To avoid any confusion in the original story reference on 31 July 2012: Please note Fiona Lake is the correct name to use in this story; Fiona Mckindlay is Fiona’s maiden name and the original credits may have confused some readers. Thank you Fiona for pointing to that error.

When researching rural land holding in Australia it is easy to find historic and recent development information on holdings. It is less easy to determine the drivers behind motivation for the land. CO2Land org offers that Fiona Lake has got to the point. Using her words:

“Despite what many believe most extensive grazing properties are very well managed and there are few if any detrimental effects on the environment. Extensive grazing often has little or no impact on native wildlife, in fact sometimes birds and animals benefit (e.g. from a reliable water supply) and increase in numbers. By comparison, there is enormous, ongoing environmental damage in our cities and native wildlife is virtually extinct in urban areas (apart from a handful of bird species, some small lizard species and possums)”, and “Agricultural communities all over the world have a lot in common but unfortunately they also share the problems. Rural communities everywhere are rapidly undergoing fundamental, irreversible changes or they are under huge pressure trying to control or resist these changes”, and “It is an important responsibility to provide useful and accurate information to increase understanding and encourage respect and maintenance of a healthy, evolving rural culture, worldwide”.

CO2Land org then noticed some trends, again the reference is Fiona:

Religious ownership: “There are also religious organisations that own rural property. Top of the list is Ag Reserves Australia Ltd – a company fully owned by the Utah (U.S.A.) based Church of Jesus Christ of Latter-Day Saints – commonly known as Mormons. In addition to rural properties in the U.S., they also own farms in Canada, Mexico and Argentina. In Australia they primarily own Riverina irrigation farms – the massive Kooba Station and Benerembah at Darlington Point (south of Griffith), Bringaree at Carathool and Booberoi at Euabalong. The properties run purebred Wagyu cattle and sheep; and grow a vast range of crops – rice, corn, horticultural crops, stonefruit, olives, nuts and others”.

“There are other smaller, but nonetheless significant overseas investors who own large tracts of land but who also keep a fairly low profile. Such as GP Cattle Pty Ltd, a Dutch company that purchased Cotswald near Condamine (southern Qld) then in 2007 purchased sheep stud Portland Downs, at Isisford (central western Qld). The two Australians on the board of GP Cattle Pty Ltd are Warwick Yates of Ferrier Hodgson (Brisbane) and John Cox, Managing Director of Stanbroke Pastoral Company when it was sold by AMP. Though Portland Downs was a highly regarded merino sheep stud, it now only runs cattle”.

Where do most corporate investors buy? “Those up the top of the tree know the old adage about land being the one thing that you can’t make more of; and quality being the single most important factor when choosing what to buy. While private corporate buyers such as the Myer and Packer families choose top drawer working farms/rural retreats within relatively easy reach of southern capital cities, usually not much more than an hour’s travel time away, the largest investment in big acres occurs in northern Australia. Companies buy or setup feedlots in close proximity to graingrowers and abbatoirs, such as Queensland’s Darling Downs and in central Queensland. They buy a geographically diverse spread of good quality properties to guard against all the stations being hit by severe drought at the same time. Large properties are chosen as economies of scale are possible. This means buying in Queensland’s Channel Country, the larger Gulf places, some of the larger properties in the softer country in the central west; the best quality properties in the top half of the Northern Territory; and the southern half of the Kimberley region of Western Australia, with handy access to the main highway. Plus larger sheep and cropping properties in the Riverina and central western New South Wales, and cropping country in top-drawer cropping regions, from Quirindi (NSW) north through Moree to the St George region of southern Queensland”.

There are some advantages in properties being owned by large companies. “There is often money to spend on major infrastructure repairs and maintenance and major capital works, very large amounts of money that private owners struggle to find. Larger companies can take risks that smaller operators would have difficulty justifying; most have survived for generations by being conservative. There are also community and production advantages in cashed-up buyers who were raised in the bush but had to move to the city to earn a crust, like Andrew Forrest, buying back into the bush (usually, buying back the family farm they grew up on, as he did). Such buyers are usually determined to keep the property efficiently producing food (or fibre, as the case may be), and they usually have the capital and interest in making essential repairs to everything from fencing, waters, pastures and stock breeding to houses and sheds. These owners can bring a sense of optimism to the surrounding community, helping to stabilise the value of land owned by surrounding farmers, and some are generous philanthropists.

Larger pastoral companies have traditionally been training grounds for large numbers of young people trying out a career in agriculture. This has been a win-win situation – pastoral companies need large numbers of employees with varying skill levels, and pastoral company employment has given many school leavers a start in agriculture which they’d have struggled to get otherwise. Many boys raised in the city dreaming of escaping to a life in the bush have gone on to climb the pastoral employment ladder while others have returned to family farms with much broader experience than they otherwise would have had. Unfortunately this very positive training-ground aspect of corporate ownership has greatly reduced over the last decade. This is because many companies have become very frustrated with the increasing difficulty of retaining skilled employees (exacerbated by the drain to the mining industry), and/or they have become more greatly controlled by short-term thinking upper-management bean-counters who haven’t fully thought out where the good quality station managers will come from in years to come. This change has resulted in a reduction of permanent employees to a bare minimum skeleton staff on increasing numbers of cattle stations, with the employment of contractors for several frenetic weeks or months of the year to do the mustering. Mustering contractors are under great pressure to get the job done with maximum speed and efficiency and most do not have the time for entry-level apprentices/trainees – so they greatly favour employees that are already experienced and/or who grew up in the bush. Thus outlets for young people who grew up in cities but who want to start a rural career, have a lot more trouble finding employers willing to take them on now. The reduction in a permanent workforce on cattle stations also has a hugely detrimental affect on the social life in the surrounding region, which discourages other young employees from remaining, and it quickly accelarates a downward spiral of reducing population and reduced local services”.

Family farms aren’t large employers but when it comes to efficient production of good quality food they’re nearly impossible to beat. “Because it’s not just unadulterated dollar-chasing, family farmers take more personal pride in what is produced – which means there’s an inbuilt safety mechanism with regard to the health safety aspects of the food being produced. Unfortunately buyers with a straight finance background usually buy rural land purely as a capital investment. This ‘real estate’ valuation rather than business valuation pushes the purchase price beyond the reach of family buyers who are increasingly scratching their heads and realising that there’s no way a place bought for $10 million, for example, can actually make a decent return on investment – apart from realising a capital gain when it is sold. They’d make more money sticking the cash in the bank and raking in interest, risk-free. Most family buyers buy without the intention of selling, because they’re thinking about the next generation, so capital profit rarely interests them because they have no plans to realise it. The last thing they want to do is sell their land, and there’s not point in realising the capital gain if you have to fork out even more money to buy a replacement property, anyway. You can’t eat capital gain; you need cash flow in the meantime, so the current values put on rural land are increasingly squeezing out family businesses. This would not be the case if food and fibre producers received more in their pockets in return for their primary produce; this would make the high land prices reasonable. But low wholesale prices for primary produce is an age-old problem – primary producers are ‘price takers not price makers’, and that doesn’t look like changing; middlemen will remain the ones to take minimum risk and receive maximum profit.

One other group of cattle station owners is worth a mention. These are the private buyers who are rapid-empire building. If one property after the other is added to the portfolio in relatively quick succession (over several years); almost invariably (unless they’ve won the European lottery), it is because their places border on to under supervised National Parks or half asleep neighbours with a lot of ‘wandering’ cleanskins; they’ve bought well developed, quality assets for good prices and asset stripped or at the very least neglected essential annual maintenance (forget about capital improvements completely). Or there’s been other dodginess involved. More often than not, it’s a combination of all of the above. Unfortunately, these owners can usually be spotted a mile away and people in the pastoral industry know exactly who they are, although the general community are often impressed because they think the properties are all owned outright rather than being mortgaged up to the eyeballs. There always seems to be several around on the horizon, but they tend to come and go – a lot of this rapid empire building is done on borrowed money, and the inevitable combination of high interest rates, low commodity prices and bad seasons usually brings the whole pack of cards down within 6 years or so. These rapid-empire builders are very detrimental to the industry because their spending can inflate property values while they run down good quality properties that others have spent decades building up. And without exception, they are appalling employers. While they do usually crash and burn, no mud ever seems to stick – almost none have ever received criminal convictions. I am constantly puzzled by this group of people. Very often they grew up in the bush, but they seem to have no genuine, deep love of the land, and the empire-building often seems to stem from some sort of inferiority complex – a desire to own more than anyone else simply for the sake of it. But at the same time they are usually very secretive, although some of their financial deals are so spectacular they are reported in the mainstream media”.

Employment in the pastoral industry: “When it comes to employment in the bush, all pastoral companies, whether publicly or privately owned, and whether large or small, have their own advantages and disadvantages. What appeals to one person won’t suit another. For example some people simply like to be able to tell others they worked on a very fashionable or famous property, while others couldn’t give a toss because they’re after a quality employer, an unusually friendly working environment or an extra good place to learn as much as possible. Anyone starting a career in the beef or wool industry is well advised to obtain as varied experience as possible – working for a range of different owners and in locations across northern Australia, both large and small operators, spending at least a year at each place, before figuring out who to settle in with for a longer stretch. This varied experience and widespread networking provides a solid foundation for a long term career. It’s the sort of experience that may be taken for granted at the time but could prove invaluable later in life. At the very least, it will provide a far more interesting bunch of memories than someone who just sat on the one place or who worked for just the one employer. Or someone who put in a brief appearance on a show pony place”.

Please go to the source “If you have any additions or amendments to suggest, we understand it would be much appreciated if you could let them know”.

Source www.fionalake.com.au