Keeping up with ever-growing demand is vital for the future success of the agricultural industry. Population is growing and its impact on farmers is one of the most important considerations to be made. Our country's growth alone is already ahead of predictions by more than 30 years. To ensure sustainability of future supply there can be many approaches that can be considered including investing in new technology through to successfully managing succession of family owned farms.
It was predicted in 1998 that Australia would reach around 23.5 million people by 2051, yet in 2018 we've already reached 25 million and are growing at an unprecedented rate.
How does this impending evolution of society impact agriculture? What role does agriculture play in feeding Australia and how will it maintain exports while also meeting the growing demand of its domestic markets?
In a country where every three and a half minutes a new child is born and a new migrant arrives every two and a half minutes, food security is undoubtedly a key concern to the nation. It's hard to imagine that this would be the case, with Australia's iconic country landscape of wide open spaces, plentiful land rich and fertile, spacious and boundless.
The issue however is due to Australia's population expansion, currently one of the fastest growing countries in the OECD and well ahead of previous forecasts. How the Government plans to manage such growth is highly contentious and of pressing concern, paramount for the nation's social, economic and environmental security.
Australian farmers harvest enough food to feed around 60 million people with 77% of this produce exported1. We supply over 90% of the fresh food sold in Australia2, with a small percentage of our food being imported. With the nation's population continuing to grow, the agricultural sector must look to improve efficiencies and address market participation in order to meet forecasted demand with minimal impact on future exports.
For the past 100 years industrial and scientific advances have not only supported but propelled the farming sector forward. How is AgTech set to improve agricultural efficiencies in Australia looking into the future?
It's no surprise that sustainability in farming is one of the most important influences within our control that can be managed to ensure ongoing productivity. Reducing the detriment of environmental impacts affecting modern-day farming such as biodiversity, soil health, water use and pollution levels are amongst a myriad of factors to be examined.
The forerunner is unquestionably AgTech, with state-of-the-art developments set to greater improve efficiencies. Many of farming's biggest costs like labour, fuel, pest management, machinery and equipment, have been minimised by the investment in new technology. Optical sensors on boom sprays, for example, significantly lowers the quantity of herbicides required.
It's evident that finite resources are pushing us to get smarter and utilise technology to do things we've never done before, which is set to change the face of agriculture as we know it and ensure we can keep up with an ever-increasing national and global demand.
An important question is: do we have the levels and forms of succession arrangements in place in Australian farming and how do these arrangements prepare Australian farms with the necessary expertise to grow food output at sustainable levels over the next twenty plus years?
What distinguishes family farms from corporate farming is the emotional attachment to the act of farming and the hub of family life. A key to understanding this attachment is that family farms have often remained in the same family for several generations and the inseparable nature of family farms as both sources of income and family homes.
A few years ago I heard a West Australian farmer on a radio program about Farming Succession Planning say "Get it done early. Get it done up front and then go on farming". This is the right approach, but it is not an approach that is widely adopted.
The average age of farm owners is approaching 60, it's no surprise that succession is in the forefront of their thinking. Yet only around one third of farmers have a formal succession plan in place. It appears farmers are putting it in the 'too hard' basket.
We find that the first barrier that the farmer faces when thinking about putting a formal plan in place is simply starting the conversation. While it can be a difficult subject to bring up (as it's often a pretty confronting subject) doing nothing only accentuates issues and minimises options.
Careful planning helps reconcile different family interests and expectations, resolve awkward tax and financial issues and ensure continuity of the business. Events such as marital breakdown, sudden illness or death can greatly complicate matters for the unprepared. These events, and the forced change of ownership that can result, have the potential to derail even the most successful farm businesses.
Succession planning is paramount for the longevity of family owned farms to continue their legacy and transfer the skills required to successfully operate the business. In many cases, the proficiencies needed to manage the family farm have been passed on through several generations for more than 100 years and it's important for this custom to continue.
The future of Australia is looking brighter than ever, however there are some key considerations the agricultural industry needs to make to meet future demand. With a growing population, increasing supply through sustainability and the development of new technology it is vital for important advancements. Careful planning for growth and strategically planning for future succession will help ensure we have the resources required to further expand the Australian agricultural industry.
At Murray Nankivell, we're about helping rural Australians and businesses succeed financially and in all areas of their life and business. We have the experience and track record to help you work through and formalise a succession plan for your farm or business.
Please read a succession planning testimonial from Bob & Rosie Legoe of Lucindale.
If you, a friend or loved one would like additional advice about rural accounting or taxation for your farm, winery or other agriculture business, please contact us at Murray Nankivell on email@example.com
or by phoning us on 08 8752 8888
1National Farmers' Federation – Farm production 2016-2017 https://www.nff.org.au/farm-facts.html
2Australian Government – Department of Agriculture and Water Resources http://www.agriculture.gov.au/ag-farm-food/food
About the Author - Matt Rowett
Our goal, mission and purpose are to help people reach their full financial potential professionally and personally and whatever that means for them. We understand everyone is different which is why we're anything but your typical Accounting Practice. It's also why we've been growing our clients' businesses, minimising their tax and improving their bottom line for almost 80 years. You see, we're well known for having a personal approach where we get to know you, what you want and what you want your business to give you first.
We have three main offices - Naracoorte, Bordertown and Murray Bridge – as well as 11 visiting offices in Meningie, Coonalpyn, Tintinara, Lameroo, Keith, Millicent, Robe, Penola, Kingston, Nhill and Kaniva. We're also happy to visit all areas in between on appointment so if you would like to know about the value of structuring your business the right way please call us on 08 8765 7777.
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