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Australia’s most successful farm businesses will continue to be family farms and those that continuously look to improve their productivity.
This is the message from National Australia Bank’s General Manager Agribusiness, Mike Carroll, to the conference ‘Profit Opportunities in an Uncertain Environment’ being held by the Australian Farm Business & Farming Systems Management Network (AFBMNetwork) in Orange, NSW and sponsored by the National.
"Agriculture can be a very profitable form of investment, with the top 25% of farmers generating returns greater than shares and property in recent years," Mr Carroll told conference delegates last night.
"Around 95% of Australian agricultural enterprises are family farms.
"For many successful enterprises, the younger generation is tertiary qualified and has developed skills and worked externally before returning to the family business."
Collectively, the families involved in farming have over $120 billion invested in agriculture, and control over $150 million in agricultural assets.
However, Mr Carroll says the industry has enormous room for improvement outside the top 25%, and the farmers that survive into the future will be the ones willing to take on this challenge.
"A large part of meeting that challenge is a willingness to change and continuously lift productivity.
"The country’s top farmers are those at the forefront of innovations that increase productivity and profitability, who are giving us insights into the type of technology that will be mainstream in the future," Mr Carroll said.
Mr Carroll told the conference that size is also a factor in the success of a farm businesses, however it is not everything. The best of the mid-sized farms generate higher returns than the average large farm.
"Consolidation is likely to continue, with increasing agricultural production in the hands of fewer farmers.
"As farming businesses grow in size, they must become more professional. This will increase the need for outside ideas.
"Peer discussion groups are a growing phenomenon that enable like-minded farmers to join forces to discuss the challenges they face and work through solutions.
"Other groups focussed on productivity and comparative analysis are also challenging traditional thinking and individual farm managers’ performance and plans, to the benefit of all involved.
"External technical expertise is already being brought in more and more, such as specialist nutritionists, agronomists and marketing advisors.
"There’s a growing trend toward share farming, share milking, and leasing land and even livestock, rather than tying up capital.
"The use of contractors is reducing capital costs, as equipment and labour are brought in as needed for sowing, spraying, harvesting and mustering," Mr Carroll explained.
"Agriculture is characterised by declining terms of trade. Pressure on farmers is intensifying, and it is only by looking for continuous improvements in productivity that they will survive into the future.
"What will be most important to the successful farmer of the future is a willingness to embrace change - particularly through greater professionalism in outlook, openness to new technology and seeking out of external advice," Mr Carroll concluded.
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