Académique Documents
Professionnel Documents
Culture Documents
FARMING PHILOSOPHY
For whatever reasons we farm, and I am sure these reasons are as numerous as there
are farmers, it seems clear to me that we must farm profitably. Besides the obvious
reasons to do with provision of the essentials for our families food, clothing warmth,
education it seems to me that we owe it to future generations to farm profitably now.
If we cannot farm profitably we will not be an attractive destination for capital, and it
will leave (and has left) our industry. Good examples of the effects of the inability to
farm profitably and competitively include the overrunning of our landscapes with the
radiata and the blue-gum weeds. The less obvious but more insidious effect is the
widespread running down of infrastructure, pastures, and skills that we have seen in
the grazing industries over the past 20 or so years.
Agriculture is not sustainable without outside input - energy, replacement nutrients,
new technology, research and development, education or whatever must be purchased.
To think otherwise, as the crazier end of the green movement, and some rather naive
farmers seem to do, is simply dumb. If we are to sustain our businesses and our
industry we must have profits, from which we can draw funds to reinvest and to reward
the providers of capital that have made that profitability possible. We must be
attractive as a destination for capital. We must be profitable.
So, I say; forget the touchy feely guff about sustainability peddled by the diverse range
of prophets out there. We must farm profitably and in a way that produces risk and
return competitive with other industries. Without this simple prerequisite, capital will
flee from us and our industries will not survive.
And what does this mean?
It means that farm businesses must be continually assessing and integrating new
technologies into their production systems.
It means that managers and their advisors need the skills to adopt an evidence and
systems based approach when making decisions.
It means that we must continually strive to be producing whatever commodity we are
involved in at an acceptable quality and the lowest possible cost.
It means that we must not block the flow of capital needed to be invested in our
industry for the gains to be made that will ensure our survival.
CURRENT TRENDS
On the farm
I spend a lot of time driving around the bush, and quite frankly, it can get depressing.
I see too many old farmers, farmers that have given up, farmers that dont have the
skills to utilise their resources.
I see too many young farmers that have not been able to throw off the bad habits of
their fathers and grandfathers.
I see a huge gap in performance between farmers that are similar in terms of scale,
age, location etc.
I see too many farms that are too small to be viable, or so run down and burdened by
debt that they have no chance of becoming viable businesses under their current
ownership and/or management.
I see desperate farmers using range of silver bullets from a range of providers across
the full spectrum from the just plain incompetent through to complete shonks. We have
run our skills base down to a level that a substantial proportion of farm managers do
not have the skills to differentiate between useful and just plain bad advice or products.
Running parallel to this I see very attractive returns being generated from the adoption
of best practice techniques on farms, and I see farming businesses run by welleducated and committed farmers that are producing returns competitive with other
asset classes.
How can this gap be bridged? My view is that there is a clear need for a massive
change in the ownership and management structure of the industry.
Growth Farms
2
Why Agriculture?
November 2013
GROWTH FARMS
I have been farming on my own account since 1984. For the first 15 years of this period
I concentrated exclusively on increasing the productivity and profitability of our family
business. The financial results from this were satisfactory, and it became increasingly
Growth Farms
3
Why Agriculture?
November 2013
Growth Farms
4
Why Agriculture?
November 2013
Some quick sums indicate that there is the potential to increase the agricultural income
coming into the shire by $40-50M, or well over double the current income. Imagine if
this could be realised!
This is not an issue unique to Tumbarumba shire. If similar figures were calculate for
any number of shires the figures would be similar.
Why is this? I think that it is simple:
Farms are too small
Farm managers are too old, undereducated or undercapitalised.
And what is the solution? Farms need to be aggregated, infrastructure and pastures
need to be recapitalised and management skills need to be reinvigorated.
THE FUTURE
Unlike the past, which is often a very is a pleasant place to be, the future is an unknown
country a very scary place indeed. I hesitate to predict anything, however I think that
there are some prerequisites that if put in place, will give us the best chance of recreating profitable farm businesses and a vibrant agricultural sector.
We need smart well educated people to manage farm enterprises. To attract them to
the industry they will require career paths and reasonable remuneration.
We need high level, post graduate training in evidence based approach for these people
and for all of the support people that are part of a healthy industry; scientists, advisors,
agribusiness executives etc.
We need the capital to be invested in farming businesses to allow the increases in
productivity that are possible. This capital can be in the form of either debt or equity.
Well designed and implemented farm productivity improvement programs can have
returns much higher than the costs of the capital required to enable them. My
experience is that returns from these programs can range from 20% to 100s of percent.
However, there is risk involved and it is unlikely that debt can provide all of the capital
needed by the industry. We need new sources of equity to enter the industry.
And we need scale in farm businesses. Greater scale means that we can spread
management over more productive units, pay managers more appropriately, and
provide real career paths for bright, well educated, ambitious young people. We are
Growth Farms
5
Why Agriculture?
November 2013
I would say in a day to day sense; not much, and as little as possible. Get out of the
way may be a realistic request. In the medium to longer term there are real structural
impediments to change that government does have the power to influence.
These would include:
Removal of impediments to the re-aggregation and re-capitalisation of Australian
farm businesses.
Areas to consider:
The effect of subdivision rules
Interest subsidies
Fodder subsidies
Other RAS benefits
Growth Farms
6
Why Agriculture?
November 2013
Growth Farms
7
Why Agriculture?
November 2013
IN CONCLUSION
I like farming.
Growth Farms
8
Why Agriculture?
November 2013