Succession planning leads to multi-generational success

Apples have been the fruit of choice for five generations of the Baldwin family – in Tasmania and Victoria. But the way they farm and market their product has changed in response to environmental needs, price points and customer demand.

Through good succession planning, the next generation of the Baldwin family have transitioned to managing the orchard. Left to right: Krestabelle Baldwin, Sally Baldwin, Mary Baldwin, David Baldwin and John Baldwin.

Embracing the challenge of bringing the next generation into the business, has led to some of the biggest changes, creating new opportunities and resulted in the development of new products and markets.

Succession planning was a process that began with initial discussions nearly six years ago, according to the family members involved, but really got underway in July last year.

“Everyone’s very glad we’ve done the succession planning, but it took finding someone with expertise to take us through it. It’s very complex,” said David Baldwin, eldest son and farm manager.

“But it’s been supported by a gradual process of us making decisions about the business, including diversifying product.”

With the paperwork signed by all involved in April this year, the succession plan took effect from June.

It means security of income for David’s parents Reg and Mary Baldwin, who were looking to retire in their 70s. For the younger generation, ownership under a new Family Trust structure is through a mix of equity and debt.

“The farm had to be able to support four families and now there’ll be a better share of the farm income for everyone,” David said.

From dairy to vegetables to apples

Reg Baldwin grew up on an apple farm in Ranelagh in the Huon Valley. After moving to Victoria, he and his wife, Mary, bought a dairy farm at Picnic Point, Bairnsdale, intending to turn it into an apple orchard. Bairnsdale was already a renowned vegetable growing district, so they grew beans, asparagus and broccoli, among other crops, while they planted the first apple trees.

Shortly after they started planting trees, Reg and Mary began growing a family: three boys – David, John and Tom – and a daughter, Sally. All grew up helping on the farm.

Time for a tree change

Over time, how they have managed the apple trees has changed. In 2008, the first trellised plantings were installed.

“We had a lot of big trees older than 20 years that were becoming unproductive,” said David Baldwin.

“Dad and I attended some Future Orchards® walks and saw the advantages of high-density, trellised plantings. We’re in a fairly isolated situation here, so making the effort to travel to other orchards and seeing what they are doing has been worthwhile.”

They have spent the past 10 years consolidating the current trees, to ensure they are yielding well; and bringing on young trees.

“Trellised apples allow for high-density plantings and increased yield, which we’re beginning to realise,” David said.

Today, there are about 18,000 trees on 7.5 hectares, including Royal Gala, Red Fuji, Cripps Pink (sold as Pink Lady®), Golden Delicious and Granny Smith; on track to produce 80 tonnes/hectare of fruit this season. Long-term plans include increasing the size of the apple orchard on some of the remaining land.

Permanent netting covers three hectares of trees and drape netting is used for the remainder – it is usually put up in November, a few weeks after blossom time.

“Netting protects the apples from hail, sunburn, birds and bats,” David said.

“Cost permitting, we’ll install more permanent netting over time.”

“The benefit of installing trellising, netting and reflective matting is about more than the environmental benefits – the trellised trees are more productive and require less labour. The reflective matting helps with colour,” Sally said.

“These new systems help ensure the strict quality standards of the wholesale market are met.”

Netting and reflective matting are part of the Baldwins approach to fruit quality.

Innovating product

While the family had always sold some apples through the farm shed, they began to increase the volume. At the same time, farmers’ markets were established in the Bairnsdale district and Picnic Point farm hopped on board.

“But what you sell is also up to how you market it,” said Krestabelle Baldwin, who came into the business when she married John. “Encouraging people to sample a different apple variety or to taste our other products has really increased our sales locally.”

They began diversifying product even more.

Recent innovations include planting more cherry trees, and producing apple juice, sparkling juice and, in the past year, dried apples – three products that are available year-round, alongside jams and vinegars.

All through the business is an attitude of eco-conscious decisions, a focus on retaining the family business, and innovation to value-add products.

Fresh energy and product growth

Bringing in the next generation offered new opportunities for the business to grow.

David and John demonstrated it was more cost effective to permanently net the trees that were already part of the change to intensive plantings.

There has been a greater focus on selling fresh fruit at the farm shed and farmers’ markets. In the past decade, direct-to-customer sales has grown to 30 per cent, with the remainder to Melbourne Market.

Marketing, traditionally through the local newspaper, diversified to social media under the management of Sally and Krestabelle. Seasonal information is provided online to customers, increasing their own understanding of what fruit they should be eating.

The family has installed controlled atmosphere (CA) technologies for the coolrooms this year.

“This will enable us to store the fruit in good condition for longer and increase our local sales,” David said.

Education an asset

Education is important to the entire Baldwin clan. Reg was a qualified draughtsman when he moved to Victoria and Mary is a teacher. All the children have been to university.

David studied part-time to attain a science degree, while working part-time on the farm and completing some agriculture courses.

“I never really left the farm and I never considered not returning to the farm,” David said.

“We’ve all developed areas we want to be responsible for on the farm.”

Sally left the farm for university and never considered returning to a full-time role in the business. After gaining her degree in mechanical engineering, she travelled and worked in the United Kingdom.

“I then came back and didn’t leave,” Sally said.

“I found I like living in a small town, working outdoors in the orchard, working in a small business and not having a boss. I like training the young trees,” she said.

“I’ve also had opportunities to try things that I probably wouldn’t have, working for someone else.”

John said he never considered not returning to the farm, when he left to study plant science at university.

“I always thought I’d be back on the farm at some point,” he said.

“Growing up, I enjoyed the lifestyle and working outdoors with the trees. It’s a bit of a challenge growing the apples.”

He has brought some value-adding ideas to the enterprise, including turning second-grade apples into cider vinegar and sparkling juice with the help of local cider maker, Mt Markey Winery.

Krestabelle completed a post-graduate degree in geology and petroleum geoscience – but moving to Bairnsdale meant she had to develop other skills. She shares packing and social media
responsibilities with Sally.

She also works in the office, managing the myriad accreditations and legal responsibilities of the business. She is sharing the bookwork with Tom, who is studying accounting.

Reg and Mary Baldwin, Picnic Point Farm.

Succeeding at handing over the reins

Establishing a clear succession plan became a priority when John married Krestabelle and David married Ali.

Initiated by Reg and Mary a couple of years ago, succession planning enabled them to plan their exit from the business, while giving the next generation clarity about the part they would play.

“It isn’t easy but it should be done. I wanted us to ease right out of managing the orchard,” Mary said.

“They are all intelligent enough to take it on and we’re proud of them wanting to be the next generation of apple growers in the family.”

She said changing the business structure also enabled David, John and Sally to fast-track in some of the changes they wanted to implement.

“The Family Trust can sell the assets – the renovation of the coolrooms was paid for by selling 22 acres of the farm land,” Mary said.

“It was a big investment. Foregone wages earned a portion of the farm and a mortgage within the Family Trust paid for the remainder of the business.”

The change of ownership of the farm, which includes the orchard business, was welcomed by everyone involved.

“We thought the kids would do other things,” Reg said.

“My identity is still connected to my parents’ farm, so it’s good their identity is formed by their connection here.”

“Ideally we’d have started transferring land to the children years ago, but they didn’t all know what they wanted to do,” Mary said.

Initially the family utilised the services of a rural financial counsellor.

“That helped us work out foregone wages for the kids because that had to be done properly – they had worked for many years helping in the orchard and the business,” Mary said.

The next step, on their accountant’s recommendation, was to create a family trust, involving David, John and Sally as equal partners.

“They were able to take out a mortgage for the remainder of the farm and business,” Mary said.

Creating the family trust, enabled Reg and Mary to step away from decision-making roles. They retain other assets, including their own home on a separate title to the farm and superannuation.

“The trust owns all the farmland and farm assets and any borrowings or mortgages that will come about in the future,” Mary said.

“Forming the family trust is the best way, I think,” Mary said.

“It really helped clarify the whole business of retirement for us and succession for the children.

“There’s a better share of the farm income for everyone else.”

Mary and Reg might continue an ad hoc involvement, since they are staying in their family home which, on a separate title, overlooks the farm.

“I’m looking forward to being a grandmother and, if he thinks he needs to and the weather is perfect, Reg will often get out on the tractor, but we’re both very happy we’ve done it [succession planning],” Mary said.

Further information

Current practices in Australian Farm Succession Planning – surveying the issues (Griffith Institute)

Caretakers for the next generation: Families talk succession planning (ABC AM Radio, 22 June, 2018 – listen to Audio / Read script)


By |June 18th, 2018|Future Business|

About the Author:

Freelance agricultural journalist