Property too expensive for next generation of farmers

With the official figure at a 40 per cent rise in six years, Jenny Kelly asks is property too expensive for farming’s next generation?

Without a decent inheritance or a helping hand, a young worker will not be able to afford a decent parcel of farmland. Picture: Zoe Phillips

Real estate regret. Anyone aged over 20 would have their own story of should have purchased that, could have purchased that — but didn’t because it was too dear.

And now those same properties are worth hundreds of thousands of dollars more, possibly even millions.

My story goes back to when working in Port Melbourne 25 years or so ago and I briefly considering buying a flat or house, only to conclude that it was ridiculously expensive.

With the benefit of hindsight, it would have been a bargain.

And regret can stretch back generations.

Agent Michael Scollard, of Paull & Scollard Nutrien at Albury, said they recently sold an 85ha block of land to a neighbouring landholder for a district high price of $1.4m, or $16,500 a hectare and the farmer buyer said it had been a thorn in his side for years.

He said: “I’ve been looking at it over the fence for 56 years as Dad didn’t buy it when he had the chance and it’s taken that long for me to have another opportunity.”

The issues of land being too expensive to turn a profit, of young people not being able to afford to get into farming, have been around for years.

So has anything really changed, or is it just the prices have got bigger?

It is a complex issue, and one ripe for headlines in media, as at any point in time there are people pushed out of the real estate price cycle while others happily invest and revel in a rising market.

When it comes to farming land values, it is reasonable to argue that wages and incomes from labouring jobs that often acted as a stepping stone into farming for young people have not kept pace with the cost of land.

The official figure is a 40 per cent rise in land values nationally over the past six years.

The simple truth is that without a decent inheritance, or a helping hand from family with big equity in their own operations, a 25-year-old working a standard 9-to-5 job is not going to be able to afford the millions needed to purchase a decent parcel of land.

Looking forward, it is easy to understand why those with a strong footprint in the farming game are keen to expand.

Land has been a great investment over a lengthy period, and when you consider the price points of productive country in competitor nations such as New Zealand and the UK it could be argued that Australian values could still move upwards.

Analysts such as Robert Hermann, from Mecardo, argue the simplistic days of linking land price to return per hectare are no longer as valid as they once were as other factors come into play.

For farmers with cash in the bank and a sound inventory of land, livestock and equipment already, grasping an opportunity to expand probably makes sense at very low interest rates.

Maybe it’s a case of the strong will get stronger?

And the young, well, they just won’t go farming in the short-term unless they have a bit of luck such as great aunt or uncle falling off the perch.

And it’s not like that has never been the case before.

● Jenny Kelly is The Weekly Times livestock commentator

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