Rural adjustment - here to stay - 7 March 2005

Monday, 7 March 2005

The shift from smaller farms into larger ones will continue, along with the debate over whether it is possible to protect traditional rural communities while increasing agricultural production.

A key to surviving this change is to seek assistance before it’s too late.

The causes of consolidation are not abating, and adjustment will be an enduring feature of farming and rural communities, Mike Carroll, general manager of Agribusiness at the National Australia Bank, told ABARE’s Outlook 2005 conference in Canberra today.

“The number of commercial farms in Australia has fallen by 50% over the 40 years to 2001, while the average farm size has increased almost 50%.”¹

“However, being big does not automatically make a farm more profitable, and indeed some medium sized farms are doing better than larger ones,” Mr Carroll noted.  “Though, with declining margins it’s harder to survive without efficiencies of scale.”

“To pass on the family farm and give the children a decent living, the traditional farm is under pressure to increase its asset base and ‘real’ profits by two or three times every 30-40 years.” 
He said: “These days it is also harder for people to get a start, with the $1.5 million needed to buy a property and necessary equipment out of the reach on many aspiring young farmers.”

Even so, Mr Carroll said there are many farm families who are successfully dealing with the challenges of adjustment. “For example, one key for those considering leaving the land is to leave with enough equity to fund an alternative business or lifestyle – and not leave this too late.  Banks can be an important part of this discussion and process.”

“The key issue is to seek help early, don’t be stoic,” he cautions.  “You don’t have to go it alone!”

Mr Carroll suggests: “Farmers should be holding regular discussions with their bank managers or other appropriate advisors a manager can arrange to see, whether they’re looking to expand or not doing so well and need to think about making some hard decisions. At times, these discussions have triggered actions which have helped to preserve a family’s wealth or provided guidance on the complexities of growth.”

Following his address, Mr Carroll will host a media briefing at the ABARE conference today at:
1.00 pm, at
ABARE press conference area,
(left rear of the foyer as you enter the National Convention Centre),
National Convention Centre, Canberra.

1 – “Farm size and productivity,” Australian Bureau of Agricultural and Resource Economics 2002.

About National Agribusiness
The National employs more than 530 agribusiness banking specialists at over 110 regional locations Australia wide.  The Agribusiness team at the National is a leader in providing agribusiness banking services to Australian rural businesses, agriculture, forestry and fishing industries. It serves customers across Australia ranging from small family farming enterprises to large multinational operations.

For further media information, please contact:
Guy McKanna
NAB Australia Corporate Affairs
Tel:  (02) 9966 3532
Mob: 0402 893 843

* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges