Presentation from the WCCA 2011 conference in Brisbane, Australia.

1. Can corporate farms provide new pathways to improve
the profitability and productivity of family farms?
Mr. Brendan C. Lynch Co-authors
Doctoral Student – Agribusiness Dr. Rick Llewellyn, CSIRO
University of Adelaide & CSIRO Dr. Wendy Umberger, University of
Monday 26th September, 2011 Adelaide

2. Productivity Growth Increases
Value of Ag Production
Without productivity improvement the value of ag
production would have significantly declined
(Sheng et al., 2010)

3. Flattening Productivity
• Flattening TFP (Dark Blue)
• Flattening TC (Orange)
• Declining TE (Sky Blue)
• Increasing productivity gap
between leading farms and
average farms
(Nossal et al. 2010)

4. Factors driving productivity trends
• management + capital constraints are often
limiting technical efficiency (ABARE, 2010; Hughes et al., 2010)
• Factors driving farm productivity increase:
• land use intensity,
• land area
• corporate ownership
• Corporate farms 12–28% more productive than
the average non-corporate farm (ABARE, 2006)

5. Corporate farms and innovation
• leading corporate farm models adopt new
innovations by having greater access to:
• Human Capital – Financial Capital – Natural Capital
Do such models offer average-sized family
managed farms new pathways to:
• overcome constraints
• enhance innovation adoption
• boost productivity
• and retain inherent strengths of family farms

6. Farm Attributes Influencing Technical Change
Adoption Technical Efficiency
Adoption Decisions
Farm Attributes
Human Capital Financial Capital Natural Capital
- Access to Information - Access to Credit - Land Quality
- Attitude to Risk - Enterprise Profit - Farm Size
- Number of employees Expectations - Farm Tenure Status
Core Attributes
- Use of Crop Consultant - Farm Profitability - Cropping Intensity
- Use of Contractors - Financial Risk - Enterprise Mix
- Use of Farm Business - Market Risk - Climate Risk
Consultant - Sources of Credit - Production Risk
- Farmer Age - % Off-Farm Income
- Farmer Stage of Life
Unique Family
Farm Attributes - Farmer Motivation
- Farmer Education
- Management Team -Investment Portfolio Balance - Agro-ecological
Unique Corporate Education - Relative Investment Return Vs. zone diversity
Farm Attributes - Management Team Alternative Investment Options
Experience

7. 6 Unique Corporate Farm Models
Identified
Land
Localised Hub
Transformation
Corporate
Multiple Hub and Contract
Spoke Farm Farming
Models
Management
Crop Co-production
Services

8. • Multiple Hub and Spoke
• Geographical diversified over
1000km
• 5 scale efficient management
hubs
• Efficiency achieved at multiple
scales
• 31,000 ha cropping land
• 6,000 ha grazing land + feedlot
• Specialised management and
technical staff

9. Hybrid Farm Models....the best of both
worlds?
How do we bring some of the beneficial
corporate farm attributes and characteristics
into family farms?
Are there hybrid models that combine the
advantages of both family/corporate farms to
increase innovation adoption and
productivity?

10. Collaborative Farming
Australia
• Individual family farms constrained by
management and capital
• Formed new joint venture business arrangement:
family farm - localised hub
• Independent chairmen and board
• New farm structure has provided:
• Scale and improved efficiencies
• Ability to specialise (labour specialisation) + increased flexibility
• Improved farming practices (PA + no-til)
• Skill based roles
• Contracting of crop consultant
• Increased bargaining power with suppliers
• Marketing advantages (Riverland Weekly, 2009)

11. Summary
• Productivity growth is slowing
• Management + capital constraints impact
innovation adoption
• Corporate business models are providing potential
new pathways for typical family farms
• Examples of hybrid models emerging
• Key question for future research:
• What attributes of a hybrid model will be attractive
to average sized family managed farms?

12. CSIRO Sustainable Agriculture Flagship
Brendan C. Lynch
PhD Research Fellow
Phone: 08 8303 8479
Email: Brendan.Lynch@csiro.au
Web: www.csiro.au/org/SustainableAgricultureFlagship.html
Thank you