AN EXCITING mix of farmer and external investment will be the key to driving agriculture in Australia forward, according to Rural Bank’s new board appointee Alex Gartmann.
Ms Gartmann, who is also the chief executive of Rural and Regional Renewal and spent nearly a decade at the helm of Birchip Cropping Group (BCG), said the financial industry serving agriculture needed to foster innovation to allow maximum returns from investment in the sector.
“There’s been a lot of commentary about whether the traditional family debt-driven model can raise enough capital to continue to bring the industry forward,” she said.
“The truth is, family farming will always be an important part of Australian agriculture, but we may see it linked in with other sources of capital in the future.
“Already we are seeing some innovative arrangements where family farms transition to a corporate style set up while still allowing facets of traditional family ownership, whether that be the farming business set up separately from land ownership or other models.
“It’s something that’s working for farmers wishing to free up capital and while it won’t be for everyone, it is something I think we’ll see more of in the future.”
She said the challenges in attracting external investment to agriculture, with its highly volatile income streams, would remain, however, capital was making its way into the farming sector.
“There is international investment and while I wouldn’t say it is as large as it seems according to media reports, with it comes opportunity.
“I feel the industry has become more mature than a decade ago when we were having these linear debates with corporate farming versus family farming and where there was no middle ground.
“That really negative attitude towards corporate investment has probably dissipated since then, and we’re now seeing the flexibility that investment can provide,” she said.
Regarding agriculture banking, she said a mixture of the major banks and niche players would continue to have a role.
“I think farmers will continue to have the choice of a diverse set of lenders.”
In terms of winning over risk-averse mainstream Australian investment into agriculture, Ms Gartmann said products such as multi-peril crop insurance (MPCI) on the risk management side and forecasting tools such as Yield Prophet, which was jointly developed by BCG and allows farmers to make predictions on yields according to current season conditions, would help.
“It’s all about minimising those really bad years, whether that be through crop insurance, or whether it is by lowering inputs if the forecast is less than optimum.
“You’ll obviously have years like this where it starts promisingly and falls away, but I see forecasting tools playing a valuable role in risk management as they become more and more sophisticated.”
Ms Gartmann said as agriculture became more in-depth, the skill sets required would become more specialised.
“I think we are going to really need a depth of knowledge, rather than breadth, so that may mean bringing in external expertise,” she said.
“Farmers will make decisions on who is in their circle of influence according to what skills they have and what they need to get.
“As farm businesses broaden in scope, keeping an eye on the specialised areas of the enterprise will become more challenging.”
“Having the best info and advice when they need it will be critical, especially with margins between success and failure so minute.”
Ms Gartmann said she anticipated the cycle of consolidation within farming was not yet complete, even though farmer numbers have declined by far more than expected over the past decade.
“It will depend on technological advances as to whether we can continue to do more with less.”
However, she said she was confident larger farmers with less employees would not mean less vibrant rural communities.
“As the number of people employed by the actual farm business diminishes, I see more people in that agricultural services sector, providing diversity throughout the community.”