The findings in a new report highlight the extent of the succession challenge ahead for New Zealand’s agriculture sector.
Within the next 10 years, New Zealand agriculture will need to manage its largest-ever intergenerational transfer of wealth, according to a new white paper by Rabobank.
The new paper ‘Changing of the guard’ reveals that over the next decade, more than half of all New Zealand farm and orchard owners – approximately 17,320 farmers and growers – will reach the age of 65.
At current land values, the transition of these farmers’ operations represents a conservative estimate of over $150 billion in farming assets that will depend on a successful succession process.
Rabobank New Zealand chief executive officer Todd Charteris said that succession “is not a moment in time – it’s a process that takes years of planning, conversation and adaptation”.
“The traditional model of passing the farm to the next generation is under pressure, but there are new and innovative models emerging that can help families stay connected to their land.”
The new Rabobank white paper is the fourth in a series exploring the opportunities and challenges faced by New Zealand’s primary industry.
It looks at the emotional, environmental and economic aspects of farm succession, including the risks of disconnect between generations, and the realities of servicing debt.
Rabobank commissioned the University of Waikato School of Economics to review official statistics as part of the development of the paper, alongside its own desktop research and case study interviews.
Succession plan
Charteris said data collected for the white paper found that only one in three farmers have a formal succession plan in place.
“A further 17% have discussed succession with the relevant parties but nothing is documented, leaving exactly 50% who had neither discussed succession nor commenced a succession plan,” he said.
Research also finds one-third of farmers intend to pass their farm to their children, yet 39% report having no children seriously interested in farming.
“For many Kiwi farmers, the dream is that one of the kids will take over the farm. The flipside is that it can also be experienced as a feeling of pressure or a sense of responsibility by the next generation,” Charteris continued.
“Taking over the family farm involves committing to decades of indebtedness in a sector that is subject to volatility and uncertain returns.
“It remains a big call for a 20-something and their bank.”
While this is the case, data collected for the paper suggests the financial obstacles to farm ownership have plateaued in recent years.
“With total package values for farm employees keeping pace with the increase in land valuations over the period 2011–2024, the succession cliff appears less steep recently,” Charteris said.
“However, the challenges to get on the ladder remain high, particularly with the increased scale of farming and need to increase margins to support borrowing.”
Succession models
The paper also highlights a number of increasingly prominent succession models, including hybrid ownership models and corporate structures, which are being adopted to help farming families stay connected to the land.
“A number of New Zealand’s largest scale, most productive and environmentally responsible farming businesses are either fully corporate or run under Māori-owned incorporation models,” Charteris said.
“There are already some innovative solutions offering up promising ideas, not so much to disrupt the system, but rather to enhance it.
“If we get this right, we can unlock new pathways for young Kiwis who are passionate about farming – whether they’re farming mad, farming curious or farming adjacent – to own a share of a greater pie.”
Drag the chain
Charteris said that most of the farmers spoken to in the process of compiling the white paper had been looking at succession for years, and all of them wish they had started the process earlier.
“It is certainly no surprise that some people drag the chain when it comes to succession on the family farm or orchard,” he explained.
“At the end of another month of another changing season, it’s tempting to leave the succession conversation where it sits most comfortably – in the too-hard basket.
“Delay in itself becomes a problem in that, the more time that passes, the more succession options become restricted, further exacerbating stresses and difficulties in the family.
“As a sector, we need to be open to considering and developing new models to ease the way for the next generation into farming on fair terms and ensure Kiwi farming families keep the connection to their land and heritage.”
