MODULE 4

Conflict Management and Enabling of a ‘Perfect’ Ending

3. Critical Areas for Potential/Possible Conflict

A wide range of issues were identified in section 4.2.3 as having the potential to cause conflict within collaborative/cooperative arrangements. Two specific issues which are critically important are investment planning and succession/inheritance.

Investment planning has the potential to cause conflict because if often involves large scale commitment of resources, borrowings, long-term repayments, decision on priorities, decisions on the location of assets/investments and the allocation of resources in the event of exit/dissolution.

Succession/inheritance has the potential to cause conflict because it can alter the overall dynamic of a collaborative/cooperative arrangement. It is most critical where a small number of members are involved and individuals interact on a daily basis.

Successful collaboration/cooperation involves investment to continue to grow and develop the business, careful planning of investment and clarity over the process for investment will help to minimise conflict

  • Important to have clarity on the funding of investments (borrowings, contributions from partners, from profits).
  • Clear on the responsibility for the repayment of borrowings (who is ultimately responsible for meeting repayments?).
  • Ultimate ownership of the asset when the partnership ceases e.g. who owns the milking parlour or processing facility.
  • Decision process on where to invest or locate the investment – which farmyard is developed or where is a new building or processing unit actually built.
  • Agreement on how new assets will be purchased.
    • By collaboration/cooperation – e.g. machinery, equipment etc
    • By individual members – e.g. land
  • Agreement on depreciation and write off of assets.
    • Time period and rate
    • Compensation for other parties if required
  • Compensation (if required) for the investment cost to other partners if arrangement ceases.
  • Rate of return on any investments made by individual partners.
  • Mechanism for the disposal of assets and distribution of profits.
    • Succession/inheritance have been the key to maintaining family farms through the generations, however it is also a very sensitive issue for farm families, can be complex and takes time to address.
    • Collaborative/cooperative arrangements can impact on succession both positively and negatively.
    • Positively in that the farming operation may be more vibrant and profitable and more appealing to a young person.
    • Negatively in that it can change the dynamic of the farm operation and complicate succession/inheritance.
    • The dynamic of the arrangement will obviously change following succession/inheritance - essentially involves replacing one established member with a new member even though in practice the new member may have been involved informally in the business e.g. son/daughter of a member who may have worked/assisted on a farm.

Succession needs to be carefully planned for and different options and scenarios explored including:

      • Involvement of one successor.
      • Involvement of multiple successors.
      • Lack of family successors.
      • Process of involving successors and impact on the operation of collaboration/cooperation such as labour input, distribution of profits/income.
      • Impact on current partners on involving successors.

Example: Lack of successors leading to ending of collaboration/cooperation in dairy business (Case Study Reutehof GbR)

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SELF-ASSESMENT

This questionnaire will allow you to evaluate the competences acquired by studying the module.

This project has been funded with support from the European Commission.This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
CO-FARM: Enhancing COoperation amongst FARMing entrepreneurs
Project Number: 2016-1-IE01-KA202-016870

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