Farm ownership dream moving ‘out of reach’

Young farmers are being urged to be cautious amid a property market with record farmland values and softening commodity prices.

Family succession and generational family farming is becoming the only feasible way for young farmers to live their dream of farm ownership as land prices rise to record levels.

Rural land prices have never been higher, while livestock and cropping commodity prices have softened against a backdrop of rapidly rising interest rates in the past year, creating an untimely set of circumstances for young entrants to the farm ownership market, Agribusiness Valuations Australia director Sam Paton said.

“My message right now is you must do your sums,” Mr Paton said.

“For a new entrant to the market it would be virtually impossible I would have thought.

“If you do the numbers across per hectare returns with gross margin profit minus costs, the returns are pretty ordinary.

“New entrants need to be prudent and informed when looking to buy farmland, and there could be another vehicle which they could invest in.”

Nationally, just 10 per cent of Australian broadacre farmers are aged under 47 with an average age of 62 years old.

Rural Bank head of agribusiness Andrew Smith said record farmland prices were an obstacle for young farmers.

Rural Bank head of agribusiness Andrew Smith.

“Someone trying to enter the market or having to buyout siblings at this higher value creates a barrier to entry,” Mr Smith said.

East Gippsland farmer Nicholas Blandford, who runs a self-replacing merino flock in Meerlieu on 1400ha with his parents, said record rural property prices were putting farmland out of reach for young farmers.

“Increasing rural property prices have added a level of complexity to this issue as young farmers struggle to build the capital needed to fund land acquisition while competing with established businesses,” he said.

“The transfer of farm businesses through family succession has limited the capacity for those outside these family units to gain a foothold in the industry. For this reason many young people see the dream of owning a farm as outside their reach.”

Mr Blandford said with entry to the farm ownership market becoming more difficult for young farmers, alternatives were needed.

“As an industry that is in dire need of more quality people, the ability to attract young people should be one of the highest priorities.

“There are numerous options for this to occur, including equity partnerships for employees and decoupling farm business ownership from land ownership through leasing or share farming agreements.

“As the corporatisation of farm businesses continues, and the ownership changes from owner-operator to owner-manager there are now more opportunities to set up complimentary contracting businesses, as a pathway into farm business ownership.”