ANZ agribusiness head Mark Bennett told the second annual AgriVictoria summit half the productivity since 1978 was attributed to farm consolidation.

“What are we doing to ensure we have productivity growth in the sector, in order to create returns and to match market needs?” Mr Bennett said, after the summit. 

He said increased productivity was not just about cost, but “being critically good at right through the supply chain.” 

Mr Bennett said investment in technology and better land and water use would result in productivity gains. 

“Whilst we have emerging parts of the world starting to win on cost, it’s not just about cost, it’s about output and price, which sees us in a position of advantage in some key markets.”

Mr Bennett presented figures, showing Australia stood to capture between $.7 and $1.7 trillion in agricultural exports, between now and 2050. But he said there was a capital gap of $600b, in production growth and a further $400b to support turnover for Australia’s 134,000 farm businesses.

 “Not enough capital can be raised through debt alone,” Mr Bennett said. 

The $400b locked into turnover could be solved by encouraging families to stay on farm. Children staying, or returning, was one of the biggest positive factors in meeting the capital gap.

“It’s more logical they get more say in controlling some of those structural and strategic parts of running a farm business.” 

Other ways of bridging the capital gap were joint ventures, share farming and lease arrangements, equity partnerships and collective bargaining. Prior to the global financial crisis (GFC), there were a significant number of investors, seeking to put capital into agriculture. Since then, the industry had found it must be more organised around how it could promote itself “as a ready taker of capital.” Investment had been focussed on big scale farms, Mr Bennett said. 

“But if you imagine an investor coming to 134,000 farms, of all kinds of ways and industries, and sub sectors and seasons and everything else to deal with, where do you actually start with that ? That’s the challenge that is confronting a lot of the investment houses.”

Mr Bennett said attracting investment depended on knowing how the business operated, including implications from capital gains tax and succession planning. 

“A lot of farm businesses just aren’t well organised around that – it’s often premature to talk about new structures and ways of taking in investment. (But) if you are going down the path of attracting some of this capital and investment, it’s a really critical starting point.”