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The Benefits of a Small Farm
By David Mason-Jones
Is rural sub division - the break up of larger properties into smaller holdings - a help or a hindrance to the volume of rural production in Australia?
This is an important issue for small farmers because, all too often, the rural subdivisions which allow the development of their small farms are often criticised by a previous generation who regard the older and larger farms as the only ‘proper’ farms. When small farmers get to hear of these opinions it is possible for them to get defensive about what they are doing. They shouldn’t get that way because they are creating benefits for the nation.
The process of breaking up larger farms into smaller farms usually generates more, not less, rural production. It also leads to a more diversified base of rural production. It is good for small farmers to understand these benefits because this enables them to wave the flag for the small farming sector when it is attacked for taking farm land out of production. Nothing could be further from the truth.
The ‘old’ system extensive grazing properties with low investment intensity was probably the natural way for Australia’s rural industry to develop in its first phase. The ‘new’ system smaller farms with more intensive methods and higher capitalisation is probably the better way for large parts of Australia’s fertile land to be developed at the moment.
Many areas close to capital cities are undergoing rural sub division. One of these is the Yass/Canberra corridor which includes the small town of Murrumbateman and its surrounding areas.
The benefits of rural sub division include:-
Extensive to intensive. The logic of an extensive farm is to have a low per ha production rate with even lower input costs. This may lead to relatively efficient beef production over the size of the whole property but the actual yield is low per each unit area of land under management.
When rural sub division occurs, a change in investment philosophy takes place. The small farmer knows that it is impossible to make a return using extensive methods and will, therefore, switch to using more intensive methods and higher capital investment. This will involve the use of more capital but it will lead to a higher rate of prod-uction from the smaller area. There is a strong commercial pressure against the new small landowner just buying the farm and sitting back and relaxing. This pressure comes from the fact that the farm is a large investment and the owner is going to want to see a return on investment from the property.
Higher value crops and activities. The move to intensive farming creates a switch from lower-value commodities to products with higher value. Hence, new crops are introduced to areas where rural sub-divisions have taken place. Centered on Murrumbateman, for example, there are now around 10 new vineyards and wineries, three or four alpaca prop-erties, a range of cattle properties both stud and beef production, poultry production, olive groves, hydroponic tomatoes and many other forms of higher value rural production. Added together, the value of this production from all the small farms is higher than the value of production from the same land when it was farmed with extensive farming methods.
Diversity of rural production. Not only does the area produce higher value products, it also becomes characterised as a more diversified production area. This leads to greater income stability for the area as a whole as the area becomes decreasingly reliant on the commodity prices of just one or two rural products. In an extensively farmed area where it is all sheep, the farmers suffer when wool and lamb prices are poor. In an economically diversified area the vulner-ability to poor prices in one or two commodities is lessened.
Individuals come cashed up. A benefit gained in areas of rural subdivision is that the new farmers often come to the situation fully cashed up with money from the sale of a house in the city, the profits from a successful business elsewhere, the sale of a business or the proceeds a superannuation fund. The cashed up nature of the new owners means that they have the money available to make the capital investment needed to move the farm from an extensive operation to an intensive operation. Conversion to a higher value activity such as wine making takes thousands of dollars per hectare and the sad fact is the new farmers often have this money or access to it where the former landholders do not.
Individuals come skilled up. Many of the new farmers on small farms have extensive experience in other management and commercial roles which are directly relevant to making their farms work. Many new owners have marketing skills, for example, which they can use to make sure that their product finds a buyer. Other new small farmers have skills in manufacturing, distribution, advertising, administration and financing.
All these factors combine to create market access and this, in term, means that the rate of production can be kept at a high level because the products can reliably clear the market.
More intensive land management. As the density of settlement goes up, so does the intensity of land management. For the owner of a large extensive property of thousands of hectares, it is easy to notice things like an erosion point starting but do nothing about it. Own-ers of smaller properties are much more likely to pay immediate attention to erosion control and repair tasks in their land. This helps maintain the prod-uctive capacity of the land at a higher level.
Tree planting and bio-diversity. The new owners of rural subdivisions gener-ally pay immediate attention to such things as tree plantation and the restoration of native habitat. They can do this more intensively because they may have just 50ha to manage. The owner of an extensive property of thou-sands of ha is just not able to get down to the detail of tree planting and care as can the small landholder. With tree planting and increased biodiversity comes a lift in the productive capacity of the land and this is another reason why rural sub-division leads to more production not less.
Creating an overall capital gain. When more people move into an area and it becomes more desirable from the environmental, residential and production point of view, the region experiences a capital gain in the value of land. With more buyers wanting to buy-in to that land, the availability of buyers becomes more reliable. Everyone benefits and the increased value of land means that the owners are more likely to be able to make greater investments in intensive farming methods. The banks may also become more likely to lend against the properties in a buoyant market. This is a factor tending to push the value of rural production in subdivided areas up and up again.
Creating tourism. As new industries such as wine establish themselves in subdivided areas, they also tend to attract downstream industries such as tourism. In Murrumbateman, there are now around half a dozen restaurants and cafes. This benefits the economy of the whole area and makes it even more resilient against market fluctuations in one rural commodity.
Seminars, events and field days. With an increased number and diversity of farms comes the possibility for events which stimulate local economies. Murrumbateman again provides a good example. In 2003 the Murrumbateman Field days in October attracted 18,000 visitors and 330 stall holders. The Murrumbateman Cool Climate Wine seminar and competition in September of each year also attracts new visitors to the area. This new economic activity is largely the result of subdivision.
Restoring community. Rural subdivision means that there are more people living in the landscape. This means that the sense of community can be restored.
Far from leading to a reduction in productivity, subdivisions enhance it.
