not all that easy, and much of the interest so far has come from people who were also not in a position to buy the 1/3 share in full. The third option, sell the whole farm and try to pick up life somewhere else, is generally what most farm kids are left with when their siblings need to cash out their share of the farm.
Then I came across an article on Cultivate Farms. A new organisation exploring succession planning and working to get young farmers onto farms before it's their super fund coming out that does the buying. With a second house on the farm, Cultivate Farms might be the forum to find someone to buy that third share and start their journey as I began to scale back. So I emailed Sam and he called back and we talked through what Cultivate Farms could do and what my dreams and plans were. Highclere Farm is now on the Cultivate Farms match list (here) and hopefully we'll find a farmer who wants to take the land to the next level.
In the meantime, how to free up the other 1/3 so the owner can move on ?
In the next installment of the blog I'll tell you about DomaCom and why we are taking the plunge with a new wave of finance possibilities.
