Future Broadacre Farming Systems – a personal view

Ross Kingwell

WA Dept of Agriculture & University of WA




Broadacre farm businesses in Australia face several challenges.  Some of the challenges are direct and immediate such as unexpected pest or disease outbreaks, the vagaries of extreme weather or climatic events, or sudden shifts in input or output prices.  Some challenges are long in the making such as the cost-price squeeze, salinisation, soil acidification, rural de-population, herbicide resistant weeds and climate change.

Other challenges arise from the different needs and aspirations of farm owners, rural communities, consumers and governments.  These groups place pressures on farming systems and farm businesses.  Farm owners want financially viable farming systems.  Rural communities want farm systems that maintain rural populations and rural lifestyles.  Consumers want farm businesses to supply a diversity of high quality food ingredients that are safe, healthy and reasonably priced.  Simultaneously consumers and voters want farming systems that protect natural environments. Governments want farming systems that deliver export earnings while maintaining the visual amenity of rural landscapes and which don't require large transfer or subsidy payments.

The next section expands on some of these key trends and challenges for farm businesses and farming systems.  Then some possible types of future farming systems and farm business structures are described. 

The purpose of this paper is to present a personal view of future possibilities in order to stimulate and inform discussion about the unfolding nature of profitable broadacre farming in Australia.

Key Trends and Challenges

Industry structural adjustment

Most broadacre farm businesses are owned and operated by families.  However, farming is a business so market and technical change and the vicissitudes of weather and climate affect their operations.  Broadacre farm families make many business decisions from which they intend to benefit financially. 

Since the 1950s many of these decisions have involved adoption of labour-saving technologies, increases in farm size, a greater use of chemicals and machinery, more crop species and varietal changeover, more animal breeds and, since the 1980s, more intensive cropping.  These changes, combined with the cessation of release of new land for broadacre farming, have caused widespread structural changes in agriculture.  Farms are now larger, more complex and more dependent on purchased technologies and services. 

The search for profit, often in the face of subsidized competition on international markets, has caused some farmers to make decisions that have deleteriously affected rural communities and the natural environment.  Natural vegetation has been cleared to provide economies of size, eventually in many regions exacerbating salinity problems.  Labour-saving machinery has been purchased at cost to some farm labourers, their families and other rural businesses in turn dependent on those families. 

It is difficult to build vibrant rural communities when the aggregate demand for rural labour declines and there are few off-setting local employment opportunities.  However, it is equally difficult to ensure farm businesses remain profitable if they do not have access to new technologies, even if they are labour-saving technologies.

Rural depopulation

In many regions dominated by broadacre farming, fewer farm families and reduced employment in agriculture necessarily have caused an exodus of some other families directly or indirectly reliant on population size. Remaining farmers now live in districts comprising fewer and larger farms, with fewer local employment opportunities outside of agriculture.  A sense of social alienation, particularly among under-employed youth, can develop. In spite of cross subsidisation to rural areas, as a result of government policy to provide rural services and infrastructure, many inland rural regions continue to face a lack of employment opportunities.  The decline in agricultural employment has added to de-population pressures. 

In many inland rural regions with small local towns total employment has declined.  The exodus of labour has been fuelled by the less attractive wages and salaries on offer from local businesses compared to some in metropolitan regions.  A further disincentive to work locally is that many inland agricultural regions have much less industrial diversity compared to metropolitan regions, so there are limited opportunities for employment in other sectors and fewer career pathways.  Other factors contributing to reduced employment and population in these rural areas are the trends toward providing children with more years of education outside the local area and the decline in family size. 

Depopulation in inland rural regions or their lesser growth in population compared to coastal and metropolitan regions causes urban voters to grow in political importance.  Hence, urban voters' views on land and water management, sustainable farm production methods, biotechnologies, environment and animal welfare will be accommodated increasingly in the policies and actions of future governments.  Also, as the age structure of Australia's population alters in coming decades and the political power of the elderly increases, then governments will shift their funding and policy focus more towards that group.  Social services such as rural health, community, tourism and information services may receive increased funding, perhaps at the expense of public funds for agricultural industry support and development.  This has implications for R&D into farming systems in the future.

The reality for many farming communities is that countering the social, economic and government policy pressures that encourage a lesser population growth in inland rural regions is extremely difficult. 

Familial aspirations

There is currently a cocktail of influences that militate against a welcomed familial succession in farming.  Many small rural towns cannot offer the social vibrancy of larger centres and urban areas.  As family size decreases and children spend more years off-farm in formal education, the probability of children wanting to return to farming diminishes.  Further, as farm size increases and farming systems and farm businesses become more complex, more sophisticated management is required.  More production and marketing alternatives, more input options, more combinations of production systems, an increasing array of opportunities for new technologies and more off-farm investment opportunities, all increase the demands and stress on management.  Children in farm families may see this workload or stress first-hand and choose other career options. 

Historically, most farm families were willing to sacrifice their standard of living and some personal enjoyment for the good of the business. In the future, this may be less common.  The combination of high equity of many farm businesses, smaller family size, family break-up pressures and more investment choices outside the business, may mean a finer balance will have to be maintained regarding the financial and social viability of the farm business.  If the farm business does not provide a standard of living within desired family obligations and aspirations then the long-term legacy of the family business may be in doubt. Making the social and personal life on the farm attractive to the next generation of farmers is a major challenge.

Competitor protection

The Common Agricultural Policy in Europe and various Farm Bills in the United States have channeled billions of dollars of direct and indirect support to the farm sectors in those regions. For example, crop and dairy subsidies in the United States are estimated to range from $US38 billion to $US57 billion from 2002 to 2007, up around 70 percent from levels in 2001.  By contrast Australian broadacre farmers receive a low rate of government or taxpayer assistance, so their profitability largely depends on their access to superior technologies, any supply chain and marketing advantages and their own managerial skill.

Access to technology

Ensuring Australian farmers and researchers have access to new farming system technologies at reasonable prices, or on equitable terms, may become an important issue.  Often new technologies are expensive to develop and require significant investments in human capital and R&D infrastructure.  Whether governments and farmers can afford these investments, particularly biotechnology developments, is an important issue that will affect the viability of agriculture.  An accompanying issue is whether community and voter opinion will support the utilisation of a range of gene-based technologies in food production systems.

The protein gap

The average consumer in the US consumes about 85 grams per day of protein from all major sources such as meat, milk, fish, eggs and vegetables. Average per capita consumption in Asia, where incomes are rising rapidly, is less than 20 grams per day.   Protein demand in Asia is forecast to rise steadily and protein suppliers (e.g. feed grains, meat exports) may have an unfolding huge market opportunity.  Australian farming systems are well-placed geographically with some cost advantages to supply feed grain and/or animal protein to service this future demand.

A weakening relationship between farm and food prices

The farm-gate share of each dollar spent by consumers on food is continuing to decline in many developed countries.  An important growth area in retailing is the sale of prepared and partly prepared food lines.  Time-pressed consumers in many markets are paying for food convenience. This trend is giving greater commercial power to food processing and retail chains rather than to commodity marketers.  In turn, the bargaining position of farmers is potentially lessened.

A decreasing terms of trade

Real prices for agricultural products display a declining trend greater than real prices of agricultural inputs.  This is known as the cost price squeeze or the declining terms of trade. The Australian Bureau of Agricultural and Resource Economics has predicted the downward trend in the terms of trade for primary producers to continue, falling a further 20 per cent over the next five years.  A corollary of the declining terms of trade is that farm businesses must generate efficiency improvements in order to maintain profit levels. These improvements will come from scale, allocative and technical efficiency gains.

Deregulation of markets

As part of their quest for cost-savings and their commitment to ‘free market’ solutions, various Australian governments have moved away from market interventions by removing subsidies, reducing tariffs and removing price guarantees.  Direct government involvement in commodity marketing has lessened.  The guaranteed minimum price scheme for wheat, the reserve price scheme for wool and market milk pricing arrangements no longer apply, exposing primary producers to more direct market signals and price risk. 

Fuelling the withdrawal of direct government involvement in agricultural marketing was the Council of Australian Governments’ endorsement in 1995 of the Competition Principles Agreement.  All Australian governments are committed to review all legislation that restricts competition.  This places additional pressures on some agricultural industries and remaining statutory marketers to improve their productivity, efficiency and marketing ability.  It unleashes commercial pressures and incentives and, in broadacre farming, encourages the exodus of some farm families and a shift toward larger production units employing greater mechanisation.

A decline in the relative importance of agriculture in the nation’s economy

As an economy develops, technological change and increased productivity contribute to rising income levels.  Through time, there is typically a decline in the relative importance of agriculture and an increase, first in the relative importance of manufacturing industries, and, later in service industries.  This does not necessarily mean that the actual agricultural output declines, rather that agriculture grows less rapidly than other sectors of the economy. This is a phenomenon occurring in all developed countries that usually leads to a diminished relative importance of rural production and often a decline in the political power of the farm vote as labour is attracted to larger regional and metropolitan centres.  Attracting high calibre people to work in agriculture and its associated services is likely to remain difficult whilst agriculture is perceived as a sector with limited employment and growth opportunities.

Land resource quality

Salinity and loss of biodiversity in broadacre regions are topical issues in Australia.  The first national State of the Environment report in 1996 identified extensive deterioration of natural resources through dryland salinisation, with a significant further proportion of the rural landscape being forecast at risk from the subsequent spread of salinisation.  Farm land, rural infrastructure, waterways and bushland are all recognised as being affected by salt. 

Among OECD countries, Australia has a higher percentage of threatened mammals than USA, Japan, Finland, Ireland and Norway and a high number of extinct and threatened plants. Land use, mainly for agriculture, has caused nearly 90 per cent of temperate woodlands and mallee to be cleared and replaced mainly with annual crops and pastures.

Currently 60 per cent of birds and 80 per cent of mammals, listed as threatened, have suffered habitat loss. Also introduced pests and weeds are affecting not only agricultural production but also bushland, reducing its native flora and fauna.  Yet over 70 per cent of international visitors to Australia identify the main reasons for their visit as the unique flora and fauna and the open landscape.

Greenhouse gas emissions and climate change

Agriculture is the second biggest contributor to greenhouse gas emissions through its emissions of methane and nitrous oxide.  The National Greenhouse Gas Inventory estimates that agriculture contributes approximately 27 per cent of total national greenhouse emissions.

Concentrations of methane and carbon di-oxide have increased rapidly in the last 150 years.  Much of this increase is attributed to human activity, particularly due to the clearing and burning of vegetation and the use of fossil fuels.

A widely held view is that greenhouse gas emissions are a primary cause of unfolding climate change which is forecast to affect Australian agriculture in various ways such as:

However, as many of the effects of global warming on agriculture are gradual, it is expected that incremental technological improvement and plant breeding improvements will lessen the severity of many of the main impacts for agriculture.  Appropriate farming systems are likely to be able to emerge gradually in response to climate change.

Food safety

Highly publicised food safety breakdowns and the emergence of genetically modified food ingredients have fuelled consumer concerns over food health in recent years.  Governments have responded to these consumer concerns by increasing the regulation of the production, processing and importation of food.  Retailers also have responded by implementing production contracts, identity preservation systems and quality assurance systems that effectively guarantee food quality across the food supply chain.

Increasingly, individual farmers and whole agricultural industries are introducing quality assurance systems so that the quality and safety of their product more closely matches consumer requirements.  As consumers’ and retailers’ interest in food quality and safety is heightened, then increasingly quality assurance and supply chain management systems will be employed to guarantee the nutritional integrity of food products.

Pests and diseases

As a biological process, food production is always exposed to pest and disease threats.  Current agricultural systems use a variety of management approaches in lessening the impact of diseases and pests.  Many approaches rely, to varying degrees, on the use of chemicals.  However, a number of plant and animal pests and diseases are expressing increased tolerance to chemical control methods, threatening the productivity of agricultural systems. Even genetically modified plants that offer disease or herbicide resistance will have a limited life due to the likely emergence of weeds resistant to herbicides and pests resistant to pesticides.

There is also the likelihood that exotic weeds, pests and diseases could establish themselves in Australia, threatening many existing agricultural systems.  The ease of overseas and interstate travel and the volume of goods transported around the world mean the risk of disease and pest incursions is likely to increase.  Already some agricultural industries have been exposed to significant disease and pest threats.

Exotic vermin (e.g. foxes, rabbits and wild cats) and weeds (e.g. bridal creeper, blackberry) once established are known to greatly threaten native wildlife and natural habitats, so surveillance and control of pests and diseases will have ramifications not only for farm businesses but probably also for natural environments.

In summary, the greatest impacts on Australia's farm environment in coming years are likely to come from causes mostly outside local immediate control (e.g. climate change) and from past patterns of land management (clearing of land for agriculture based on annual species) that will generate a range of negative impacts.  Species depletion, habitat loss, salinisation and threats to water catchments and infrastructure are all examples of challenges to sustainable agriculture and the natural environment.

Farming System Responses

In response to various economic, social and environmental challenges and opportunities farmers have adjusted their farm management and farming systems.  They have altered their input and enterprise mix, adjusted household expenditures, invested off-farm, adopted new technologies and increased their production efficiency and scale of operations.  Many farmers, particularly those managing large operations, increasingly rely on professional consultants to assist with enterprise, financial and marketing management.  Most farm businesses employ new technology and research and development findings and innovation to increase productivity and profit. 

In coming years, profitable broadacre agricultural businesses and farming systems are likely to be characterised by:

Examples of Farming Systems

Besides the traditional farming systems, as we know them, there are likely to emerge other types of farming systems.  How rapidly they emerge and grow in relative importance will depend on many factors.  At this stage it is worthwhile perhaps just to note them as possibilities and to be aware of their ramifications.

Zonal farming

Farming system analyses usually show significant profit advantages from tailoring rotations to different land management units.  Emerging spatial technologies will permit various types of various types of zonal farming. 

For example, more detailed soil mapping, interfaced with yield, weed and pest monitoring, will allow more variable spatial applications of production inputs.  Hence, although a paddock may be sown to a single crop the input regime across the paddock may differ to maximise net returns.  Also rotation selection may be better attuned to the nature of a land management unit.

A possible variant of zonal farming may be where a farm is divided into cropping and livestock zones.  The cropping zones may have few fences and be set up to facilitate controlled traffic, increasingly robotic, crop production.  Sheep may be excluded, almost permanently, from the cropping zones to minimise soil compaction and spread of weed problems.  The pasture zones of the farm may include fodder shrubs, saltland pastures, shelter belts and perennial and annual pasture mixes; along with feed-lotting facilities.

The advantage of this system is that it may facilitate division of labour within a family-farm or corporate farm structure.  For example, crop specialisation and sheep specialisation is facilitated. It simplifies the management and measurement of the costs and returns of the business.  It generates clear spatial ownership and authority of management within a partnership business structure.  The relative profitability of sheep and crop enterprises is clearly demonstrated.  It can facilitate the leasing out of parts of the farm.

Enterprise Specialisation

Currently, most farmers manage a mix of enterprises.  Although, farming systems in the future may remain characterised as a mix of enterprises, it may be that the land owner of the future will opt to specialise in fewer enterprises.  Such a manager would establish what land management units on their farm most suit particular enterprises they wish to specialise in.  The remaining land management units of the farm then could be leased out.  The farmer might also lease from neighbouring farms particular land management units most suited to their enterprise speciality.  So a farmer may specialise in saline land management, or canola, chick pea and wheat production, or field pea, durum wheat and manufacturing barley production.

Farming as a time-defined business venture

The philosophy of farm management on these farms may be described as the "Lotto" approach: "15 years and we're out of here!".  The farm families involved may make a conscious decision to commit 15 or so years of their working life to farming; building up their wealth as a business venture, only then to cash in or transfer to some other business venture.  These farms would require farming systems that offer high return.  Often the farm families may be prepared to invest in intensive management and new technologies provided that high returns are anticipated.

For some other farm businesses, family demands or changes in aspirations may dictate that the farm business is sold and that only in retrospect could the farming business be called a "time-defined business venture".

Lifestyle farming

There are a variety of situations in which choice of the farming system is driven principally by lifestyle concerns.  Some examples are:

Capital Innovation

Some farming systems may emerge to be underpinned by innovative sharing of capital costs.  For example, through controlled traffic systems, variable rate technology and data loggers; it may be possible for adjacent groups of small farms to benefit from economies of machinery size.  The high work rates of these machines, combined with their on-board technology may enable a group of farms to share the cost of the machinery on the basis of a user-pays agreement.  Housing and maintenance costs could be shared on the basis of an auditable proportion of use.

Some farming systems of the future may be based on equity-financing rather than the debt-financing of traditional agriculture.  For example, 'green' venture investments may enable the farmer to provide the land resource while external equity partners may fund inputs and management to generate commercial and environmental outcomes.  The financing vehicle of unit trusts is a common way of accommodating different equity partners and payment vehicles.

Contract Farming

The emergence of more domestic marketers and the increased importance of the domestic market may give rise to more contract farming. Contracts offered by some marketers may include price premia underpinned by requirements for quality assured production systems, mandatory licensing of farm managers and adherence to delivery schedules.

Farmers who opt to be part of these supply chains will be required to adopt prescribed farming systems and management methods.  Farmers who avoid these contracts may face lower priced often more volatile marketing arrangements.


Developing longer-term forecasts for agricultural industries is known to be difficult, so caution is merited when making judgements about what will be the future of broadacre farming systems and farm business management in Australia.  Hence, the forward-looking comments in this paper are best viewed as a set of possibilities. 

The trends, challenges and opportunities facing broadacre agriculture, as briefly outlined in this paper, are increasingly well-known.  However, how broadacre farming systems will respond to them is not yet fully known.  This paper describes a possible set of responses.  Several types of farm systems and business structures that may evolve are described briefly.

Options such as zonal farming or farm businesses increasingly based on equity financing, may or may not emerge to be important, alongside the traditional mixed-enterprise, debt-financed, family-managed farm.  Certainly an on-going challenge for many farm businesses will be how to make the social and personal life on the farm more attractive and appealing to the next generation of farmers and partners.  Such social drivers may become as equally important as financial drivers in determining the nature and performance of farming systems and farm management.