The AFI "Managing the future of Australian farm land" conference held over the past two days provided many interesting insights into the challenges of policies to manage farm land in Australia and internationally, but perhaps the most telling quote out of the conference was that "rural subdivision is a cancer for profitable agriculture close to cities."
Several speakers made similar points about this issue, which was observed in stark reality during a field trip to western Sydney as part of the conference.
Speakers explained that Local Government decisions to allow small-lot rural sub-divisions had two effects. Firstly in resulted in a large number of unproductive small lots that are often poorly maintained and are not viable for any form of agricultural production. It also created elevated land prices for these lots, and any adjoining non-subdivided land - because of the expectation that the land not currently subdivided would eventually be approved for subdivision.
Secondly, the creation of areas of small rural subdivisions forced housing developers to turn their attention to any remaining large-scale land holdings, because of the impossibility of acquiring large numbers of smaller adjoining blocks in order to create new developments of sufficient scale. This, not surprisingly, makes even the larger-scale farm businesses in an area unprofitable because the capital value of the land (inflated by the expectation of eventual development opportunities) means the farm cannot hope to generate a decent return on investment.
When the inevitable inter-generational change occurs, even if some of the family wish to keep farming the amount of debt they need to take on to pay out other family members makes the farm business non-viable - and housing development inevitable. In addition, the proximity of urban 'neighbours' imposes increasing constraints on farm operations because they are too 'noisy' or 'smelly'.
There was almost universal agreement that better long-term land planning is needed for future growth, and that planning needs to generate certainty about future land uses. Speculation about the potential for future zoning changes is enough to drive up farm land prices and create an inevitable process.