Growing the Family Farm
The economics of broadacre farming in Western Australia suggest farmers need to get bigger to better absorb the pressures of price and yield volatility, and rising costs. Focus needs to be on reducing cost of production and realise that business expansion plays a key role in driving that production efficiency through improved economies of scale. Unfortunately, the traditional option of buying more land, funded by the bank, is leaving many farmers in significant debt. This represents a barrier to young farmers looking to expand as well as encouraging new entrants to the industry.
In the next five-to-ten years, the author believes there will be a significant transfer of farming assets in Western Australia as the baby boomer generation look to retire. This represents an opportunity for farmers who want to expand, however this situation presents some questions as to how this process will be funded.
Introducing other strategies for family farm expansion is the purpose of this report. Whether it be gaining control of land through owning or leasing, family farms can partner with institutional investors, private equity or form equity partnerships and even collaborate with other farmers to achieve their expansion goals.
This report provides examples of these options from businesses visited around the world. The report outlines key steps farmers can take to prepare their business and become investor ready to attract outside capital or find other partners in their expansion.
It is important to note that the vast majority of family farming businesses have a bank as their major equity partner in a trusted and long -lasting relationship. Buying farmland is still an ideal way to expand. However, there are certainly alternatives which this report explores.
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