Helping young farmers onto farms

Future Farmers Network directors regularly give their opinion on the latest news, events and issues in agriculture for an article for Australian Community Media. Here’s the most recent yarn from director Richard Kohne. 

It is common for farming families to send their kids to their local capital cities for a formal education.

As they progress through school and sometimes university, opportunities arise that attract them to jobs in new industries and locations. Ultimately however, it seems these kids come to realise that life on the farm and in the country is in their blood and they look to return.

For some this may be as simple as calling their parents and asking for a job, but for others this option doesn’t exist.

So, what can the youth in agriculture do to get back on the farm? The increasing corporatisation of farming in the past decade has seen record levels of capital descending onto farmlands, contributing to a steady increase of land prices, which unfortunately now seem out of reach for most young farmers.

This is made more difficult by the unwillingness of most banks to provide loans to younger farmers who can’t demonstrate a history of profitable operations and likely do not have a material amount of collateral. It appears therefore that the traditional owner-operator model isn’t going to work for these young entrants.

Operating under a lease model removes the need for upfront capital however does not provide long-term certainty for the farmer over their land access and leases with an option to buy only deferring this requirement for capital (unless the farm has been extremely profitable during the lease period).

Share farming is another arrangement available, similar to the lease operating model however, instead of paying fixed charges farmers enter into a risk-weighted, profit-sharing arrangement. Again, unfortunately this does not provide land ownership unless a specific equity mechanism has been agreed and often young farmers feel they aren’t provided the autonomy required to influence results.

Perhaps a solution exists in history. Following the First World War, a soldier settlement scheme was implemented in each state to place servicemen who had fought overseas on Australian farms.

While the program was not perfect it does provide a concept worth exploring today.
While there may not be surplus farming land available for allotment, a government-funded program where individuals meeting certain criteria are provided with a long-term loan to purchase proven productive agricultural properties will greatly assist young farmers.

The loan might have annual key performance indicators to ensure the farms are staying viable and the land value is being preserved.

While the Agristarter Loans pledge is aimed to assist young farmers in a similar way to this, it appears to require a level of corporate debt to be obtained. Investing in a dedicated funding scheme of this nature would mesh with the current government’s goal to build vibrant rural and regional communities across Australia by increasing participation in farming.