The Impact of Succession Planning on Agricultural Investment in Kirkwood, Eastern Cape, South Africa

Abstract

Succession plans are essential for ensuring the continuity of agricultural businesses. The next generation may be unsure about how to proceed with the farming operations, and they could be compelled to sell if an agreement cannot be reached. Succession planning involves a deliberate process of identifying, preparing, and grooming or training potential successors for future agricultural and asset management roles. To guarantee the survival of farming operations after the founder's retirement, having a succession plan is crucial. Considering this, the study examined the impact of succession on agricultural investment in Kirkwood, Eastern Cape, South Africa. The specific objectives include examining how factors related to implementing succession plans correlate with farm sustainability measures and financial key performance indicators, as well as identifying the main challenges in succession planning and analysing their connection to investment patterns and successor readiness. Google Forms and a face-to-face questionnaire were administered to seventy-six respondents, including farm owners, potential successors, and managers involved in succession planning, using purposive sampling methods. Analytically, descriptive statistics and regression analysis were employed as estimation techniques to achieve the research objectives and test the hypotheses, respectively. Descriptively, the study found that the implementation of succession planning affects a farm’s sustainability and financial outcomes in Kirkwood, Eastern Cape, South Africa. The study suggests that the implementation of succession planning has a positive impact on and contributes to the farm’s sustainability and financial outcomes in Kirkwood, Eastern Cape, South Africa. Furthermore, it was established that the primary barriers/challenges affecting effective succession planning, investment decision, and successor preparedness are financial constraints, interest from the younger generation, family conflict, and resistance from the current owner. The study concludes that, based on the regression analysis, succession planning has a positive and significant effect on agricultural investments. Therefore, succession planning can involve the younger generation with decision-making, critical thinking, and investment analysis as a wake-up call for the successor. Hitherto, governments have been encouraged to provide a business-friendly environment with maximum infrastructure that can facilitate the smooth operation of agricultural investments. This is imperative to achieve food sufficiency in Kirkwood, Eastern Cape, South Africa.