2012 Winter - Will corporate agriculture swallow the family farm?

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FPJ0902 - Byerlee et al., Corporate models of broadacre crop farming: international experience from Argentina and Ukraine

Byerlee, D, Lissita, A, Savanti, P, (2012),  Corporate models of broadacre crop farming: international experience from Argentina and Ukraine, in Farm Policy Journal, Vol. 9, N.2, Winter 2012, pp. 13-25

Family firms in which family members own and manage most assets and provide much of the labour have prevailed in agriculture for several reasons, including the risks and seasonality of production, the spatial dispersion and diversity of labour tasks, and the need for intimate local knowledge of site and seasonal conditions. Although corporate business models that depend on hired managers and labour have made inroads in some types of agriculture (intensive livestock and horticulture), almost all broadacre crop agriculture in Organisation for Economic Co-operation and Development (OECD)countries is run by family firms.This paper analyses two major exceptions – Argentina and Ukraine – where relatively large companies, often managing operations with over 100,000 ha, account fora significant share of broadacre crop production. Both countries have also gained world market share in grains and oilseed exports since the 1990s. A unique feature of the Argentine model is the predominance of ‘sowing pools’ where professional managers raise working capital, and largely rent the land and machinery services for crop production. In Ukraine, farming companies are a legacy of the Soviet collective system, where after privatisation, some companies (most vertically integrated)acquired large tracts of land through mergers and acquisitions. In both cases, the best companies use state-of-the-art technologies and professional managers. However, the trend is too recent to draw definite conclusions on their superior profitability relative to smaller enterprises. Also poorly functioning financial markets (and sometimes other logistic weaknesses) have disadvantaged smaller operators.In Australia we expect the trend toward larger farms to continue but family firms are likely to dominate for many years to come. However, the rapid pace of technological change combined with management innovations will likely see the growing direct involvement of larger companies in crop production or through contracting or co-production business models.

 

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FPJ0201 Article - The Industrialisation of Australian Farming

Keogh, M
Farm Policy Journal, March 2005, Volume 2, Number 1, pp. 16 - 26 (11 pages)

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FPJ0802 Byerlee Derek, Deininger Klaus, Foreign investment in farmland, worries about a land grab in Australia are unfounded

Byerlee Derek, Deininger Klaus, Foreign investment in farmland: worries about a land grab in Australia are unfounded, Farm Policy Journal, Vol 8, Number 2, Winter 2011, Foreign investment in Australian agriculture: myths and realities, Australian Farm Institute, pp 1-9
ISSN 1449-8812

Recent strong commodity prices have led to rising demand for farmland and this is projected to continue for the medium term, due to increasing population and incomes, and growing use of biofuels. Global analysis indicates that about 450 million ha of suitable land is available to bring into cultivation, much of it in sub-Saharan Africa, Latin America, Russia, and to some extent Australia. Improved returns in farming have translated into a sharp rise in domestic and foreign investment into farm land, largely focused on Latin America, Africa and Eastern Europe. A surprising development, given the long tradition of family farming almost everywhere, has been the rise of corporate superfarms often managing over 100,000 ha of prime crop land. Where land and other markets work well, these new developments represent an opportunity to tap capital, technology and new markets. However, with poor land governance and weak institutional capacity, there have been many failures in economic, social and environmental terms, especially in Africa. In Australia, given skilled farmers and strong institutions, there seems little reason for concern about recent reports of foreign investment in farmland. Australia has set a global example of openness to trade and investment. Increased transparency through a register of such investments could alleviate fears in some circles of a foreign ‘landgrab’ in Australia.FDI, Foreign Investment, Agriculture, agribusiness, land grab

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Farm Policy Journal - Vol 9 No 2 2012 Winter - Full Journal - Will corporate agriculture swallow the family farm

Australian Farm Institute (2012), Will corporate agriculture swallow the family farm?, Farm Policy Journal: Vol 9 Number 2 - Winter 2012
ISSN 1449–2210 (Print)
ISSN 1449–8812 (Web)

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FPJ0902 - Freshwater, D, Corporate Farms Should they be a concern

 Freshwater, D, (2012),  Corporate Farms Should they be a concern? in Farm Policy Journal, Vol. 9, N.2, Winter 2012, pp. 1-11

Corporate farms have drawn considerable criticism in recent years. They are held by some to embody the negative characteristics of industrial agriculture:unhealthy food, environmental damage and mistreatment of animals. The general sense of the core criticism of corporate farms is that in their search for profits and scale economies that benefit them directly, these farmers have adopted practices that result in significant costs for society collectively. But, in reality almost all corporate farms are operated by farm families who have no more incentive to behave in this manner than do operators of small farms.Large farms are more likely to take on a corporate form of business, and these farms now account for the majority of farm output. Economic and technical forces continue to push farmers to expand in order to increase efficiency. However, the public face of agriculture in most countries remains smaller traditional family farms. In many ways the concern with corporate farming reflects a growing disconnection between farmers and an urban society. Consumers are becoming increasingly concerned not just about the quality of their food but also about how it is produced. This has particular importance for large farms that are part of an integrated supply chain. If consumers mistrust corporate farms they may exert pressure on retailers and regulators that impacts farmers’ behaviour. For this reason alone it is in the interest of farmers to reassure the public that practices on farms of all sizes meet society’s expectations.

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