How things are going for farming and agriculture is hugely important for Australians, given our cultural connection to the land. The sector is one of the biggest employers in rural and regional Australia, with farm production being worth around $60 billion in 2016-17, and bringing in around $45 billion in export revenue, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
When it comes to the challenges and opportunities in farming across Australia today, the issues can be as vast as the land they occupy. Here is a quick snapshot of some of the most pressing challenges – and exciting opportunities..
Challenge #1: Limited weather forecasting can rock revenue
“The weather is obviously always a big challenge,” says Gus Thompson, a cotton farmer based in Central West NSW, “but the way we predict our weather needs more input.”
According to Gus, the US forecasting system is miles in front of the Australian forecasts, with Australia lagging behind overseas examples. “I reckon the Australian government doesn’t see long term forecasting as a worthy enough investment,” says Gus. “As farmers, we aren’t subsidised – so if we’re wasting money, it’s not the government’s problem.
“For example, I wasted half a million last winter from planting crops that never grew. It could have been avoided with better forecasting. Ninety per cent of the people you talk to on the land would probably air the same frustration,” Gus says.
Challenge #2: Big business affects the bottom line
Duncan Ashby – a senior consultant at ProAdvice, which provides business advice to rural farmers – says that farmers can fall victim to becoming ‘price takers’ – having to accept the prices on offer in the market.
“The relentless trend is that farmers are more and more often price takers,” he says. “If you’re a small producer producing for large businesses then you lack market power. And supermarkets can misuse their own power, which is tough.”
There is a silver lining though. “Some supermarkets – like Aldi – are good to deal with, as they build long term relationships and deliver a fair price to farmers,” says Duncan.
Challenge #3: No connectivity (and complex tech) hampers productivity
“The NBN is all great in theory,” says Gus. “But it needs to be wireless. This comes up a lot amongst farmers, as we increasingly use technology plug-ins. It’s great that farmers can use technology like cloud-based management programs, but we need to have that network coverage there to upload what we’re working on.”
Beyond connectivity, Gus says farming-specific technology platforms could be streamlined.
“I think there’s a big opportunity for an IT guru out there to try and simplify a many of our management programs,” he says. “A lot of farmers have their head in the sand and don’t want to know about them, because they’re too hard to use. I’d like to see this technology simplified. There’s no need to have it so complicated.”
So, where are the opportunities?
On the flip side, opportunities in agriculture are there for the taking. Rural business advisor, Duncan Ashby, discusses a few of them – including an alternate way of ‘working the land’ that he says can benefit everyone.
Opportunity #1: Share the land to share the profits
Duncan explains the potential of contract share farming as a win-win opportunity for smaller farmers to consider.
“Contract share farming is where the bigger entity (the leasee) and the smaller farmer (the lessor) both farm the land together through a lease arrangement, where profit is incentivised and shared,” he explains. “This is where the cloud can come into its own – as both parties can see what’s happening behind the numbers in the shared venture. It brings about a whole new level of transparency.”
Duncan states the case for this approach. “A lot of smaller farmers aren’t making a profit, yet the numbers show that if they leased their land to larger, more established farmers, they could make a good living,” he says.
This suggestion is sometimes disregarded in farming circles, explains Duncan, where the bigger entity is met with skepticism by the smaller farmer.
“It’s important to clarify that though the proportion of corporate-owned farms and international farmers has risen, it’s not by as much as everyone thinks,” he explains.
“The bulk of Australian farming is still dominated by family farmers. So instead of demonising these larger entities, we should be celebrating them as success stories.”
Opportunity #2: Some ‘profit perspective’ goes a long way
“There’s a lot of talk about the need for government subsidies”, says Duncan. “But if you look at America, where farmers are subsidised, they don’t actually make a profit.
“They all make a loss, which is pretty shocking when you think about it – even the best farmers. Instead, their ‘profit’ is solely made up through the government subsidy, creating a very dependent model.
“Whereas here, many of our farmers are independently profitable, which is a credit to them. Many Australian farmers run lean operations and are turning a profit. We should be proud of them and the benchmark they set, especially given our unpredictable weather conditions and relatively poor soil.”
Opportunity #3: Go bespoke and prosper
Duncan says that farming often favours established farmers, or conversely, small niche growers.
“If you’re a smaller farmer, you’re best to either specialise with a niche bespoke brand that yields a high margin, or lease your land out to a bigger farmer,” advises Duncan.
“If you do choose to go bespoke and your product has a high margin, then you stand to make a lot of money. But be careful not to burn out at the farmer’s markets, as this ‘direct to market’ approach can take a toll.
“The key here is how you brand and market your produce – tasks which require a very different skillset,” Duncan says.
Gus – Gus Thompson is a cotton farmer in Central West NSW who loves his job. “Every day is different, and I’m always outdoors,” he says during our mobile interview which was carried out on his 4-hour trip to Dubbo (with some seriously patchy phone reception thrown in for good measure).
Duncan – Duncan Ashby is a senior consultant at ProAdvice which works to help family businesses grow, particularly rural-based farmers. He specialises in agri-business advice with a focus on collaborative farming models, farm financial management, business structuring and succession planning.