End of the family farm?

While overall prospects for Australian agribusiness haven't looked brighter for a decade, lacklustre interest from the Generation X and Y age groups is likely to leave our ageing farm owners with little option than to sell to an expanding base of outside investors (including foreign groups) or big corporate-like family ventures.

By the middle of the 2020s much of Australia's productive farmland could be in the hands of corporate farming operations, according to international business advisory firm KPMG.

KPMG partner and demographic analyst Bernard Salt said without a new generation of farmers coming along behind the baby boomers "it could very well spell the end of the family farm model".

Mr Salt's comments accompany the release of a major study of the Australian agribusiness sector by his firm, which claims the agricultural supply chain is looking towards an "unusually favourable outlook".

Despite the inevitable uncertainties of weather, the threat of global warming, cost pressures and fluctuating commodity and financial markets, KPMG tips demand for Australia's main farm commodities will be bullish for several decades.

World population growth and increasing prosperity in Asia put Australian farms in the box seat to benefit from strong food demand and strong global interest in our farm production chain.

A lot of that interest was being driven by aspiring overseas buyers wanting to own a share of Australia's farm productivity according to the firm's Expanding Horizons agribusiness study.

KPMG has even forecast a solid lift in productivity and earnings opportunities in the politically hen-pecked Murray-Darling irrigation sector.

It said major investments in water efficiency infrastructure will cut water wastage and save the eastern States food bowl from a water-starved productivity slide.

Broadacre irrigators were set to become more nimble at taking advantage of the best available returns from their water entitlements either by achieving more efficient water use and productivity or by trading their water to other farmers for a better return.

But with the average farmer now aged 56, half the current farm workforce would be looking to retire during the current decade, according to Mr Salt.

"The big problem is that baby boomers (born 1945 to 1960) are struggling to pass on their farms to the younger generation because Generation Y (1975 to 2000), in particular, doesn't want to take on the responsibility - or liability as they see it," he said.

"This age group tends to have broader horizons and generally doesn't see the benefit of farming's long working hours and unpredictable seasons and markets.

"If they've grown up on farms these people have probably had plenty of first-hand experience with the work and tough seasons, particularly in the past decade of drought."

Older farmers were therefore staying on well into their 60s or later, hoping a son or daughter would eventually return to the farm.

This raised questions about the health, energy and efficiency of many farmers in the next decade and whether they represent bigger occupational health and safety risks with associated insurance and compliance problems.

Mr Salt said questions also had to be asked about whether finance institutions would be as keen to help ageing farmers pay for much needed long-term investments in productivity, or if older owner-operators were even psychologically prepared to take on larger productivity boosting projects.

Many farms could be at risk of marking time in the next decade while new technology opportunities were passed up by the baby boomers.

Another risk was a potential bulge in family farms hitting the rural property market at the same time in the next decade as older farming couples reached the an age when deteriorating health or dwindling energy levels forced them to sell or lease their land and retire.

The exodus may provide attractive buying options for expanding corporate players, but land prices may also be restrained by the large amount of land on offer.

Mr Salt said it was fairly likely that for the first time in about two centuries Australia's agricultural industry model would, in just 20 years time, not be based around the family farm.

"The model that has served us so well will evolve into a more corporate business structure, even for those family farms that do remain," he said.

The need for bigger economies of scale may even encourage family farming ventures to tap the investor market, following a similar management style to their neighbouring corporate farmers.

Service sector businesses such as farm machinery dealers and local farm input suppliers were also following a similar trend.

While their customer focus would remain a priority for success they would most likely be part of a much bigger corporate business so they could get maximum benefit from staff and stock usage efficiencies in the 2020s.