Growers weather drought, face consolidation

MELBOURNE - The worst of Australia's long drought may be over, but the country's rural sector is still gripped by major changes set to push many farmers from the land, a senior banker says.

Michael Carroll, general manager for agribusiness at National Australia Bank, told the Agriculture Australia 2005 conference yesterday that during the past 15 years Australia had lost 30,000 farms, bringing numbers back to about 125,000.

At this rate, only 100,000 farms would be left in Australia by 2020.

One-and-a-half farms had disappeared every day and three farmers had left the land every two days over the past 15 years. More consolidation was to come.

Carroll said prodded by inflation, farms with a turnover of less than A$100,000 ($111,520) a year were disappearing.

Australian farmers remaining in production were becoming stronger as well as bigger, with the number of farms with turnover of more than A$100,000 a year increasing.

During the past decade, the net value of agricultural production had increased by 7.9 per cent a year, despite the decline in the number of farms.

Carroll said efficiency in the farming industry was being driven by the forces which had pushed large numbers of farmers from the land.

Declining terms of trade and large minimum investment requirements for new farms were among the factors that would continue to force consolidation and reduce the number of farmers working the land.

Those same forces would cause farmers to seek more off-farm income, with about 45 per cent of farms already generating 30 per cent of their income off the farm.

Carroll said agriculture had produced "fantastic" productivity gains of about 3.5 per cent a year during the past 35 years, with particularly strong growth in cropping.

Average farm sizes had increased by more than 50 per cent in the past 40 years. Farm efficiency was also being promoted by the introduction of satellite navigation technology in tractors, sophisticated computer systems in farm management, rainfall derivatives to offset losses because of dry weather, improved soil management and genetically modified crops.

- REUTERS