Todd Charteris: Rabobank CEO on the number of farming assets that will change hands over the next decade

A new Rabobank report reveals within the next 10 years, New Zealand agriculture will begin its largest-ever inter-generational transfer of wealth. 

More than half of farm and orchard owners will reach the age of 65 in the next decade, but only a third have a formal succession plan. 

It's estimated $150 billion worth of farming assets will change hands. 

Rabobank CEO Todd Charteris told Mike Hosking the challenge is farms are getting better, but there are fewer farm owners, so the capital requirements are big.  

He says we need to continue to explore different ownership models. 

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Episode Transcript

Speaker 1 (00:00):
Very interesting insight into the rural sector from Rabobanks. So
their report looks into succession and the massive transfer of
wealth that is heading this country's way over the next
few years. Over half our farm and orchid owners are
going to reach retirement age in the next decade. Now,
that's one hundred and fifty billion dollars worth of assets
potentially changing hands. Todd Chatteris is the CEO of Rabobanking
as well as Todd Morning Morning, Mike. I am very well. Indeed,

(00:23):
I read the report and what the best line in
its succession is not a moment in time, It's a
process that takes years. I thought that was almost profound.
What you're telling me with the numbers is most people
haven't worked that through and too many people don't have
a plan.

Speaker 2 (00:37):
Yeah. Yeah, that's what the research is showing. And we've
got about half of the farmers we surveyed actually haven't
thought about it yet, which is a bit of a concern.
But we just need to work through it because there's
a big opportunity here and a big need for it.

Speaker 1 (00:52):
I guess when you talk about the retirement age doesn't
mean in relation to the potential transfer just because you
reach sixty five doesn't mean you want to sell up
or move on or even stop working, does it.

Speaker 2 (01:03):
No. I think that's what we need to put in context.
So we shouldn't actually call it the retirement age, because
there is no official time and age, certainly in farming.
So it's the age of sixty five is what we're
referencing there, and as we know, a lot of people
go on beyond that. But it's essentially handing over the
sort of financial requirements and thinking in that regard as

(01:24):
opposed to actually working in the business.

Speaker 1 (01:26):
I guess, how much do you know about transfer of
land within the family and how much of that's changing
because the world has changed versus any other reason.

Speaker 2 (01:37):
Well, look, I think there's still that emotional tie for
a lot of farming families in New Zealand, and the
challenges farms are getting bigger. There's less farm owners and
so that the capital requirement is a big amount nowadays.
So what we're seeing is I think, and opportunities around
different ownership models, and I think that's something that we

(02:01):
need to continue to explore because we need to keep
that connection with the land. But does that mean you
need to own it outright?

Speaker 1 (02:08):
It's a very interesting I'm glad you said that because
I thought that was one of the most interesting parts
of it. You talk about EWI investors and you know,
partial investors and stuff. Would many farmers, traditional farmers have
even thought of those options.

Speaker 2 (02:20):
Oh, we We've seen some really great examples and we've
highlighted We've highlighted one of those hybrid ownership models in
in their white paper. And I'm not saying that's the
way to go, but it's an option, and I think
people are looking more at options to maintain that connection
and ownership within families, but also bringing in like minded
investors that helps that transition to the next generation.

Speaker 1 (02:42):
How much of it is connection versus just pure ownership.
It's an asset, I'm moving it on.

Speaker 2 (02:47):
Oh look, I think it's a combination. I think it's
a combination, and there's no one model fits all, right,
And for some people and some families, the best option
is to sell up and do other things. But for others,
there is a deep connection and they want to keep
that connection going of the land, and it's just how

(03:07):
we facilitate that as the big challenge.

Speaker 1 (03:10):
Well, I've got you, what's the vibe? I mean, Is
there anyone not doing well on the land at the moment?

Speaker 2 (03:15):
Oh, no, things are pretty good, Mike. There's a lot
of enthusiasm out there. I mean, notwithstanding the challenges they're
going on around the world. But it's a good place
to be at the moment. And food Negro, there's no
doubt about it. And the sector's doing really well.

Speaker 1 (03:27):
Good stuff. Nice to talk to, you appreciate it. Todd Chatters,
Rabobank's CEO one hundred and fifty billion dollars worth about sis.
There's saw some grapes being pulled out at our place,
not at our place literally, but over the fence the
other day, and I thought to myself, there's a change
happening in front of her very eyes, and it's a
sad thing. Especially vines, old vines too, And I thought
there'll be a reason that I happen to know what
the reason is. No need to tell you about it,

(03:48):
but I thought there's something emotional about that when you've
been invested in the land for years and you're looking
at old vines going out and the tractors come in.
It took a long time to do it, lost a
lot of money to So the next question is of course,
Likecally what happens to the land. For more from the
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