Irish farm succession and inheritance; an examination of farmers’ economic decision-making strategies as socially-constructed risk assessment

Abstract

Intergenerational farm transfer is increasingly viewed as fundamental to the sustainability and development of global agriculture, with an expectation that younger farmers, with more effective and efficient production practices, will enter the sector. However, in the EU at least, this perspective is tempered by the reality of a slow rate of farm transfer to younger farmers, reflected in the rising average age of farmers, and reduction in the number of farmers aged under 35. There is growing concern that this demographic trend may have negative impacts on the agricultural industry. The question of what motivates decisions to transfer farms is a complex one, and agricultural policy to date has not appeared to adequately address and respond to the current trends towards an ageing farm population. The key aim of this study is to examine the phenomenon of farm generational renewal with a specific focus on the economic implications at individual farm level, with a view to better understanding the reasons for sustained low rates of farm transfer in Ireland. The specific focus for this research is the economic and financial aspects of the farm transfer process, grounded in the notion that many older farmers perceive farm transfer as a risk to their own future financial security. This risk perception is framed as socially constructed and thus affected by a range of factors. The methodological approach is a mixed methods one with converging quantitative and qualitative methods. Three academic papers make up the central chapters of this work. Paper 1 highlights the functioning of current capital taxation reliefs for land transfer, whilst also discussing the current farm subsidy system and the way in which it has potential impacts on farmer decisions. Paper 2 investigates current measures aimed at encouraging the uptake of farm partnerships which have been framed as a means by which to reach farm succession and inheritance outcomes. The results illustrate the inability of lower income farms to support such a management structure and highlights potential retirement income issues for older farmers. Finally, Paper 3 focuses on farmer perceptions of the succession and inheritance process, with particular emphasis on finances. Findings from this paper broadly reflect and complement those of the earlier (quantitative) papers relating to issues of farmer income once land is transferred and taxation concerns. Collectively the findings illustrate a need for a strategic farm generational renewal policy to assist those trying to enter the farming sector, as well as those hoping to exit from it.