Innovative ways to lure young farmers

By Brierley Penn

Farming in modern New Zealand is about much more than production. A career in agriculture can involve anything from science and engineering, to marketing and design, but regardless involves working as part of an increasingly globalised supply chain.

Bruce Wills says the strong kiwi dollar is acting like a sea anchor on all export returns. Photo / BPT
Bruce Wills says the strong kiwi dollar is acting like a sea anchor on all export returns. Photo / BPT

Recruiting high-achieving young people into the industry will be vital to maintaining our position as a leader in international agriculture and to delivering national wealth

Agriculture was once seen as a promising career path for our best and brightest, guaranteeing a solid income and appealing lifestyle in our most important export industry.

But with fewer than 1 per cent of university students now graduating with agricultural science degrees each year and fewer young people willing to leave their urban lifestyles to turn towards farming careers, it is little wonder that a third of dairy cows in the South Island are now being milked by migrant labour.

High land prices and damaged perceptions of the industry have transformed farm ownership from a young person's pursuit to the domain of the experienced and well-capitalised.

"The average age of a dairy farmer today in New Zealand is 43 years old, the average age of a sheep and cattle farmer is 58," says Federated Farmers President, Bruce Wills.

This isn't a concern unique to New Zealand, and is part of a wider international shift in demographics, with 68 now the average age of a Japanese farmer.

Nonetheless, our aging farming population is a significant problem. In many cases, uptake of new technology and innovation is slower among more traditional and sceptical farmers, removing some of the productive potential from NZ farms. The physical nature of farm ownership can also be difficult for older managers. Perhaps most importantly, young farmers lack the ability to gain the long-term management expertise that allows them to become world leaders.

"When you look at it now, and you look at the price of land, the available capital suggests that a lot of that land will end up in offshore ownership unless we do something innovative to create a structure and a stairway for young people to buy into a farming business," says Ian Proudfoot, Head of Agribusiness at KPMG.

"We have some of the most expensive farm land in the world in this country," Proudfoot says. "And by having that expensive pastoral land, it's meaning that for many people, there isn't the option of buying into farming businesses that have been passed down through the family, because there just isn't the cash available to fund that."

Traditional methods of breaking into the industry via inheritance of a family farm are also quickly diminishing, as farming structures become more complex and corporatised.

"In the past, a farmer's son or daughter would come back onto the farm, but as we're starting to see more corporate farm structures come up, that pipeline of next floor farmers is under threat as well," cautions Graham Turley, Commercial and Agri Managing Director at ANZ.

Succession planning for inherited farms is complicated by the significant equity to be allocated, as well as the lack of guarantee that a sibling will see a return to the farm as a viable career path. For young people who aren't fortunate enough to inherit a farm, getting a foothold into the industry can be an even greater challenge.

Banks are seeking to open up channels to build equity in farms. ANZ launched a Farm Start-up Package in 2011, doubling their pledge to $120m in 2012 to help a "lost generation" of young farmers find a credible pathway into the industry. More than 500 young farmers have already signed up.

But industry experts warn that more innovative approaches will also be necessary to complement more traditional financial backing.

Proudfoot suggests that building structures that incentivise the transfer of land in affordable ways will be important in this regard. "I think we should be looking at how we can provide an incentive for those that are looking to move out of the industry to leave some of their capital in the business and receive a tax benefit or some sort of incentive for doing it, at the same time providing an opportunity for a young New Zealander to get on to that land."

As trends in the farming sector begin to change, market solutions are becoming apparent. "We've got to get a bit smart at how to look at different options," adds Wills. "That's why in the dairy industry we're seeing lots of partnerships set up, with farmers no longer chasing the aspiration of 100 per cent ownership.

"There are options to be involved with reasonably large scale farming operations on a percentage share basis, and we're seeing the advent of more corporate farm systems; fewer farms but bigger. That's offering the opportunity for people to have some pretty senior and challenging roles in agriculture, without actually owning the farm. That's a good clear prospect for a lot of people."

Wills suggests increasing numbers of young New Zealanders who have aspirations in farming are pursuing alternative career pathways early in their careers, to broaden experience and accumulate capital before returning to the agricultural sector.

However, the struggle to get young New Zealanders on to farms runs deeper than economic concerns. Despite an average farm worker salary of $5000 more than the NZ average, Federated Farmers have reported 23.1 per cent of farmers found it more difficult to attract skilled and motivated staff over the past six months, the highest level since surveys began in 2009.

"The core of the problem actually goes back beyond the universities, and it goes into the schools," Proudfoot says. "There's not enough being done to get out and explain to career advisers what a career in agriculture is these days."

"If you're working on a farm nowadays you're running a multi million dollar business, using complex science, fully integrated into international markets, so you actually need really quite academically capable people to be coming into farming. Schools are still somewhat guilty of raising farming as a career option if the person is less academically capable - they still see that as an easy option, where I don't think that it is."

Turley warns that our NCEA credit system encourages students to follow the "path of least resistance", selecting subjects based on the easiest way to attain credits, at the expense of future career paths. "It's too easy for our young kids nowadays to opt out of sciences at school. Chemistry isn't fun. But by doing that, they're cutting down their options, because when you go to university it's very hard to pick up science if you haven't done that since you were 13. And science is a big piece of agriculture... it's getting more and more high-tech."

Turning around a predominantly negative media focus on the industry is also a priority.

"We always hear the bad stories, when someone has spilt some milk somewhere or whatever, but we never hear about the great stories and the huge advancements that have been made in New Zealand in the agricultural sector," Turley adds.

This will require making agriculture more relatable to young people. Using social media to spread such a message is now an essential part of any such marketing strategy, and Proudfoot has floated the idea of a reality TV show showcasing the dynamic, exciting nature of the industry.

The key concern is one of incentivising young people to leave the comforts of urban living to pursue a farming career. Rural broadband is a vital aspect of the strategy in this regard. "Why would we expect a 20-year-old who's used to Facebook and emails, going out somewhere to work on a farm and not be able to connect to the social media that they've been used to in the big cities?" Wills questions.

He suggests a greater government focus on research and development can also help to glam up the agricultural industry. Currently in New Zealand, we spend about 1.2 per cent of our GDP on R&D, while the OECD average is 3 per cent.

"Farming is our number one export earner by a country mile, and it is about new science, new innovation, new technology. If we can get that it helps with the profitability and the excitement."

- NZ Herald

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