The myth of the ageing farmer

In the flood of recent economic analysis detailing the opportunities that the Asian Century will provide for Australian agriculture, one common issue identified as a potential limiting factor has been the average age of Australian farmers. A regular comment has been that because Australian farmers are on average much older than workers in other sectors and will be looking to retire soon, this will limit the ability of the farm sector to respond to increased Asian demand. A common example is shown in the box below from a recent report by Deloitte, although the issue features in many similar analyses by other organisations.

Box: Excerpt from Deloitte’s Positioning for prosperity report

Figure 1:  Age distribution of farmers relative to all other occupations.
Source:    Deloitte (2014).

'Age will weary them: Our farmers are old, and getting older, with the average age of Australian farmers at 52, 12 years above the national average for other occupations. Farmers are five times more likely than the average person to still be working over the age of 65 (see figure). The retirement of many farmers in the coming decade will mean Australia’s relatively high dependence on ‘family farms’ will come under increasing pressure.'

Deloitte (2014), Positioning for prosperity? Catching the next wave.

 

The major problem with this analysis is that by comparing the age of farmers with the average age of all other workers, a very distorted picture emerges of farmers.

The reality is that the average broadacre farm now has a capital value in excess of $4 million, and most farm businesses are now owner operated and employ minimal labour. Even to be able to source sufficient finance to acquire a farm business requires significant assets, which automatically biases the age of farmers towards an older demographic. Comparing the age of this group with the average age of all workers (which includes all workers older than 15 years of age) is hardly a valid comparison.

A more valid analysis is to compare the average age of farmers with the average age of Chief Executive Officers (CEOs) and General Managers (GMs) in the Australian workforce, given the relative level of responsibility of each of these groups. This comparison is displayed in Figure 2, which is from a forthcoming AFI report of research conducted in the grains industry.

 

Figure 2:  Comparison of the average age of Australian farmers with the average age of Chief Executive Officers and General Managers.

Source:    AFI analysis.

The graph highlights that the average age of Australian crop farmers is actually slightly younger than the average age of CEOs and GMs in the Australian workforce, and that the farmer population has a younger age profile than the population of CEOs or GMs. If there is a looming ageing ‘crisis’ in the farm sector, then there is equally a looming ageing crisis in the economy as a whole.

Overly simplistic analyses such as the example above create the risk that policy-makers will focus on the wrong issues when it comes to decisions about what policies might best help the Australian farm sector respond to the opportunities that have emerged in Asia.

Back to May 2014 Insights contents page.

Images: Deniliquin Newspapers, Stefano Lubiano, USDA