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Dreams built on
By MAX OPRAY
LAND ownership has long been
considered the best pathway
to financial independence,
but a leading business advisor is
warning farmers that the Great
Australian Dream can actually be a
Farm business consultant Duncan
Ashby, RG Ashby & Co, is the
co-author of Successful Land Leasing
in Australia: A Guide for Farmers
and their Advisers, published by
the Rural Industries Research and
Mr Ashby, who wrote the guide
with his father Rod, argues that our
national fixation on land ownership
is harming productivity and mak-
ing it difficult for people to enter
and exit the agribusiness sector.
Rather than everyone pouring
finances into mortgages, he is keen
to see farm leasing become the
preferred form of land ownership
structure in Australia.
In the US and the UK, between
50 per cent and 60pc of farmland
is leased, compared to 5-7pc in
There are good reasons for the
vastly different ownership struc-
tures, including lower land prices
in Australia and the UK's history of
wealthy landholders leasing out to
the rest of the population.
Nevertheless, Mr Ashby worries
that the situation is holding back
Australian agriculture by forcing
young farmers to tie up most of
their money in mortgages while
making it difficult for older farmers
to exit the industry without losing
For those just starting out, leasing
instead of buying means more capi-
tal can be invested in the productive
aspects of the business, leading to a
profitable enterprise sooner than
would otherwise be possible.
Even when fully established, Mr
Ashby recommends farmers con-
sider funnelling their profits into
other ventures rather than simply
buying up the land they are using
as a safeguard.
"If you instead invest in shares
and residential property, what that
does is allow you to diversify, so
you haven't invested everything
into your working assets," he said.
As for older farmers who already
own their land, Mr Ashby says
they should check to see if leasing
out their property can offer better
returns than farming it themselves,
although he says there are some
"The downside for landowners
is by leasing out all your farmland,
you lose your primary producer
status and may have to pay signifi-
cantly more tax,"
"This can be
exacerbated if by
not farming any-
more you decide
to, say, sell all
your sheep -- not
profit -- which will be counted as
income and can prove to be very
One way to circumvent the tax
problem is through a share-farming
arrangement, which permits
landowners to remain classed as
While arrangements can vary
dramatically, share-farming essen-
tially allows landowners to continue
living on the land and reap a share
of the operation's profits.
This can be particularly useful for
farmers who want to retire but are
unwilling to give
up their home --
they can remain
in the building
but not have
to worry about
keeping the land
Share-farming works the other
way as well, allowing new farmers
to spread the business risk while
remaining exposed to the upside of
good seasons. Mr Ashby says such
arrangements provide an opportu-
nity for younger farmers to develop
useful mentoring relationships with
the landowners who often carry
rich experiences with them.
He says leasing benefits by creat-
ing more efficient economies of
scale. In the US in particular, it is
typical for smaller landholders to
lease out their property to huge,
collectivised operations that make
enough additional profit from the
scale of production to offset the
cost of leasing.
This sort of approach can work
in Australia for primary producers
seeking to expand their operations
but lacking the capital to buy
neighbouring properties -- they can
simply rent the additional land.
Mr Ashby said the biggest bar-
rier to leasing in Australia is simply
that it is not part of the national
Farms are rarely offered up
for lease, and it is even rarer for
would-be farmers to seek out such
opportunities, so buyers and sellers
have little incentive to even try.
Mr Ashby said getting the ball
rolling required an entrepreneurial
spirit from those seeking out leas-
"What you need is to develop a
good business plan to take to farm-
ers you know are looking to sell,
and say 'here is my plan, would you
consider leasing or do you know
anyone who might'," he said.
"That plan will also get banks
interested in lending you the capital
you need to invest in developing
the productive capacity of the busi-
ness once you find the land.
"I really think with our aging
population and young people
priced out of the ownership mar-
ket, this could be the right time for
leasing to take off in Australia."
• Need to know more?
Duncan Ashby, email@example.com
Call to invest more in equipment
Owners can mentor next-gen
Share-farming dumps tax hurdle
Victorian Governor Alex Chernov presents the Churchill award to Duncan Ashby for his research into farm leasing. Mr
Ashby says leasing can create more economies of scale.
The biggest barrier to
leasing in Australia is
simply that it is not part of
the national mindset.
Leased property boosts
Blackmore's profit run
WHEN David Blackmore's
father became too sick to
look after the family farm
and decided to sell it in 1976,
David was left with all the
skills to rear cattle but no
Rather than saving up cash
to put a deposit on some
property, David (pictured)
started up an innovative
share-farming dairy opera-
tion in the Adelaide Hills.
While the Stirling family
owned the land, house and
buildings, the Blackmores
supplied the herd and the
All costs and the milk
cheque were shared, while
cattle replacements and sales
went to the Blackmores.
Since those early days
David has come a long way.
He now runs 3000 head
of Wagyu cattle out of
Alexandrina, Vic, where he
and ten staff slaughter 60
carcases a month and export
to 14 countries under the
Blackmore Wagyu label.
Although his beef empire
spreads across nearly 2500
hectares, David chooses to
lease most of his land rather
than own it.
"If I had to purchase all
the land I need, it would
probably cost me upwards of
$12 million," he said.
"It is much more cost-
effective to invest that
money into growing the
The owner foots costs for
capital improvements to
the land while David bears
"The key is dealing with
good people, and good
relationships," he said.
"Some of the landowners
have been living in these
houses their entire lives, so
they stay on even if I'm using
"Often they are retired and
with nothing better to do,
so they'll help us out -- I had
an electrical fault recently,
and the owner knew the
property best so he sorted it
out for us."
• Need to know more?
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