Land Prices v’s Farm Productivity.

I had the pleasure of spending the first week of May at the Beef Australia 2015 expo in Rockhampton, Queensland.  It was an amazing spectacle that saw over 70,000 people through the gates in just 5 days. There was a large contingent of international famers and potential investors there looking at the beef industry and assessing possible business opportunities.

One of the things I discovered was just how hungry overseas investors are for safe, low risk investment possibilities.  Folks from Asia, Europe and North America were all making noises about the investment potential of rural Australia.  They feel this way, mainly because it is a low risk place to invest and because land prices are, according to them, quite low.  And there is a belief that Australia is very well placed to profit from the ongoing growth in Asia.

At the same time I was also hearing farm management advisors from Australia saying that the overwhelming majority if livestock production businesses in Australia have actually been experiencing declining farm productivity for at least the last five years.  This included the top twenty percent of farmers and well as the rest.  These are validated details from some very experienced and respected advisors.

Thus led me to privately ask the question “How come land prices keep rising while farms productivity and profitability is a best static and at worst actually falling for large sections of primary industry”.  And this is happening while farmers have had access to very cheap loans, a favourable Australian dollar, access to some of the smartest minds in agriculture and a world that by all reports cannot get enough of our produce.  Australian farmers have access to all the fertilizer, fuel, machinery, genetics, technology and advice that they could ever want.  Still, rural based businesses are experiencing, with in their business, falling and failing terms of trade.  And yet, land prices keep rising while sustainable returns and profits keep declining.

And while it is very easy to blame this circumstance on drought and people in parliament in Canberra.  They are neither the cause or the solution.

If farm productivity was stable or even growing at half of 1% annualized, then the current state of land prices could well be justified.  But productivity is neither, stable or growing.  This has to change and like it or not the only people who can change it are the farmers and business people themselves.  The only way to effect the necessary change is to change the way we make the decisions and the way we view the land and manage it.   Albert Einstein said “We cannot solve our problems with the same thinking we used when we created them”.

The Holistic Management Essentials course gives people the tools and the courage to make change that is best for them right now.  Managing holistically is a process and activity that empowers people, it helps people to identify and measure risk and then plan how to manage it, while creating real change.  If business as usual if no longer an option for you and your interested in changing your circumstance for the better, the team at Landlife Education is willing to talk with you.