* Rural

GET big, get tough or die — that’s what farmers were told in the 1980s. However, with government forecasts suggesting that weaker prices and lower returns will lead to tough times, questions are being asked about whether or not the “get big or get out” rule is still appropriate.

Over the past 40 years, the number of commercial farms in Australia has almost halved, from around 200,000 in 1961 to just over 100,000 in 2001. At the same time, the average area of land operated by these broadacre farms has increased almost 50 per cent from 2800ha to about 4100.

But the country is littered with tragic tales of families who lost everything after following advice from government bureaucracies, aided and abetted by free-wheeling banks.

In a recent paper, “Get Big or Get Out: Is the mantra still appropriate for the new century”, statisticians at the Australian Bureau of Agriculture and Resource Economics note that many Australian farmers who chose to get bigger, buying the farm next door or otherwise expanding their operations, were caught by astronomically high interest rates and falling grain prices. Many farms were left with high debt, low equity and poor debt-servicing capacity.

“It was the beginning of the end for some of these businesses,” it notes. “Many of the debt problems faced by farm business in the 1990s originated from farm expansion in the 1980s.”

But ABARE executive director Brian Fisher said the trend towards larger farms was likely to continue.

“The largest third of commercial farm businesses have consistently achieved higher rates of return to capital than the smallest third, with the gap between them having increased over the past decade,” he said.

The number of farms purchasing or leasing additional land in 2000- 01 has increased to its highest level since ABARE started surveying broadacre farms in 1977. Not just larger farms are expanding. ABARE survey data indicates farms of all sizes are acquiring land. The extra land typically represents expansion of 13 per cent to 30 per cent of the farm’s size.

During 2000-01, a record number of beef producers acquired more land and expanded their enterprises. The beef industry has been a star, with last financial year’s farm cash income for beef producers estimated to have increased 36 per cent on the previous year.

Peter Martin, co-author of the paper “Get Big or Get Out”, said the increasing size of farms did not mean the death of the family farm, with 99 per cent of farms family owned.

“It is not the being big that sends you broke. It is the getting there,” he said.

Chief executive of NSW Farmers Jonathan McKeown called for a change to the Trade Practices Act to allow smaller properties to bargain collectively, presently illegal as being a so-called collusion on price. The move would make the vast majority of smaller operators who sustained farming communities more viable.