Small family-owned and managed farms are struggling for survival in the face of corporate and large-scale agriculture.
Research released yesterday by the Australian Farm Institute, entitled Will Corporate Agriculture Swallow The Family Farm?, found that in Victoria last year, only 28% of family farms were of sufficient scale and profitability to earn enough income to support the families owning them.
Only half of this group was classed as likely to achieve the same success in the future and more than one-third of all family farms relied on adults living on the farm to earn wages elsewhere, reinforcing the stereotype that many farm wives have to work as local doctors, hairdressers and teachers for their families to survive.
Another 39% of farmers earned so little from trying to grow and produce food that their family income was below the median of all Australian households.
AFI chief executive Mick Keogh told SmartCompany that family farms were at a disadvantage as revenue needed to be close to $500,000 a year for a farming business to have enough scale to be profitable.
“That is the hard reality at the moment; it is too hard to be profitable with low turnovers,” Keogh says.
The figures point to a growing view among policy-makers that corporate farming is inevitably going to grow in the future, and that farm businesses increasingly need to develop the scale and professionalism that is only possible within a well-capitalised structure, such as a corporate farm business.
However, Keogh cautioned the figures also included some farmers who farmed for lifestyle reasons rather than to make an income.
“If you look at farms with under $100,000 of sale a year, they tend to have in excess of 95% of their net income from off-farm wages,” he says.
“So the farm makes virtually no profit and they exist on off-farm wages.
“In effect they are choosing to be involved in farming for a range of different lifestyle reasons, it could be a vet who works in town and runs a farm on the weekend.”
Keogh says while many family farms are struggling, there are some family farms which are big and very profitable.
“It is not just corporates. There are farm businesses that are very big, they can be owned and operated by a farmer and they can be very big,” he says.
“I think the smaller farms have to take action, whether it is sourcing income off the farm to survive or looking at more specialised production like targeting farmers’ markets, or targeting specific markets like hospitality and finding themselves a business opportunity and surviving.”
Keogh warns there is a “strong disconnect” between the public perception of where food comes from and the reality, with 20% of famers producing almost 80% of total production.
“While the major retailers and food producers flat out advertise their connection with the average Joe farmer, a bloke on a tractor with his hat on, that’s not the reality. The reality now is much larger scale farm businesses,” he says.
Jock Laurie, president of the National Farmers Federation, says the family farm still has an important role to play in Australia but there is no doubt there is a lot of strength in the Australian corporate sector.
“Family farms are very strong and resilient businesses. They keep plodding along; whether they are profitable or not is another thing,” he says.
“The farmers work long hours and don’t necessarily work for the money others get paid and so, in many ways, they are very efficient.”
Laurie says the drought and changing family structures are both having an impact on family farms.
“Intergenerational change is an issue as generally what happens is property sizes get smaller, but when family businesses get scale they can do pretty well,” says Laurie.
“It’s a sign of the times. Many family farms have one or two people to work off the farm to generate income.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
