Issue No 10, July 1998.

NOTICE: Hard copies of the Australian New Crops Newsletter are available from the publisher, Dr Rob Fletcher. Details of availability are included in the Advice on Publications Available.

14. Multi-level land use: creative resource use for rural Australia

The sustainability of Australian agriculture is now being questioned at all levels. Farmers are being forced to leave their land. Conservationists are concerned about widespread land degradation. Aboriginal groups are questioning the European land use systems. Agricultural policy makers and politicians are faced with rising rural welfare costs.

The agricultural sector and rural communities are struggling with financial, environmental, cultural and spiritual issues in the context of attempting to achieve sustainability.

The following issues are common throughout rural Australia:

• low returns on capital invested - the average return on a rural investment is 0.3% (ABARE, 1996);
• declining terms of trade - terms of trade have declined by 4.3% per annum for the last 18 years (ABARE, 1996);
• aging rural populations;
• shrinking rural communities;
• rising welfare costs;
• widespread land degradation and
• the native title debate.

However, there are some individuals and businesses achieving good returns on investment. The Landcare movement has been successful in raising awareness of many issues, such as land degradation and has been able to encourage amelioration action.

Never-the-less, Australian agriculture, which is still highly reliant on external input, remains monocultural and European in style.

Australians continue to live and to farm as Europeans in an essentially non-European environment. Common paradigms are concerned with farm ownership and the economic necessity of exotic species.

Farm ownership in Australia is 99.6% by families (ABARE 1996). With this level of ownership comes the notion of exclusive land ownership which can reduce the rate of change in farming systems. Exclusive ownership is not so strong in Europe, the UK, USA or Asia. Leasing, tenant farming and share-farming are also common overseas.

The Australian Aboriginal people had no concept of exclusive land ownership. In fact, land ownership itself is an oxymoron from an Aboriginal point of view.

The Aboriginal people developed complex systems of multiple levels of land use and stewardship and used these systems to survive in their harsh and unpredictable climate.

The crops that are grown in Australia (wheat, barley, cotton, sugar-cane, grapes, etc) and the animals that are raised (sheep, cattle, pigs, poultry, ostriches, alpacas, etc.) demonstrate this paradigm.

We have exported the macadamia to be developed in Hawaii, several Eucalypt species, native flowers, fish and animals so others can commercialise them. Australian farmers have missed a number of opportunities with native species.

Farming with native species would be appropriate since there would be less need for external inputs, reduced land degradation, the maintenance of biodiversity, opportunities for multi-level land use and even the develop- ment of an Australian identity.

Large amounts of capital in Australian rural enterprises are tied up in land ownership often with a debt the enterprise cannot afford.

Farm debt is currently $17.9 billion and at least half of this has been borrowed to purchase land (ABARE 1996). Farmers own their own land but have few resources to develop any significant enterprises, especially any which may require innovation.

Inflation over the last twenty years has had the effect of distorting where the real wealth is generated in agriculture. Increases in land values have allowed farmers to operate non-sustainable practices but have permitted them to sell the land for a profit, eventually.

In the current low inflation environment, it is necessary to make profits from the farm itself in order to grow and survive.

Farmers operate the businesses of land ownership and farm production together and as one. However, these businesses can be separately owned, such as when the farm is leased, share farmed or operated as a joint venture.

The different businesses have different cost structures, returns and risk profiles:

• land ownership has a high entry cost, with generally low maintenance costs and a low return with high security.
• a farm business can have a medium entry cost, high maintenance costs and a high return with low security.

These two investments attract investors with different resources and requirements.

Corporations or superannuation funds with large investment portfolios may be interested in investing in rural land to balance their investment structure.

Primary producers, freed from having to own land, could then invest in larger or more highly developed rural enterprises which would be able to provide the return on investment they require.

There are many examples of leasing, share farming and livestock agistment in Australia today. In a number of cases, farming cooperatives are also separating land ownership from production activities.

The fundamental problem of security of tenure exists and low returns limit the amount which can be paid as a yearly lease.

The exclusive land ownership ethic and the mono-cultural approach to farming are largely responsible for the low yield on investment in land in Australia. Many Asian and European farms support a number of enterprises.

The potential exists to raise the productivity and return on investment on Australian farms by simultaneously operating a number of complementary enterprises on each farm.

Once the land ownership business is separated from the business of producing a product or service, it is possible to entertain the concept of the ownership of different enterprises by a number of different entities. All would operate on land belonging to a separate land owner.

For many years now Australian farmers have been encouraged to diversify, but diversification on a large scale can be difficult and has been very slow to happen.

Two reasons for the slow rate of diversification have been a lack of expertise and a lack of capital. These problems can both be solved if the concept of multi-level land use is combined with a change of attitude towards land ownership.

The density and efficiency of land use seen in Asian countries demonstrates what is possible under pressure. Farmers in these countries use all available land for production and frequently run a number of enterprises on one farm.

Aboriginal land management and land use systems, employed before European settlement, used multi-level principles.

With a little imagination, it is possible to visualise a number of levels of opportunity on many Australian farms. Each of these levels could operate independently without interfering with each other and in some instances, with appropriate planning, synergies could be found which would enhance the productivity of each enterprise.

The owner of the land need not supply the expertise or the capital to operate these enterprises. The owner could be a corporation, a private investor, an aboriginal community or a farmer already operating an enterprise on the land.

Enterprises could be operated by separate individuals, corporations, cooperatives, etc, who would lease the relevant level of opportunity from the landowner or operate on a joint venture basis.

Examples of complementary enterprises could be cattle, timber, tourism, apiculture and bush foods. All these enterprises could operate on the one farm with separate owner/operators without interfering with each other.

Agroforestry and livestock, vineyards and tourism are examples of this concept which are in common use across the country now.

Expansion of this concept and removal of the need to own land can increase the return from the land and enable people without a large capital backing to enter rural industries and operate rural enterprises.

Use of land on a number of levels could be utilised to decrease pressure from one enterprise, i.e. if return is increased by the introduction of bees, timber and tourism, the livestock stocking rate could be reduced, thus making the entire system more diverse and more sustainable.

Multi-level land use, by increasing returns, can be viewed as a way of making leasing a more attractive proposition.

Leasing can also make multi-level land use viable by importing capital and expertise into the system.

There are parameters other than economic growth which determine the health of the economy and society.

Social, cultural, recreational and spiritual use of land, while not producing a directly measurable economic return, are valid land uses and must be considered when land use issues are discussed. Native title can be viewed as a level of land use which can fit into a multi-level land use system.

The Cape York Land Use Agreement, developed in 1996, is an example of a number of different parties negotiating to use the same area of land for a number of purposes, not all of them producing a measurable economic return.

The principles established by this agreement could be applied throughout Australia in a range of industries and locations.

Australian farmers and rural communities are under threat and non-sustain- able practices are being used in many cases to combat this threat.

Significant change will need to occur in the structure of land management, ownership and land tenure systems if environmentally, financially, culturally and spiritually sustainable systems are to be developed.

The development of sustainable Australian land management systems will ultimately require a combination of indigenous and non-indigenous knowl- edge, technology and philosophy.

The separation of land ownership and enterprise ownership combined with multi-level or complementary land use is an example of this combination.

It has the potential to change the current situation, breathe life into Australian rural communities and take positive steps toward the process of reconciliation between Aboriginal and non- Aboriginal Australians.

ABARE (1996) Commodity Statistical Bulletin.

Bourne, A (1997) The Land Ownership Ethic and Its Impediments to Rural Development. Contributed Papers. Australian Farm Management Society Ltd 23rd National Conference, 5 February, 1997. University of Southern Queensland, Toowoomba, Queensland.

Flannery, T (1996) The Future Eaters.

Napier, R (1997) Business Structures for the Future, in Proceedings of the National Agricultural and Resources Outlook Conference 1997, ABARE, Canberra, pp 83-92.

Page, JR (1997) Declining Farm Viability and Our Aging Farm Population - Is There a Connection? What is the Solution? Contributed Papers. Australian Farm Management Society Ltd 23rd National Conference, 5 February, 1997. University of Southern Queensland, Toowoomba, Queensland.

Perkins, I (1997) Multi-Level Land Use. Contributed Papers. Australian Farm Management Society Ltd 23rd National Conference, 5 February, 1997. University of Southern Queensland, Toowoomba, Queensland.

Sirolli, E (1995) Ripples in the Zambezi. Murdoch University, WA.

Tomes, QR and Bartholomew, RB (1985) Share Farming and Lease Agreements - A Practical Guide. Queensland Department of Primary Industries Information Series Q185004.

Contact: Dr Rob Fletcher, School of Land and Food, The University of Queensland Gatton College, 4345; Telephone: 07 5460 1311 or 07 5460 1301; Facsimile: 07 5460 1112; International facsimile: 61 7 5460 1112; Email: r.fletcher@mailbox.uq.edu.au

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originally created by: GK; latest update 6 June 1999 by: RF