Global farming: Contrasts and shared concerns
© Shannen Davies Kevin Davies and his wife Jenni farm near York in Western Australia, with their son Alex and his wife Shannen.
The family has been farming in the area since the early 1900s, and the past 10 years have seen significant expansion, which has more than tripled the cropping area.
Many of the issues in UK farming are reflected in the Davies family’s business, although to varying degrees.
See also: Farmer Focus – Australia trip proves again that the grass isn’t greener
Challenges
Some of the main challenges are, unsurprisingly, policy related. With the majority of products exported, Alex fears that some decisions will potentially erode trust in the country’s ability to consistently meet global demand.
“Recent government actions, particularly the decision to phase out the live sheep trade [live export by is sea being phased out by 1 May 2028], pose a significant threat.”
A bit of welcome shade – harvest in December 2024 © Shannen Davies
Farm facts
Hillgate Farming
- Predominantly cropping, near York in Western Australia wheatbelt
- 5,000ha hard spring wheat, canola, malting and feed barley, milling oats and lupins
- 3,000 Merino cross Poll Dorsets for wool and meat, on about 2,000ha of land unsuitable for cropping
- Cropping land is roughly one-third owned, one-third leased and one-third share farmed
- Three full-time farm staff in addition to family labour, plus seasonal help when needed
“The decision to shut down this industry was not driven by scientific evidence, but by the influence of a vocal minority and will have huge impacts on the WA agricultural sector and will ripple throughout our rural communities.”
Increasing regulation and the loss of chemicals are further concerns.
“The government is quite reactive to activism, but we need to protect our food security and trading relationships,” says Alex.
Labour
Addressing farm labour challenges is another of the industry’s most pressing concerns, says Alex.
“Fortunately, we’ve been able to build a strong full-time team.
“One of our key staff members, James Cassidy, joined us around eight years ago. His hard work and loyalty have been integral in our business growth.
“We also have two other locals, Gavin Bauer and Dave Duperouzel, whose experience and strong work ethic help us run the business smoothly and efficiently.”
Succession and expansion
The expansion of the Davies’ business followed Alex’s return to the farm and a restructuring and succession process, which led to Kevin buying his brother Graeme’s share of the business.
Graeme continues to work on the farm in a less active role.
Succession is a big issue in Australian farming, says Kevin.
“There’s a fair bit to navigate so that everybody is happy with the outcomes, but I think we’ve reached a fair arrangement and now we’ve got to move forward.”
The land farmed stretches about 44 miles between its most northerly and southerly points.
Alex (left) and Kevin Davies © Shannen Davies
They plan to continue expanding as opportunities arise, although it may well not be by buying more land, says Alex.
Through the restructuring process, they had help from their farm business consultant, Graeme McConnell, managing director of Planfarm, with whom they continue to assess opportunities.
“If something does become available, we can have a go, or go shares with a business partner,” says Kevin.
“There are people who want to invest in farming provided they can get a return on their money.”
Their rented land is generally on agreements of anything from one to five years, most of which have tended to roll on annually in the past.
More recently, some of these have come up for tender.
“The past three years has seen much more competition for land,” says Alex.
Land values in the Davies family’s farming area are in the region of A$12,350/ha (about £6,180/ha), while cropping land rents are roughly A$321/ha (£161/ha).
These are about double the levels of five years ago, says Alex.
© Shannen Davies
This is on land with a five-year rolling average wheat yield of about 3.5t/ha, barley at 4t/ha, oats at 4t/ha and 1.9t/ha for canola (oilseed rape).
Hillgate Farming’s grain is delivered to storage and handling co-operative CBH, often directly off the combine.
From there, the family can sell their grain at any point in the season, taking independent advice on this.
Brexit trade impact
Alex thinks the UK-Australia trade deal doesn’t offer their business any particular opportunities.
“All our grain goes into the Asian and Middle Eastern markets, where there is huge demand and easy freight options. Same goes for our meat.
“The trade deal did free up some of the visa requirements for UK travellers wanting to visit Australia and work, which is a great benefit to us and other farmers.”
Seasonal opportunities and farmer contact
Seasonal hires are taken on as needed at Hillgate Farming and are an important resource for Australian agriculture.
The grains sector relies heavily on casual workers during peak periods, as do horticultural, fruit and vegetable businesses, with many coming from the UK, Europe and Canada.
Australia’s farming seasons align well with cropping seasons in the northern hemisphere, making it an ideal opportunity for workers seeking international experience, says Alex, who has recently visited UK farms with his wife Shannen on the travelling part of her Nuffield study into opportunities for the Australian oat industry.
Alex is open to being contacted by farmers wanting to know more, or who want to visit or work in Australia. He can be emailed at alexjdavies@me.com
Australian consultant sees challenges ahead
Graeme McConnell, managing director of consultancy Planfarm, advises farm businesses across Western Australia.
“We’re farming some of the least fertile soils in the world here,” he says.
Nevertheless, those soils have been giving an average return on investment of about 5%, with the top 25% of businesses achieving 9%.
“We’ve seen a really rapid rise in land values over the past four years, one of the main reasons being the low cost of capital.”
This puts good arable land east of Perth at about A$14,800/ha (£7,400/ha).
“There’s nothing to say that values will continue rising at that rate as we’re at the top of where you can get an economic return,” says Graeme, who thinks that given the challenges of farming over the next two to three years, land is now overvalued.
“Forward returns at current land values look like about 2-3%,” he says.
Part of the upward pressure on values comes from oil companies investing to plant trees to offset carbon emissions.
Alongside finding skilled labour and the live sheep export ban, market access is another concern, including the possibility of a US-China trade war and the potential impact of the EU and UK neonicotinoid bans on Australian canola exports.
The carbon issue is also going to hit farm businesses, he says.
Australian companies of a certain size must also report Scope 3 greenhouse gas emissions, which includes those from their supply chains.
This is expected to directly impact all farmers who buy from or sell to these companies.
“By default, farming is going to have to start reporting emissions.
“That will impose a compliance and education burden, which will take away from the efficiency of farming for a while.”
Graeme says 2006-07 through to 2010-12 saw very lean markets and production, resulting in many quitting farming.
“It was brutal, but those who survived are very good farmers.”
Less pressure, more opportunity, higher returns outside the UK
Many countries offer a more policy friendly and flexible approach to agriculture, so that a return on capital of 3-5% is available, compared with 0-1% in the UK, says Charles Whitaker, managing partner at Brown & Co.
The firm advises on agricultural investment mainly in the UK but also other countries, including eastern Europe, Russia and Ukraine (in the past), the US, South America and the Caribbean, and has worked with Graeme McConnell of Planfarm in Australia on farm management and benchmarking.
Charles says the burden on UK farming with the inheritance tax (IHT) relief change, the BPS cut and emissions reduction is too much.
In Australia, there is no IHT on farms, and in the US, each individual has a US$13.6m (£10.7m) personal relief threshold.
Farming in many other countries is simpler, with fewer pressures, he says.
Land markets can be more fluid and often offer scale, expansion and new land at much lower values.
Genetic modification makes growing easier and cheaper, and in the US and Australia, precision farming has been adopted faster than in the UK.
Different farming structures, such as sharecropping, offer more flexibility.
Also, corporate investors, including pension funds, want inflation-proof real assets such as land and farming interests, which in turn creates more opportunities to farm.
Recent changes mean the UK is at a severe tipping point, says Charles.
“If policy demands that farmers help with Scope 3 emissions, then consumers and the supply chain are going to have to pay for changes in practice that impact on production.
“But if producing food doesn’t make economic sense, let’s identify where we need to stop doing it and use the land for something else such as CS or SFI.
“Policymakers need to understand that we can produce to standards, but not if we’re being asked to compete with inferior standards of production in other countries.”