FOR RETIRING FARMERS AND THEIR FAMILIES

How do farmers retire? Seven ways to step back from the farm

You've worked this farm for most of your life. The heavy work is getting harder, but selling up and moving to town doesn't sit right.

There are more options than you think.

How do farmers retire?

Ageing on Farm, our guide for retiring farmers, sets out seven transition options. The first six have been used successfully by Australian farming families. The seventh is the Cultivate Trust.

Each one has benefits and drawbacks, and the guide lays them out plainly, with a worked example for each of the first six. The right one depends on your situation, your goals, and what you want for the farm's future.

Some let you retire without selling the farm, and the land stays in your name. Vendor finance is a sale, with you acting as the bank. Lease to buy can end in a sale, if the farmer takes up the option at the end.

The seven options at a glance

1. Flexible lease

It's the simplest way to hand over the farming while keeping ownership of your land. You lease the farm to another farmer, they pay you rent, and you stop doing the physical work. You can negotiate to stay living on the property.

Main upside: you keep full ownership of the land.

Main downside: the leaseholder has limited reason to put money into long-term improvements.

2. Share farming

The farm's profits are split between you and the farmer, in line with who carries the costs and the risks. Good seasons and tough ones are shared.

Main upside: you carry the risk together with the farmer.

Main downside: you can disagree over who should pay for improvements.

3. Lease to buy

The leaseholder gets an option to buy the farm at the end of a lease period, at a price agreed at the beginning. It's a clear pathway from working the land to owning it.

Main upside: an orderly, planned transition of ownership over a clear timeline.

Main downside: you might forgo significant increases in land value beyond the agreed growth rate.

4. Vendor finance

The buyer pays you a deposit and you lend them the rest of the purchase price, to be paid back on agreed terms. You're essentially acting as the bank.

Main upside: it lets the buyer purchase when banks won't lend.

Main downside: your capital is tied up in the farm for the term of the arrangement.

5. Collaborative farming

Two or more farming businesses pool their resources, skills and land to create a single, more efficient operation. Think of it as a merger between neighbouring farms. It works well when two or more farmers in the same district are nearing retirement and neither has enough scale on their own.

Main upside: the combined farm has more scale and runs more efficiently.

Main downside: you lose individual control over your land.

6. Joint venture and equity partnership

This takes the collaborative model a step further by bringing in an outside backer. The people with capital own the asset. The people with skills run the operation.

For a retiring farmer, the appeal is selling part of your equity to a backer while keeping a stake in the business.

Main upside: it's a formal business with proper reporting, so everyone can see how it's going, and it can carry on when someone steps out.

Main downside: you lose some control over business decisions to other shareholders.

7. The Cultivate Trust

Your farm moves into the Cultivate Trust, which runs it on your behalf, with the right farmer on it.

Main upside: the farm stays whole, stays farmed and stays in local hands.

Main downside: it's a big decision for the family, with things to weigh up. The full guide to it, Your Farm, Your Legacy, sets them out.

Putting them together

You can combine these options, and many farmers do. You might start with a flexible lease and move to lease to buy once you've found the right person.

The full guide, Ageing on Farm, is free at cultivatefarms.com/resources.

You can build your own plan at cultivatefarms.com/plan.