AUSTRALIAN family farm debt is skewed heavily towards expanding farm businesses, with the majority of new debt growth going to businesses with loans in excess of $2 million said ANZ’s manager of agribusiness Mark Bennett.
At the other end of the ledger, he said there were a number of high equity, small scale businesses that were weighing up what their next move in the industry would be.
“The dynamic around land values and wealth in farming is very interesting now,” Mr Bennett said at this week’s Victorian Farmers Federation (VFF) grains conference in Horsham.
“There has been a well-documented push for expansion among croppers and you now have 20pc of farmers owning most of the debt.”
Mr Bennett said non-farm investors could help ease the capital squeeze, but said this may require changes in business practice for growers.
“There may be a need to look at methods to ease the earnings volatility, this could include group buying or selling blocs that could help generate better returns or cut input costs.
“It is something that is not overly popular in the cropping sector, compared with other agricultural industries, culturally farmers have tended to make their own decisions.”
Ouyen farmer Ian Hastings said it was difficult to see a pathway into farming for younger farmers without access to equity in the form of land.
Mr Bennett said this may be where outside capital finds its mark in agriculture, helping start-up operations achieve economies of scale.
Otherwise, novel ideas such as co-operative land purchases or share farming arrangements could provide people with an entry into the industry.
He said the high equity sector of the farming industry was also an area to watch.
“There are still small farmers with very little debt and they are looking at their next move – some will be just staying as they are looking towards retirement while others may start to take on more land in order to generate economies of scale.”