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Business interests should always be placed above the individual needs of family members in a farming business. This was the key message conveyed by Theo Vorster, CEO of Galileo Capital, during the first Nation in Conversation session held during Nampo 2023.
“Some of the most successful businesses on the planet are family businesses. However, there are serious challenges that must be addressed,” Vorster said. Some of these issues are the fact that South Africa’s agricultural sector has grown significantly, and commercial farms demand numerous specialised skills – from accounting knowledge to technical and marketing knowhow – to remain successful.
“Given this reality, it is never a good idea to give a position – any position – to a family member, simply because he or she is family. They need to earn their position at the table,” Vorster added. “Entitlement is a red flag in any farming business. Once a producer starts asking ‘what’s in it for me’ the business will head for a downward spiral.”
Vorster said family members functioning in a family farming operation need to keep in mind that they will never truly own that farm. They will simply be in a position to govern its direction for a period of time, before handing it over to the next generation or management team.
Read more about Grain SA’s rebranding at this year’s Nampo here.
Gerhard Bruwer, who farms with his two brothers near Douglas in the Northern Cape, said each of them has strong points which they utilise to the benefit of their farming operation, Genade Boerdery. “It takes a lot of self-knowledge and honesty to admit that there are things you yourself cannot do.”
Luckily, since they’ve literally known each other their whole lives, they know who is best at what. While each brother is responsible for a different section of their irrigation farm, one is especially good at marketing, while the other is good with technical issues. They will therefore assist each other, and the more knowledgeable brother will focus on his speciality – even if it isn’t a section of the farm that he is necessarily responsible for.
Father Vickie Bruwer (66) is also still involved in an advisory capacity. “Stress kills. We decided together to take the stress of grafting off our father, because we want to increase his longevity,” Bruwer said. “We want to have him around for a long time, because his persona and wisdom is irreplaceable – both personally and in a business capacity.”
An emotive issue
Tony Balshaw, an international family business specialist from VOS Quantum Solutions, said tongue in cheek that one needed to realise that ‘CEO’ often stood for ‘chief emotional officer’.
“We need to keep in mind that there is a life beyond the balance sheet. One of the biggest issues within family businesses is the fact that there are a lot of emotions involved and this needs to be considered. Often these emotions spill over into a task-based business environment, creating incredible potential for conflict.”
Within a family farming operation, it is crucial to find something that is important for all family members involved and to focus on that.
Get the financing right
Dr Stefan Strydom from SSS Wealth, a subdivision of the Senwes Group, said accounting is mostly retrospective, whereas succession planning is all about looking ahead. “Family farmers should always look ahead and think about the best interests of the business.”
This means that, if the farm is to continue, both financing and policy needs to be geared towards succession.
When to quit
The one time that a family business should not continue is when there are no successors that are interested in the farm. It is also crucial that all family members are aware of what the farm’s future entails. The reality is that the subdivision of farms, given the facts of scale of economies in South Africa – probably won’t be feasible. This is why a family business is often passed on to either the eldest sibling of the following generation or to a competent sibling that wants to keep farming. There are various ways in which these situations could be structured, but honest communication is pivotal in such a situation.
“This is a conversation to have early on – while people are still willing to sit around a table and discuss the matter. If you don’t communicate honestly and clearly, you will risk losing everything.” – Susan Marais, Plaas Media