A surge of outside investment flowing towards agriculture is being met head-on as family farmers continue to overwhelm their corporate rivals numerically, and often at property auctions, too.
While foreign investors and big scale corporates are getting bigger and more active, the Australia and New Zealand Banking Group forecasts family farms will still represent 85 per cent of the sector's ownership mix by the end of this decade.
By 2030, 40pc of Australia's farms would remain owned by the same family operators who held them at the start of the decade.
A further 15pc of holdings would be in the same family, but passed on, or in transition, to a new generation, according to ANZ.
The bank's Greener Pastures 2 report on the state of farm sector investment trends and profitability has also tipped many of those farms which do not change hands this decade would also grow in size and sophistication.
Some of that growth and upgraded management capability would be prompted by generational changes in attitudes and technology, but family operations were also being strengthened by high commodity prices.
"The Australian family farm has emerged stronger than ever, both financially and agronomically," said the Greener Pastures 2 report, released late last year.
"Australian agriculture has proven to be a compelling investment case for its existing participants, and for external investors."
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By the end of the decade a further 30pc of the farms currently operating around Australia were likely to be purchased by a neighbour, or nearby local farmer or farming family business group.
Sustained high commodity prices, combined with the promising long term outlook for the sector, suggested a run of strong farmer confidence in the industry's prospects and demand for farmland.
The report's lead author and ANZ's agricultural insights executive director, Michael Whitehead, said many positive changes in the agricultural landscape had resulted in the outlook improving considerably in the past decade.
Times have changed
When the first Greener Pastures report was released in 2011 many in ag's upcoming generation were reluctant to stay because markets and seasonal conditions had been tough.
The general belief at that time was that a large proportion of farmland would likely end up as relatively easy pickings for new investors.
Management companies would take on much of the responsibility, and cost, of improving farming infrastructure and conditions.
However, the revival of the family farm, with at least two generations working together on one operation, had since grown significantly thanks to factors such as high rural commodity prices and better technology and the development of regional centres - all of which enhanced farm life's appeal to younger families returning from city jobs and education backgrounds.
New investor growth
Mr Whitehead said the number of new off-farm investors and farm management companies representing corporate agriculture would keep growing, reaching 15pc of the ownership mix by 2030.
Offshore pension fund and family office investors were being steadily joined by more Australian superannuation fund and private high net worth interest in agribusiness.
However, it wouldn't be easy for the newer players, as the greater strength of farm family operations had beefed up competition for agricultural assets.
He said rising demand for global food imports had drawn increased attention to agricultural production and supply chains as credible, valuable asset classes.
Australia had grown as a central focus for investors from North America, Europe and Asia, and, particularly, China, during the past decade.
At the same time, the ANZ report noted a change on the domestic front "which should not be underestimated".
"There is increased capacity among Australian farmers to reinvest in their own sector."
They're able to make long term strategic decisions with far more complexity than would have been the case 10 years ago
- Michael Whitehead, ANZ
While a decade ago the main driver for new investment tended to be the growth of corporates (with an expectation that local producers would inevitably have declining roles in their industry), today many family farms were emerging stronger than ever.
"They find themselves in a robust position ... able to make long term strategic decisions with far more complexity than would have been the case 10 years ago," Mr Whitehead said.
"It is clear across many parts of rural Australia that the approach to scale, succession and generational change has evolved in a positive way."
He said not long ago many families viewed succession as the departure of the parents when their children came home - situations often fraught with challenging issues such as management responsibility changes and financial restructuring so Mum and Dad could afford to move off the farm.
Today, however, opportunities increasingly existed for two generations to work together constructively.
Younger partners often returned from a tertiary education or possessing new career skills and networks, including knowledge of ag technology and finance to benefit the farming operation.
ANZ's report noted while multi-generational farming businesses still experience succession "issues" which required early attention, the reinvigoration of the family farm on several levels had enabled this segment of the industry to play an increasingly important role.
Buying power
Families were using their strength to buy neighbours and continued to grow their operations, becoming key drivers of farmland values and frequently genuinely outcompeting institutional bidders.
"A family farming operation is more likely to have a multigenerational strategy, rather than a shorter term, returns-based agenda," Mr Whitehead said.
At the same time, however, stronger family enterprises may provide new investment pathways into the industry for some outsiders who were now partnering with innovative operators to jointly build their businesses.
"Growth of the family farm also brings with it a fundamental, and perhaps unappreciated boost to the growth of sustainable practices in our agricultural landscape," he said.
Families working together, and helped by technology breakthroughs, were also achieving greater labour use efficiencies, or at least mitigating some of the worker shortage problems which badly worried the sector a decade ago and continued to be a challenge.
"Farm consolidation and growth in efficiency have seen ongoing reductions in labour requirements in the major agricultural sectors," the report said.
"ANZ modelling for the broadacre and dairy sectors shows overall labour time has fallen in the past 30 years, largely due to rapid technology advances."
Developments in technology and farm management, were also delivering better employment terms and career development opportunities for workers.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
