ALBURY couple Tegan and Tim Hicks desperately want to purchase a farm in NSW. The couple lease a farming property and run beef cattle and sheep in the area, but harbour dreams of putting down roots on their own property in the not-too-distant future. The Hicks, who have four young children, have chosen the Albury area in the Murray region of NSW because it’s close to family. Tim works as a greenkeeper locally, but he wants to pursue farming life full-time.
But despite three years of searching for a farm within their price bracket, they’ve been unable to find anything suitable. “We’ve been hunting for around 200 acres [80 hectares] of farming land to fulfil our passion for farming,” says Tegan. “However, being able to get into a farm financially isn’t easy. “We’ve been looking at properties close to town, but then you’re up against the real estate value of a property as opposed to the rural value, which pushes the price up even further.”
YOUNG FARMERS FACE TOUGH GAME FOR OWNERSHIP
The couple don’t believe there are any tax breaks in place to help them, saying that most such benefits are handed to those who already have skin in the game. “We really feel we’re too far out of the game financially to look at tax breaks, but hope something else will come along,” Tegan says.
The Hicks’ story highlights the looming crisis facing the farming sector in NSW – insufficient succession planning, coupled with too-high start-up costs. An ageing farming population and a distinct lack of young farmers entering the sector to replace those who are retiring from the land has created the perfect storm.
NSW Farmers’ chief economist Ash Salardini says, “The cost of purchasing a farm, and specifically access to finance, is one of the key barriers for the new generation of farmers,” Ash says. “This all but rules out a minority of people from entering the farming sector.”
A medium-to-large productive farm that is big enough to allow for a steady income can cost in excess of $4 million in some parts of NSW. And considering that a farm is a commercial property, a young farmer needs to have a 30% deposit for the bank ($1.2 million) and a further 5% saved for transfer duty (formerly known as stamp duty) – a hefty $200,000, Ash explains.
.jpg)
Farm stamp duty applied to young farmers. Cartoon by John Ditchburn
"Unless you’re lucky enough to have the family farm passed down to you, it’s very difficult to get a foot in the door in the farming sector. I don’t know many under-35s who have $1.4 million sitting in the bank.”
Even those who have inherited the family farm often struggle with managing their property alongside siblings. This sometimes means subdivision – which can result in significantly reduced productivity and viability of the farm.
As a way to support young and aspiring farmers, the Assocation is helping deliver the
Young Farmer Business Program (YFBP), a four-year initiative aimed at increasing the number of young people in agriculture across NSW. The YGBP was developed using data gathered from a research pilot project carried out by DPI,
NSW Young Farmers Council and NSW Farmers Association in 2016-2017. The results showed four key areas that young farmers want access to: financial management, business planning and risk management, enterprise analysis and coaching and mentoring. 72% of responses favoured a combination of both online and face-to-face learning.
The YFBP is delivering a number of free business coaching workshops in rural centres across the state with a focus on ABNs, ACNs, Structures, GST, accountants and goals. The ‘Bank Ready Workshops’ will be held in the coming weeks at Cowra - 30 July, Wagga Wagga – 1 August and Albury – 2 August. Find regular updates on NSW Farmers Facebook page here.
TAX DEMANDS PUNISH YOUNG FARMERS FUTURE
Ash says that an inefficient tax system penalising young farmers a further $200,000 in transfer duty isn’t right. “This is about the viability of the whole farming sector.”NSW Farmers believes that a concession similar to the NSW First Home Buyers Assistance scheme, which allows discounts on transfer duty for first-time home buyers, should be introduced for farm purchases, too.
In its 2018/19 Budget submission, the Association recommended the removal of transfer duty for young people purchasing their first farm. “NSW Farmers opposes stamp duty in all its forms,” the proposal reads. “However, we believe that removing stamp duty from purchases that assist young people who wish to start a career producing food and fibre is the highest priority.”
It would be short-sighted of the government to not give serious consideration to the proposal, the Association believes. “If you eat food, you should be concerned that more young Australians aren’t buying into the farming sector,” Ash says. “Individuals keep the farming sector afloat. They’re the ones investing into the capacity and productivity of the sector. Unlike other sectors, institutional investors [investment banks and managed funds] make minimal investment in farming.
“If we can’t find new farmers to invest in the sector, our future capacity to feed and clothe ourselves will be greatly diminished.”
*Young farmers often face challenges getting a foot in the industry, due to financial insecurities. See our story on young gun farmer Joey Fleming and his partner Emily Wilson, who have used their entrepreneurial skills to create alternative agribusiness based income streams.