Corporate farming falls away

CORPORATE farming, once touted as the future of agriculture, seems to have lost its appeal.

Australian Wheat Board WA manager Greg Harvey said corporate farming was when a publicly-listed company, whose main business was not agriculture, invested in farming properties.

He said it was thought of as the major model for agriculture in the 1970s.

“Back in the 1980s it was a get big and get out sort of move,” Mr Harvey said.

“However, the proof is in the pudding. If we look at our major grower customers, there is only one example.”

That is the Axa-owned Esperance Rural Prop-erties. ERP is Australia’s second largest wool producer and the tenth or eleventh largest beef producer.

Mr Harvey said corporate farming had once been described as the replacement for the family farm.

But it seems the low return on shareholders’ investment of about 4 per cent to 5 per cent could be putting companies off.

Mr Harvey said the family farming model could also prove to be the most efficient agricultural one.

“Even so, one of the benefits of corporate farming is it diversifies the corporate stream,” he said.

“It is also investing in land which is akin to investing in property.

“I think it comes down to what companies want to do with their funds.”

Mr Harvey said the operating risk of an agricultural investment was very high.

“It’s a seasonal industry and that carries risks, but the company can still have the land,” he said.