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The end of the family farm - or just the usual cyclic trend?

Mick Keogh - Monday, February 27, 2012

Economists are once again predicting the end of the family farm, and suggesting that the future of Australian agriculture belongs firmly with corporate farming. The end of the family farm has been predicted in the past, yet the model prevails. Is there anything different this time?

Business advisory group KPMG has released it's assessment of the future of agriculture in Australia, and concluded that demographic trends and likely booming future demand will inevitably mean the rise of corporate agriculture, and the demise of the family farm. Certainly, the global demand side projections noted by KPMG have been noted elsewhere over the past five years (see the Australian Farm Institute study of the implications of increased protein demand in Asia), and the decline in the number of young people taking up careers in agriculture has also been well documented, but precisely why this might mean an increase in corporate-style agricultural businesses is unclear. 

As has been noted in the past, the history of corporate agriculture in Australia is one of booms and busts. At different times there have been large corporate organisations directly involved in farming in Australia, with the tendency being that corporate interest increases during periods when prospects look bright, but then declines at other times. It has also been noted that corporate entities tend to buy up land when land prices are high, spend a lot of money improving the holding, and then sell very well improved farms cheaply when times get tough. This is of course an over-simplification, and there are many very well managed corporate farm businesses that are managed by people who understand the vagaries of the agricultural sector in Australia and are in the industry for the long haul. 

The prediction of corporatisation is an oversimplification because it ignores the diversity of agricultural production across the nation. While some sub-sectors seem suited to corporate management (northern cattle and broadacre cropping in some regions) the mixed livestock and more specialised horticulture and dairy sectors are dominated by family-scale operations, and it is hard to see that changing given the need for close management and the efficiency of family operators relative to corporate businesses.

An additional difficulty in predicting the 'corporatisation' of farming is that the term is very ill-defined. Does 'corporate' mean a business owned by a shareholder or overseas company, or does it mean ownership by a family grouping in some form of company structure? Certainly, the latter is becoming more common as different business structures evolve, but many of these remain family owned and operated farms.

This issue will be the subject of a forthcoming Farm Policy Journal, in which a range of experts in Australia and from overseas will discuss this question from a range of different perspectives.

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