can corporate farms provide new pathways to improve profitability and productivity of family farms?...
DESCRIPTION
Presentation from the WCCA 2011 conference in Brisbane, Australia.TRANSCRIPT
Can corporate farms provide new pathways to improve the profitability and productivity of family farms?
Mr. Brendan C. Lynch
Doctoral Student – Agribusiness
University of Adelaide & CSIRO
Monday 26th September, 2011
Co-authors
Dr. Rick Llewellyn, CSIRO
Dr. Wendy Umberger, University of Adelaide
Productivity Growth Increases Value of Ag Production
Without productivity improvement the value of ag production would have significantly declined
(Sheng et al., 2010)
Flattening Productivity
• Flattening TFP (Dark Blue)
• Flattening TC (Orange)
• Declining TE (Sky Blue)
• Increasing productivity gap between leading farms and average farms
(Nossal et al. 2010)
Factors driving productivity trends
•management + capital constraints are often limiting technical efficiency (ABARE, 2010; Hughes et al., 2010)
•Factors driving farm productivity increase:• land use intensity, • land area • corporate ownership
• Corporate farms 12–28% more productive than the average non-corporate farm (ABARE, 2006)
Corporate farms and innovation
• leading corporate farm models adopt new innovations by having greater access to: • Human Capital – Financial Capital – Natural Capital
Do such models offer average-sized family managed farms new pathways to:
• overcome constraints• enhance innovation adoption• boost productivity • and retain inherent strengths of family farms
- Management Team Experience
- Farm Size- Attitude to Risk
- Access to Credit
- Management Team Education
- Access to Information
- Farm Tenure Status
Human Capital
- Investment Portfolio Balance-
- Enterprise Profit Expectations
- Land Quality
- Farm Profitability- Financial Risk- Market Risk- Sources of Credit
Financial Capital Natural Capital
- Cropping Intensity
- Enterprise Mix- Climate Risk- Production Risk
- Use of Crop Consultant
- Use of Farm Business Consultant
- Number of employees
- Use of Contractors
Adoption Decisions
Relative Investment Return Vs. Alternative Investment Options
Farm Attributes
- Farmer Age
- Farmer Education
- Farmer Stage of Life
- Farmer Motivation
Core Attributes
Unique Family Farm Attributes
- % Off-Farm Income
Unique Corporate Farm Attributes
Farm Attributes Influencing Adoption
- Agro-ecological zone diversity
Technical ChangeTechnical Efficiency
6 Unique Corporate Farm Models Identified
Corporate Farm
Models
Land Transformation
Crop Co-production
Contract Farming
Management Services
Multiple Hub and Spoke
Localised Hub
•Multiple Hub and Spoke • Geographical diversified over
1000km• 5 scale efficient management
hubs• Efficiency achieved at multiple
scales • 31,000 ha cropping land• 6,000 ha grazing land + feedlot• Specialised management and
technical staff
Hybrid Farm Models....the best of both worlds?
How do we bring some of the beneficial corporate farm attributes and characteristics
into family farms?
Are there hybrid models that combine the advantages of both family/corporate farms to
increase innovation adoption and productivity?
Collaborative Farming Australia
• Individual family farms constrained by management and capital
•Formed new joint venture business arrangement: family farm - localised hub
• Independent chairmen and board
•New farm structure has provided:• Scale and improved efficiencies• Ability to specialise (labour specialisation) + increased flexibility• Improved farming practices (PA + no-til)• Skill based roles• Contracting of crop consultant• Increased bargaining power with suppliers • Marketing advantages
(Riverland Weekly, 2009)
Summary•Productivity growth is slowing
•Management + capital constraints impact innovation adoption
•Corporate business models are providing potential new pathways for typical family farms
•Examples of hybrid models emerging
•Key question for future research:• What attributes of a hybrid model will be attractive to average sized family managed farms?
Thank you
CSIRO Sustainable Agriculture FlagshipBrendan C. LynchPhD Research Fellow
Phone: 08 8303 8479Email: [email protected]: www.csiro.au/org/SustainableAgricultureFlagship.html