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The changing face of Australian agriculture.

Mick Keogh - Monday, September 26, 2016

The average Australian farmer now manages a business with an asset value of close to five million dollars, and is now spending an increasing amount of time managing staff and talking to technical advisors, rather than actually doing all the physical work on the farm. These two changes have significant implications when considering what skills the 'average' farmer will need in the future, and how new farmers will get a start in the sector.

During a recent presentation to the GrowAg Conference held in Albury, I was asked to provide some information about the nature of farming in the future, and what sort of leadership the sector will need. In researching the topic, I came across two sets of statistics that paint a picture that is often at odds with the concept of what constitutes an 'average' farm. 

The first were the statistics detailing the asset value of the 'average' farm, and how this has changed over time. The first graph below displays the inflation-adjusted value of the average broadacre farm in Australia over the past twenty-five years. What is very evident is the substantial increase in the value of farm land assets that occurred post-2000. The rapid increase peaked around 2006-07 but has again begun to increase over recent years. When the value of machinery and stock is added, the asset value of the average farm is now around $4.5 million. Given that the ABARES data from which this information is derived included farm businesses with a minimum of $40,000 in turnover and that the sample from which these statistics are derived contains a large number of these smaller, non-commercial farms, the asset value of a commercial farm businesses is likely to now be well in excess of $5 million. 

Understanding this is of considerable importance when considering issues such as the average age of farmers, and the ways in which new entrants might come into the farm sector. Put simply, acquiring sufficient capital or access to credit to get a start in farming for young people is considerably more difficult than it is for young persons to purchase real estate in Australia's major capital cities. Unless a young person is lucky enough to inherit a farm, then new entrants to the industry will require very substantial assets, and are therefore probably more likely to enter farming as a second career. This obviously has implications for statistics like the average age of farmers, and suggests that the statistics reporting that the average age of farmers is increasing needs to be carefully interpreted before being considered an issue of concern.

The second set of statistics, which is not unrelated to the above, concerns the farm and closely related workforce. As the following graph shows, the number of farm owner-operators has been steadily decreasing at an average rate of around 1.5% per annum for the past fifty years. However, the number of employed workers (which includes farm employees and those employed providing services to farmers) has actually been increasing post the millennium drought which ended in 2010, to the extent that there are now approximately 1.5 employed persons per employer in the agriculture sector, and the number of employed persons is increasing steadily. 

This statistic highlights that careers in farming are increasingly likely to involve roles such as agronomists and animal health advisors, rather than owning and operating a farm as per the 'traditional' model that has prevailed over the past fifty years. Reinforcing this, a major issue at the recent Australian agronomy conference was the lack of graduates available to take up agronomist positions. 

Both these changes have important implications for policymakers and those industry leaders involved in making decisions about issues such as young farmer schemes and farm succession. They are also significant from the perspective of organisations such as Universities that are involved in training young persons who are interested in a career in agriculture. While actually owning a farm might now be out of reach for many interested in a career in the sector, a professional advisory role could perhaps be just as rewarding and 'hands-on'.


 
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