WHEN it comes to accessing capital for farmland, start small.
That was the advice from policy and financial experts to young farmers attending the Future Farmers Network’s Youth Ag Council event in Canberra today.
Westpac’s head of agribusiness Susan Bower acknowledged the difficult many young farmers have in accessing capital from financial institutions, but stressed the need for them to wait until the time is right.
Incremental expansion was important, she said.
“You can’t all go in thinking your first farm must be 10, 000 acres. You have to incrementally make your way,” Ms Bower said.
“Don’t worry about what your neighbours or your peers are doing… Scale isn’t born overnight. You have to really understand your capabilities to get there.”
She said many young farmers were unnecessarily focused on hectares and using debt as a tool to build their wealth.
“Once you’ve purchased your first 5,000 acres you might find intensifying your production is a better option than growing your operation physically.
“Understanding your financial options is critical when planning your expansion. Think about finding equity partners, entering into joint ventures, leasing or share farming.”
Secretary to the Minister for Agriculture Richard Colbeck agreed.
“Too often I see a need for instant gratification among young people,” he said.
“Like farms, the expectation in the housing market is your first home will be a mansion.”
Member for Hume Angus Taylor said a new approach to succession planning could help to improve the debt levels of young farmers.
He suggested family members keep their equity stake in the property, instead of selling their share at the first opportunity.
“We are all raised with the tradition of pushing every family member out of the farm as quickly as possible, but when you convince them to keep on as an equity partner you’ve just raised your capital – the very thing that underpins the future of agriculture for the next generation.”
