The day-to-day life of a farmer is probably foreign to many members of the financial services industry. So is the distinctly unique financial situation of a farmer.

Advisors who have farmers on their client rosters may stand to benefit from joining the Canadian Association of Farm Advisors, a Winnipeg-based organization devoted to enhancing the knowledge of professionals who work with farmers and farm businesses.

“There are unique aspects to farm planning,” says Liz Robertson, executive director of CAFA in Winnipeg.

For example, farms are often family businesses that are heavily invested in real estate, are extremely sensitive to weather and have an unusual cash-flow cycle, to name just a few.

CAFA was born six years ago in Manitoba, with the goal of educating advisors of all types — financial planners, accountants, insurance brokers, lawyers, family therapists and educators — about the challenges faced by individuals and families in the farming industry. CAFA also encourages networking among advisors in various professions who work with farmers. The association has roughly 35 chapters and more than 400 members nationwide and, according to Robertson, it is growing quickly.

“You need somebody who understands the industry to be able to give you good holistic advice,” she says. “There is more demand.”

People in all businesses and circumstances are increasingly seeking advisors with expertise in specific areas. And farming is no different. Demand for agriculture-savvy advisors is accelerating as baby-boomer farmers approach retirement and face the challenges of succession.

“Demographically, we’re looking at trillions of dollars in farming assets that are going to be changing hands,” says Robertson.

Selling the farm is a major financial change, she adds. Because many farmers continually reinvest their incomes in their farms, they have spent much of their lives with highly valued assets but little cash. As a result, many farmers lack RRSPs and have very little investment experience. Then they sell the farm or pass it to the next generation.

“All of a sudden they have cash,” says Robertson, “and sometimes lots of it.”

So, many farmers need advice on estate planning and succession planning, as well as investment advice. It makes the role of the financial advisor especially important to farmers.

And with such extraordinary financial circumstances, having an advisor with some familiarity with the industry is crucial.

“Only 3% of the population are farmers,” says Elaine Kelly, a financial planning specialist with Meridian Credit Union in Vineland, Ont., and a CAFA member. “Many people don’t understand or relate to farmers.”

Among farmers’ unique financial considerations is the fact that they typically get just one paycheque annually — income that must last all year, says Kelly. They also run highly risky businesses that are vulnerable to weather and changing consumer tastes and demands. They are also vulnerable to fluctuating interest rates because they often require hefty operating loans.

Farmers also have tax considerations that are significantly different from those of the average person, and it’s important for advisors to keep up with changes in such regulations. The capital gains exemption, for example, was increased to $750,000 in the 2007 federal budget, which could have considerable impact on farmers.

Seeking to establish an industry standard for advisors with expertise in agriculture, CAFA has created the certified agricultural farm advisor designation. Within a year of joining the association, new members are required to complete the certification process, which involves writing a test based on the organization’s Farm Business Advisor Manual, available to members online at www.cafanet.com.

The manual provides information on aspects of farming ranging from accounting and taxation to succession planning and risk management — a comprehensive overview designed to give advisors greater knowledge of the challenges their farming clients face.

But not just anybody can get certified. Membership with the association, which costs $350 annually, requires at least two years of experience in farming or farm advising prior to joining. The requirement ensures new members have a knowledge base in farming and a commitment to the agriculture industry, Robertson explains: “Most of our members have a direct link to agriculture already.”

CAFA chapters meet regularly so that members can learn about changes in regulations and government programs that affect farmers. Meetings also include visits to farms and farm production facilities, so that advisors can learn about the industry up close.

@page_break@Kelly says such activities have helped her in working with clients who are involved in agriculture. “Now I can relate to them better,” she says, “and I understand a little bit more deeply some of the things that they’re facing.”

The meetings also allow CAFA members in various professions to share information and network, often resulting in members making referral arrangements.

CAFA also holds annual conferences in each province. Members are expected to attend the relevant conference and participate in some meetings as part of the association’s continuing education requirements, which are in place to ensure members are up to date on issues facing the industry.

For advisors seeking to learn more about the farming realm, Kelly recommends resources offered by the provincial ministries of agriculture. The Web sites of these ministries provide information on such topics as taxation, government assistance programs and investment opportunities for farmers.

Some ministries go a step further in educational resources. Ontario’s Ministry of Agriculture, Food and Rural Affairs, for instance, holds annual Farm Tax and Business seminars in various regions throughout the province — an event, Kelly says, that is helpful in updating farmers and advisors about changes to tax rules or government programs that affect farmers. IE