Who will take over the farm?


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AFTER emerging from a decade of drought, many of Australia's ageing baby boomer farmers have worked out their Generation X and Y offspring aren't so keen to take over the family enterprise.

AFTER emerging from a decade of drought, many of Australia's ageing baby boomer farmers have worked out their Generation X and Y offspring aren't so keen to take over the family enterprise.

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Although overall prospects for Australian agribusiness haven't looked brighter for years, muted interest from younger age groups is leaving many older farm owners with little option than to sell to outside investors or big corporate-like family ventures.

On many farms where new spending is badly needed and cashflow is still only just recovering from past seasonal setbacks, 2012 was the year families were forced to confront farm transfer realities.

By the mid 2020s much of Australia's productive farmland could be in the hands of corporate farming operations according to international business advisory firm KPMG.

Early this year a "wake-up call" report from KPMG's agriculture's changing composition was accompanied by predictions from demographic analyst Bernard Salt suggesting the departing baby boomers "may spell the end of the family farm model".

Farmers born between 1945 and 1960 (baby boomers) were struggling to pass on their businesses to the younger generation "because Generation Y (1975 to 2000), in particular, doesn't want to take on the responsibility - or liability as they see it", he said.

"This age group tends to have broader horizons. It generally doesn't see the benefit of farming's long hours and unpredictable seasons and markets."

Ironically, KPMG noted agriculture's supply chain was looking towards an "unusually favourable outlook".

Despite the inevitable uncertainties of weather, the threat of global warming, cost pressures and fluctuating commodity and financial markets, KPMG tipped demand for Australia's main farm commodities would be bullish for several decades.

It even forecast a solid lift in productivity and earnings opportunities in the politically hen-pecked Murray-Darling irrigation sector as investment in water efficient infrastructure cut wastage and reversed the eastern States food bowl's productivity slide.

Similar findings by ANZ Banking Group tipped Australia and New Zealand could more than double the real value of their agricultural exports by 2050 as food demand to lifted by 60pc in response to rising incomes and changing diets in developing countries.

But ANZ's Insight study also forecast that $1 trillion in new capital was needed in the next 40 years to drive production growth and support farm turnover in Australia.

Its report emphasised that becoming a food bowl for Asia would not happen of its own accord, noting that recently Australian agriculture had achieved lower productivity growth and lower profitability.

ANZ urged selectively reinvigorating high potential industries such as grain and the high growth dairy industry in NZ by strengthening farm extension services to lift yields and attract investment.

The story Who will take over the farm? first appeared on Farm Online.

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