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The future of rural enterprises in the global food chain

There are many challenges facing the farmers of the future clipart

To outsiders Western Australia may appear as a state with a buoyant economy riding a wave of mining and energy investment, but away from the resources sector things are tough. Over the past few weeks the WA Premier Colin Barnett has had to hold crisis meetings with farmers across the wheat belt. The impacts of the high Australian dollar, low commodity prices and poor seasons have combined to make it tougher than usual for the rural producers.

The state of agricultural business in Australia

The Australian Bureau of Statistics (ABS) estimates that there are around 137,447 agricultural businesses operating across Australia. Over the past decade their numbers have decreased by about 3.5% and there has been a decline of around 10% during the same period in the amount of arable land used for farming. For example, in 2001 Australia had some 456 million hectares of land committed to farming, but by 2011 this had fallen to 410 million hectares.

Despite these falls in the number of farms and the amount of land used for farming, the overall productivity of Australia’s farmers has increased substantially. The amount of land used for crops has grown by 31% despite the reduction in overall land used, and the gross value added from agriculture has risen by about 34% since 2001. These trends can be illustrated in the following graph.

Trends in Australian agricultural businesses ABS 2012

This suggests a trend in which the number of farms operating across Australia has shrunk but those that remain have become more productive. These trends are likely to continue well into the future, but there are some serious challenges facing the nation’s farmers that deserve greater attention from our political leaders.

It was part of the discussions that took place on 10 April at a “Food 2050” symposium held in Perth by the UWA Institute of Agriculture. This drew together a cross-section of experts in a range of fields who examined the challenges facing farming communities and the longer term security of our food production system. My task was to address the issue of the state of rural enterprises and this article is based on the speech that I gave there.

The “farm problem”

Lying at the heart of the crisis facing the WA growers, and impacting on rural enterprise across Australia, is what has been described as the “farm problem”. The problem is caused by the interplay between rising agricultural productivity and the inelastic nature of food demand.

This has led to continual decreases in real farm prices and decreasing returns to farmers. Increasing competition in the food market has meant that any efficiency gains made by producers within their farm businesses are actually captured more by the consumer than the producer.

To counter this trend farm enterprises have sought to expand their area of production, develop new or additional crops or pastures, or grow large via the amalgamation of farms. This has led to the “get big or get out” mindset that has occurred across many of our rural areas in past decades.

However, many farmers lack the financial capacity or the opportunity to expand their business operations. This will result in a few much larger farms and the smaller farms that still exist will generate only minimal income.

These issues were highlighted in a study undertaken by the CSIRO for the Grains Council of Australia and Grains Research and Development Corporation (GRDC) back in 2003/2004. As the report noted:

These two issues – amalgamation and low incomes – combined with the fact that much of the productivity increases have been labour productivity leading to less demand for farm workers, have led to a gradual depopulation of many regions and depressed regional economies. Local value-adding may have some scope for increasing the value of farm products, but value adding also adds cost, hence there may not necessarily be a net gain. These trends are a long-term reality of agricultural economies and are very unlikely to be easily reversed despite community and government will.”

Current state of the global food system

To understand the forces that are impacting on our rural enterprises it is important to take a look at the current state of the global food system. Despite farmers experiencing difficulties with farm gate prices the actual price of food rose significantly over recent years. The diagram below shows the Food Price Index of the UN Food and Agriculture Organisation (FAO), which illustrates the trend.

Food Price Index UN Food and Agriculture Organisation (2013)

Between 2006 and 2008 global food prices increased significantly and despite the Global Financial Crisis (GFC) impacting on many other commodities the overall price of food has not declined, in fact it rose again sharply in the period from 2009 to 2011. Wheat prices rose by almost 30% and the price of corn was pushed up due to extreme weather conditions in the United States and Ukraine.

Another problem is the productivity within agriculture at a global level. Many rural producers around the world are undercapitalised and lack the land or technology to significantly enhance their efficiencies. The food to people ratio of productivity is estimated to need to rise by 70% over the next 40 years if food production is to match supply.

However, there is a lot of wastage. For example, the UN FAO estimates that as much as 1.3 billion tons of food is lost between the field and the table each year due to poor logistics management and storage. Writing in The Global Journal, Paolo Cravero observed:

Agriculture is at a crossroads. Since the global food crisis of 2007 and 2008, foreign investment has soared as a means to lower costs and ensure the long-term viability of worldwide supplies. At the same time, a growing chorus of experts and activists is questioning the sustainability of a status quo approach. The industrial production system favoured by major agribusiness players has failed to address the challenge of chronic hunger, nor account for adverse environmental impacts – is ‘agroecology’ the future of food?"

Maintaining sustainability of the food system

In a study of the future of the global food system published in the Philosophical Transactions of the Royal Society – Biological Sciences in 2010, Charles Godfray and nine colleagues over viewed the current and future state of play for the world’s food system.

A further report by The Institute for the Future published in 2010 and authored by Miriam Avery, Bradley Kreit and Rod Falcon, projected key trends in the global food system over the next 20 years.

According to these analyses there are a number of forces likely to shape the global demand and supply of food over the next 40 years. The first of the factors driving demand is the rising population levels around the world.

By 2050 the world’s population (currently just below 7 billion) will rise to over 9 billion people. China will be expected to see its population peak around 2030, but India’s population will keep growing and the population of Africa is expected to double. For countries across Europe and for Japan the outlook is for population decline.

The rise in population will not only see a demand for more food, but there will be a growing demand for more luxury foods such as meat and dairy, and for foods to be supplied out of season via global supply chains.

The growing population will increasingly live in major cities and there will be a growth in supermarket and fast food retailing operations. In short, people will be wealthier and they will want more processed food, and exotic foods with a change in diets from primarily vegetarian to more meat and protein foods.

The ability for rural producers to meet this rising demand will depend on a range of factors of which one of the most important is the ability of farmers to keep increasing crop yields. Over the past 50 years there has been a dramatic increase in crop yields; however the rate of such increases has slowed each decade.

Our farmers’ capacity to produce more food by 2050 is likely to be dependent on R&D that can result in breakthroughs in technologies and farming practice. This will require the adoption of new animal breeding and husbandry techniques plus new varieties of crops.

Working against this rise in primary production is the impact of climate change and concerns over food safety and ethics. For example, climate change is already impacting on weather patterns generating floods or drought and while scientists continue to debate the nature of this impact, there are already signs of climate change negatively affecting already fragile river systems and associated fish stocks.

In the oceans the supply of fish is also under pressure. There has been a growth in the past 50 years in the world’s fishing fleets and over the past 40 years this fleet has increased sixfold. However, most of the world’s fish stocks are now harvested to full capacity or over exploited and fish harvests are either static or declining.

Emissions from agriculture Greenpeace 2008

In many regions there is a decline in soil productivity and the clearing of new farmland is fraught with environmental concerns due to the impact this has on carbon emissions. For example, it is estimated that on average the clearing of land for farming leads to net CO² emissions that are 6 times greater than those generated by other forms of land use. This is shown in the accompanying diagram.

Overcoming the climate change sceptics

Yet many primary producers are resistant to the challenges of climate change. In a study of Australia’s Farming Future published in 2009 by David Donnelly, Rob Mercer, Jenny Dickson and Eric Wu for the federal Department of Agriculture, Fisheries and Forestry, surveyed 1,000 farmers in relation to their attitudes towards climate change. They also surveyed 1,000 people from urban areas.

While 58% of the urban population believed climate change was real and caused by human activity, only 26% of primary producers held this view. As illustrated in the following diagram these farmer groups were segmented into different types of sceptic. Some were sceptical but had been hit by drought and therefore were prepared to start taking action. Others were sceptical and had not yet felt any environmental impacts so they felt no need to take action.

Primary producer segments in relation to climate change Donelley, Mercer, Dickson and Wu (2009)

The ‘strugglers’ were not only sceptical but had no resources to apply to any remedial action. Even those who accepted climate change science were of the view that government assistance was required to allow them to take action.

These attitudes amongst rural producers are important as they will determine how readily many farmers adopt more sustainable farming practices, reduce new land clearing and introduce programs such as enhanced biodiversity of cropping, interlocking crop cycles, dense polycultures, biochar and carbon management.

Feeding into this mix will be market based pressures over food safety and the ethical treatment of animals. Consumers are increasingly concerned over use of genetic modification in foods and the safety of foods. The complex nature of food supply chains makes it more likely that accidents will occur.

Already there are signs of the overuse of antibiotics in animal husbandry resulting in antibiotic resistant strains of bacteria emerging. High profile cases of food borne illness have an impact on consumer confidence. However, they also result in government regulators and major food retailing groups imposing more stringent food safety codes of practice. These factors impact on rural producers by forcing up the cost of food production and supply.

Supply chain funnel in the agrifood sector

One of the problems facing agricultural producers is the “supply chain funnel” that has emerged in the agrifood sector. As shown in the diagram below there is a “choke point” in the area of buying desks that are increasingly no longer in farmer or government control.

Supply chain funnel in the Agrifood sector Gereffi and Lee (2012)

The diagram comes from a study by Gary Gereffi and Joonkoo Lee from Duke University in a paper published in 2012 in the Journal of Supply Chain Management on the state of global supply chains. The model is from the European Union (EU), but it shows a trend that is found increasingly around the world.

The power of global buyers has also been enhanced by the concentration of ownership into fewer large retailing businesses. These firms and large global buyers now dictate quality and the timing and price of food from producers.

Major retailers and buyers will demand more quality and stricter controls over food safety issues. Some will work with small groups of selected, often large scale producers, to supply produce at pre-determined levels of quality, price and delivery times. Many smaller farmers will not meet the necessary standards.

The role of co-operative enterprise

Smaller producers who wish to compete in these global supply chains must develop niche markets in order to survive. However, in Europe there is evidence that small producers working via co-operative enterprises can compete.

For example, a study published in the American Journal of Agricultural Economics in 2004 by Claude Menard from the University of Paris and Peter Klein from the University of Missouri examined the role of co-operative enterprises.

They examined the cases of 7 meat, dairy, fruit and vegetable co-operatives within the EU. It was found that these co-operatives could compete against three major wholesaler and retailer firms that controlled between 40% and 80% of EU markets.

They did this via large scale and scope from cooperative action, high investment in R&D and the development of their own producer brands that gave them a degree of marketing control within the retail channels.

Co-operatives can enhance the bargaining power of small rural producers in the face of major corporate players who control the “choke points” within the food supply chain. However, a problem for co-operatives is that they are often misunderstood, even by producers, and can be viewed as potential monopolies. As Menard and Klein explain:

On the one hand, regulators are concerned with increasing concentration in the processing and distribution sector and tightly coordinated producer networks appear to counterbalance that concentration. On the other hand, tightly coordinated groups of legally independent firms look like cartels…, competition authorities tend to take an ‘inhospitable’ approach to such nonstandard contractual arrangements.”

Where to from here?

So in conclusion there are at least four major trends that are likely to impact on rural enterprises in the food sector over the next 40 years:

The first of these will be the mounting pressure on primary producers over food safety and also the need to supply more diverse, wholesome and “authentic” food. This will require producers to innovate and find ways to market their products differently to reflect value adding.

The second major impact with be that of climate change. In order to deal with a changing and uncertain climate there will be a need for more biodiversity of cropping and animal husbandry to avoid mono cultures that are less resilient to climatic change. This may see the emergence of regional brands with shorter food supply chains to local markets focusing on healthy, wholesome foods.

The third trend relates to the need for rural communities to collaborate for their own self-interest. There is the need to enhance their bargaining power against the concentration of increasingly global buying and distribution organisations. Such supply chain structures leave the farmer with a “price taker” role regardless of their attempts to enhance farm level productivity.

The demand for locally grown food may also rise according to some analysts. However, there will still be a need for greater collaboration at the regional level in order to offer flexibility in food production and distribution.

It is here where co-operative enterprise business structures can play a potential role. They have demonstrated over time a capacity to empower primary producers and draw together resources to achieve things that might otherwise have not been possible.

A final trend is the need for enhanced innovation in farming and land use practices as well as waste disposal methods. Farmers will need to move to more flexible land use, adaptive cropping methods and carbon capture and management processes. This will be assisted by use of information management tools to aid in farm business modelling and the monitoring of markets.

In summary the pattern that emerges is one of a globally competitive market with a highly concentrated buyer and retailing channels. Producers will need to get larger, find niches or cooperate. Future sustainability and productivity in the face of climate change, water scarcity and food safety concerns will pose significant challenges.

Join the conversation

32 Comments sorted by

  1. Stephen Ralph

    carer at n/a

    Another nail in the coffin for "the good ol days".

    In this age of economic rationalism we seem to be ditching the hardworking farmer for the agricultural farm executive.

    In the race to "big is better", we may find we are left with the sort of society we don't really enjoy living in.
    One day we may wake up to find ourselves in a world where nothing matters but the dollar, and wonder why the quality of life seems somehow sadly diminished.

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    1. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to Stephen Ralph

      Stephen, in "the good ol' days" people died en masse.

      It is one of the ironic outcomes of such insecurity that fear drives population growth, the same primal fight-flight response driving gluttony and licentious sexuality.

      My people have farmed this content since 1840, brought out on the first boat-load from Ireland and the West Country under Governor Bourke's scheme to replace convicts with skilled farmers, under the first ever bonded immigration scheme.

      Even in hindsight, I cannot say any of us ever enjoyed it, that there was ever any "quality of life" to it.

      It's just plain bloody tough going, mate. A LOT of people died, and a lot more simply went out of their mind, all to suit some political ideology that should never have been allowed to start with. I would not wish it on anybody, not ever.

      The sooner we ring the changes finally, the better off we are all going to be.

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    2. Stephen Ralph

      carer at n/a

      In reply to Gil Hardwick

      I don't deny it's a tough life, and in a way that was one of my points.

      Farmers are a tough breed, and I don't know how they have stayed on the land through those bad seasons decade after decade.

      But from anecdotal evidence most farmers love the life and that would seem to be backed by the generations that continue on from their parents.

      And in referring to the good ol days I was more thinking of the 20th century and the huge impact that agriculture had on the Australian economy.

      But I am puzzled by your history, why stay on for decade after decade if there was no enjoyment or love for the land?
      Surely at some point a change in one generation would have been the optimal choice.

      Perhaps I'm looking through rose coloured glasses, but to me it seems sad to another industry become just another corporate player.

      I believe each time this happens we all lose.

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    3. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to Stephen Ralph

      They stayed on because there was no option. For our lot anyway, and here I can speak for others, they stayed on to allow others to go off.

      We did not simply produce generations of miserable dirt-scratching farmers, but teachers, nurses, engineers, academics, tradesmen, all sorts of skills we knew would find them a career once they left for town.

      It was never an industry but perpetual crisis, the cost enormous, quintessentially unsustainable, and to this day I have never have supported any idea…

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  2. Dale Bloom

    Analyst

    There seems something ominous about this. As the population grows, farms have to amalgamate and get bigger to remain profitable, but this reduces the number of farmers.

    Now if this is true for other industries, growing the population decreases employment.

    That doesn’t seem totally correct, so I think farming costs are the biggest factor in farm profitability.

    A big cost is fertiliser, and each crop harvested reduces the plant nutrient in the soil, which has to be replaced with fertilisers.

    A bigger population can look forward to increased food costs, as fertiliser supplies run down and fertilisers get more expensive.

    I don’t think co-operatives are necessarily the answer. Several have recently been sold, and some were co-operatives for over 100 years.

    For example:

    http://www.abc.net.au/rural/news/content/201302/s3683369.htm

    http://www.smh.com.au/business/proserpine-sugar-mill-sold-to-singapore-firm-20111116-1nilh.html

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    1. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to Dale Bloom

      No Dale, it does not "reduce the number of farmers" only the number of farming business entities, by which is meant reducing the number of chronically struggling small farm businesses by amalgamating them into larger and by corollary fewer business corporations.

      Amalgamating, incorporating, cooperating, taking greater control over the whole process, positioning in terms of buyers, merely stabilises farm production and marketing of rural commodities, and in doing so allows those doing the work of farming more regular and assured income.

      The work of farming doesn't change.

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    2. Dale Bloom

      Analyst

      In reply to Gil Hardwick

      Farming has changed quite dramatically.

      Large amounts of mechanisation, and large amounts of work that is contracted out.

      In fact, I personally knew a farmer who was ill for many months, and ran his farm entirely from his bed, by calling up contractors on the phone.

      There are 300 farmers leaving agriculture each month in Australia, so the agricultural industry may be reducing its workforce as the population grows.

      It goes against what many ponzi demographers say, which is to have a large population to increase employment.

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  3. John Newlands

    tree changer

    I doubt farm productivity increases will be able to outpace rising prices for diesel and fertiliser as well as climate change. While the WA wheatbelt appears to be on a drying trend climate change can also mean unhelpful frosts, storms and rain at harvest time. I speculate that by mid century we will have less broadacre farming and more food production on the urban perimeter. We may eat more root crops (eg spuds) and less grain or grain fed meat.

    Perhaps if food production moves closer to suburbia the grocery duopoly may lose influence. If I recall it was said at the ABARES outlook conference that food prices would only rise 10% in real terms by 2050. What if that is spectacularly wrong? As in food being unaffordable by 2050. Now in 2013 look at food riots in Egypt, Greece and Spain. Our politicians aren't worried so as their dutiful followers perhaps we shouldn't stress.

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    1. Stephen Ralph

      carer at n/a

      In reply to John Newlands

      Food, population, environment and so on.

      It's the domino effect of potential global disasters.

      2050 may be 36 years away......but already the future is looking bleak.

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    2. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to John Newlands

      The WA Wheatbelt is not drier, it is merely less wet of late with the trend likely to continue.

      All that is going to happen is population shifting about; those with the skills to work wetter farming country moving into wetter areas, while those with the skills to work drier country likewise.

      Nothing changes, life is simply dynamic. It has been so all the way through human history, and beyond, since the planet was formed.

      The real miracle is that this planet, this Astonished Earth, even exists. The odds against it are incalculable.

      That's the frame of reference we do need to inculcate in our generations.

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    3. Tyson Adams

      Scientist and author

      In reply to Gil Hardwick

      Gil, did you see the presentation I put on my LinkedIn account? It is getting drier in the wheatbelt. You're right that it is mainly the lack of above average years, but we are also seeing more drought years.

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  4. Gil Hardwick

    anthropologist, historian, novelist, editor and publisher at eBooks West

    Yes, as you will recall, Tim, we discussed this at the recent UWA Food 2050 forum.

    In my own work I have shown repeatedly that these phenomena are not new but have been with us since the 1870s at least, emerging in the wake of the US Homestead Act introduced by Lincoln during the early phase of their Civil War, and passed only by dint of the fact that the opposing southern states had walked out leaving him with a majority in the house.

    Why is it so important in this context to understand that…

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  5. Gerard Dean

    Managing Director

    Well boys and girls, it is time for one of my, "I was bought up on a Wimmera wheat farm stories"

    Tim is right, as he so often is, that farmers have to get bigger or find niche products to grow or co-operate to survive in the OECD nation with the highest per capita income and a high dollar.

    When I was a kid growing up on a Wimmera wheat farm, the process was already underway, in fact, I think it has been underway since the 1880's.

    The Wimmera was set to wheat farming in the late 19th century…

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    1. Stephen Ralph

      carer at n/a

      In reply to Gerard Dean

      With all the talk of Australia becoming the food bowl of Asia, all that wheat makes a lot of food products.

      Why does it have to be a BIG conglomerate that makes the money. Why not co-ops - why aren't farmers getting their act together and getting big.

      Are we giving in and up too easily?

      There are many smart people in agriculture, but it seems that many producers are giving in to global corporations or the supermarket duopoly. These companies don't have anything if they don't have the products.

      Whats to stop the farmers from creating their own supermarket chain - most Australians would support it I'm sure.

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    2. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to Stephen Ralph

      I have no argument over cooperation or incorporation. Whatever.

      I'm an old Riverina boy whose family helped pioneer rice growing and ultimately supported formation of the pre-eminently great Rice Growers Cooperative Mills Ltd.

      While I was still at school, as the small local cheese factories began to fold, my parents also bought for me shares in the Murray-Goulburn Cooperative.

      I have never taken issue with the entity itself, including over the years many 'non-profits', only with the way…

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  6. Garry Baker

    researcher

    A very good article, however it looks to be about ten minutes behind the curve, insofar as, discussion of the WA wheat issue may be dead in the water before long. Indeed, with mining bent Premier, it's probably a foregone. That is, there will be few WA resident owned wheat farms left. As usual, money bagged Chinese interests having been snapping up the WA wheat belt at an alarming rate - say a million acres to date, yet there's not a peep out of the Premier. Nor has he even considered crop insurance…

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    1. Gil Hardwick

      anthropologist, historian, novelist, editor and publisher at eBooks West

      In reply to Garry Baker

      The harsh reality, Garry, the hard fact, is that for us to maintain our position into the next 40 years we face a $500+ billion shortfall in investment capital in agriculture alone.

      How do you think we are going to raise that by ourselves, and still 'own the farm'? You live in a pipe dream.

      In WA as in any other state, who owns what? Who is 'who', and for how long have they 'owned' the place themselves?

      No, in early December I lunched with Bob Hawke and he said the same thing I am saying to you now, Australia has only ever progressed by inviting in capital and expertise, in all areas of our national life. Even Gough agrees.

      And he is right. As Deng Xiaoping opened China's doors, rightly, so we keep ours open.

      In doing so, like China and anywhere else we maintain our jurisdiction. While we recognise corporate citizenship as much as personal, so our citizens obey our rules.

      Not hard . . .

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    2. Garry Baker

      researcher

      In reply to Gil Hardwick

      Bob Hawke - Good lord, he's part of the problem. Being hired by Chinese interests to secure the Ord River agricultural land, has made a tidy sum for him. Indeed, put on the payroll as their lobby man at head office in Canberra because he knew all the right buttons to press. Naturally he would say we need foreign funds flowing in our door.

      He's nothing more than a commission agent raking in the cash for his own pocket - And notably quite a few other ex-politicians have also been secured by…

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  7. Tyson Adams

    Scientist and author

    I think that one topic that is not regularly discussed in relation to agriculture is the reduced R&D efforts/spending and the very real impacts of climate change. Current ABS stats show that average Australian cereal yields have declined since 2000. Thus climate change is essentially outstripping the improvements in agriculture, usually quoted at 2-3% pa, with little on the horizon to mitigate this.

    The eastern wheatbelt is in a precarious position as it has suffered from the decreased rainfall…

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    1. Liam J

      logged in via email @gmail.com

      In reply to Tyson Adams

      Thanks, yield decline isn't in the 'food bowl of asia' press releases.

      What will happen to those eastern wheatbelt farms - grazed, or just increasingly intermitent cropping? Not rehabilitated of course, but it'll grow back, just like mesopotamia did, oops.

      As to the OP, nicely written, but given current currency crucifixion of exporters and crisis for beef, dairy and wheat farmers in various states, we need to be thinking outside the BAU corporatised box. Farmers with consumer support could get food safety equivalence requirement for imports and full labelling.

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    2. Tyson Adams

      Scientist and author

      In reply to Liam J

      The food bowl of asia has been commented upon as being more about big business than farming. The lack of accounting for water use efficiency limitations is just one concern. https://theconversation.com/the-draft-national-food-plan-putting-corporate-hunger-first-8342

      The yield decline is a funny issue, there were several papers presented on the topic at last year's Australian Society of Agronomy conference, yet it doesn't seem to be acknowledged as widely as you would expect. I think there is also…

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  8. Bart Brighenti

    Farmer

    Just a few points
    1, Corporate Agriculture almost always ends in failure in Australia. Up to a certain size there is efficiency gains until the management structure and number of employees make the business as in-efficient as the smallest farms. the profit or LOSS is proportionate to your production, in the current Australian agricultural environment losses are occurring or inevitable.
    2, food security/productivity/efficiency are all underpinned by farm profitability. If R&D only results in the…

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  9. charles nason

    farmer

    A subject which needs a much bigger profile for it is important for all Australians - thank you all
    However one very important point is overlooked - we are producing below our long term cost of production
    Our declining production is partly because our RD&E is being run down but we are also running down our "natural capital" - our soils and also our farmers - our social capital. We are probably no better than primative societies who cultivated a patch of ground and when it was exhausted , moved…

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  10. trevor prowse

    retired farmer

    Tim Mazzarol---Thanks for a very thoughtful article to a very difficult subject , but topical now that the federal government has shown some interest. In part , the problems facing agriculture have been around for a long time . Your graph on the last decade of prices really should have been taken over a longer period to show the loss of terms of trade. Food prices relative to US GDP from IMF, RBA, WORLD BANK ---show prices hit a low of 40% in 2000
    of prices in 1900. The graph you show has increased…

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  11. Peter Ormonde
    Peter Ormonde is a Friend of The Conversation.

    Farmer

    Excellent and thoughtful piece Tim.

    There are a couple more pressures driving the problems - or more accurately impeding solutions.

    First and foremost is the lending practices of banks which seem to rely increasingly as asset values to back loans rather than treating farming as a business. Rather they treat farms like a homeloan and require absolute certainty about rising land values to secure their credit. The nature of agriculture - its market and production fluctuations and longer term…

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    1. Stephen Ralph

      carer at n/a

      In reply to Peter Ormonde

      Agree, Peter...

      But being a city/town dweller and not knowing the ins and outs of the rural/farming communities, would co-ops be viable and is there the impetus to resurrect them?

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    2. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Stephen Ralph

      Depends who you ask I suspect Stephen.

      The city banks will say no - even if what they actually mean is that rural industry is not as lucrative as share shuffling.

      I'd say it depends what they are trying to do and where.

      I'd be suggesting that there are several different types of co-operative ventures - from more or less informal producer co-operatives (sharing expertise, equipment and bulk purchasing of inputs for example) through to more structured marketing co-ops (in which regional…

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  12. Tim Mazzarol

    Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia

    Hi everyone who has read and commented on this article, and thank you for the feedback.

    The ANZ has just released a new report - which was presented at the Food 2050 symposium - entitled:

    "Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand"

    In the report they make the following observations:

    1. Strong agricultural demand combined with growing supply constraints are driving an enormous opportunity for agricultural trade.

    2. Australia and New Zealand…

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  13. Garry Baker

    researcher

    Professor, thank you for the heads up on the ANZ report. However, be aware ANZ have an ever growing presence in China - and food is not their business, whereas breeding cash for their clients is.

    http://www.anz.com.au/china/en/about-us/our-company/china/

    Thus they may have it in mind to turn a dollar by selling even more of Australia - Indeed, reflective of Canberra's business model, where asset sales underpin their rake-in-the-cash mantra. It is this "Sell Australia" policy that ticks…

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    1. Tim Mazzarol

      Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia

      In reply to Garry Baker

      Hi Garry

      At the presentation on the ANZ bank report I asked whether the investors who might seek to inject this much needed capital into Australia's farms would be looking to do so with the traditional family farm. In short the response was "unlikely".

      The more likely model could be corporate ownership of farms with professional managers running them. This is not new to Australia and I can recall this being the case back in the 1980s when I taught High School in the wheat belt in WA.

      However…

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    2. Garry Baker

      researcher

      In reply to Tim Mazzarol

      Hi Tim .. you seem to have a pretty good handle on the big picture - including 'resource nationalism' sweeping the world at the moment. I'm of the belief Australia may turn this way too, given a wider public revelation on the extent of what we don't own these days.

      There's a few things to be mindful of here, with the most important being that "Sovereign States (acting in the guise of corporations), have been doing a lot of the buying in Australia, and the least thing on their agenda is profits…

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  14. John Kelmar

    Small Business Consultant

    Tim's article and many of the comments indicate that the future may appear bleak unless some miracle occurs to remedy the situation.

    However, in the meantime we have a rapidly growing population (mostly from immigration) which Australia can't afford, and farms being purchased by overseas corporations and Governments (China, Indonesia etc) to feed their own people.

    We need to stop the massive population explosion in Australia by curtailing our open migration policy, and stop exporting the food that we grow, until the local market demand is met. Farmers are being squeezed on the prices they receive for their produce by the major players (Coles and Woolworths), but if they focused on smaller crops and supplied the local markets themselves then profits would increase.

    A few Small Business principles would work wonders for this struggling market.

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