People - Adjustment - Pressures for change and what can't be modelled
Pressures for change and what can't be modelled
Modelling demographic change over a 20 year period using only past behaviour patterns risks ignoring many of the forces which will be at work changing the shape of catchments and agricultural communities over the next 20 years. In this next section we review some of these forces. Some of these pressures can be assumed to be accounted for within the existing demographic model. Others may well catalyse quantum shifts in the social structure of rural communities.
Economic forces
The declining terms of trade for farm products: Declining terms of trade have been a long-standing feature of Australian agriculture. The rate of terms of trade decline appears to have slowed in the past decade, leading to some debate as to a fundamental shift in the nature of agricultural markets. Such optimism needs to be tempered by an understanding that declining terms of trade are driven by technological innovation. In agriculture, technology often improves productivity by allowing increases in farming scale and improvements in labour efficiency. New technology will always be adopted by segments of the agricultural and food industries if it offers economic advantage. Minor advances in the technology of managing existing farming systems bring gradual cost pressures upon those least able or willing to adopt these innovations. The result is a gradual change in the structure of agriculture as farm numbers decline. In recent years there has been an average annual 1.5 per cent decline in the number of farm establishments in Australia. This decline is the price of maintaining competitiveness (Lindsay & Gleeson 1997). Of course, the impact of declining terms of trade is not always experienced as a gradual pressure. Current forecasts are for oversupply in the wine grape market and potential under supply in the wool market. If these predictions are correct, price trends in these industries will deviate significantly from the long term trend.
Overall, the terms of trade pressures will ensure the number of farms will continue to decline, and fewer farms will produce more and more of the agricultural production of the country. These trends are obvious not only in Australia, but in other developed nations (Anon 2000; Economic Research Service 1997; Freshwater 2000).
Consequences of technological innovation: Major technological shifts often bring major changes in the structure of agricultural communities. A review of the major technological shifts in western agriculture by the Western Agri-Food Institute (Anon 2000) concluded that major technological shifts in agriculture always create winners and losers, and that the new technology often shifts the frontier of agriculture. The most significant major innovation cited in the Western Agri-Food Institute review is the introduction of the internal combustion engine to agriculture. This assisted in doubling the volume of wheat production in Australia and opening a new frontier in the West Australian wheat belt. The long term concentration of most of the Australian dairy cattle within Victoria is another example of the redistributive impact of new technologies and management practices.
The question we must consider is whether there are new technologies that promise or threaten a similar shift in the structure of Australian agriculture. Two technological innovations are regularly discussed in contemporary debate: genomics and information technology. The former may create new crops or niches, or change the relativities of advantage between different regions. Unlike the majority of earlier major technological innovations in agriculture, genomic knowledge is strongly protected by intellectual property law. The technology may favour certain types of farms? those who are more closely integrated into the marketing chains of agri-food conglomerates which own the technology. This may facilitate much more tightly integrated production and marketing chains. These potential impacts of genomics are unclear in the current debate over the ethics of genetic manipulation of food.
The impacts of information technology are generally expected to be the removal of many intermediaries from marketing chains (disintermediation). The most obvious example in Australian agriculture is the gradual demise and sometimes re-invention of the wholesale fruit and vegetable markets under the influence of growing contract and direct supply relationships between major supermarket chains and producers. Changes in intermediary relationships are occurring in other industries as internet based marketing tools are adopted by both producers and suppliers.
Policy innovation: Major policy and administrative structure changes will have impacts upon the patterns of structural adjustment that will not be indicated by the demographic modelling used in this project. We can expect that significant policy changes in the dairy industry during the most recent inter-censal period will be detected in the closer settled grazing regions when data from the 2001 census has been released. De-regulation can be expected to accelerate the historic trend of consolidation of the Australian dairy industry to Victoria and Tasmania (Bureau of Rural Sciences et al. 2001).
Changing social values and structures
The continuing urbanisation of Australia: Urbanisation is an outcome of the impact of technological innovation upon agriculture. Australia is urbanising rapidly and at an accelerating rate. The State of Victoria provides a clear example. In 1920 there were 20 Victorians for every farm in the state. By 1970 the ratio had risen to over 50. Today the ratio is 175 Victorians for every farm in the state. Modelling of the potential future adjustment of agriculture suggests that this ratio may approach 400 by 2021 (download Modelling description in the appendix report - 4.7 MB WORD DOC). The contribution of agriculture to the national economy can be expected to reflect a similar decline. There are some obvious consequences that flow from this.
The culture of farming will have less and less influence upon the creation of Australian social values. The political influence of the farming lobby will decline. This is but a continuation of a well-established trend. More importantly, there will probably be increased demand for non-productivity values from agricultural resources. We can see the greatest example of this in the use of the concept of multi-functionality of agriculture in the European position on agricultural trade reform. In the Australian context, multiple functions will include improved quality and quantity of water supply, improved health of riverine habitats, ?clean? food and landscape amenity (Cocks 1999; Ellyard 1998). It is possible these demands will appear more and more onerous when viewed from a traditional farming perspective.
Currently, demand for landscape amenity is a major influence upon the pattern of structural change in Australian agriculture. The influence is manifest in the high price of land in the more amenable and accessible parts of the rural landscape. These higher land prices restrict the capacity of agriculture to adjust to maintain competitiveness and inexorably drive the path of adjustment to a non-commercial agricultural future. The potential for these amenity pressures to increase over the next 20 years is strongly linked to the demographic structure of the nation. Research in the United States has shown the close relationship between rural area development and natural amenity. Over a thirty year period, regions with the lowest landscape amenity, and often the most competitive agricultural businesses, experienced the greatest population losses (McGranahan 1999).
The decline of farming as a lifestyle identity and the growth of market based identities: Increasing demand for multi-functional agricultural services is only one of the changes that will be brought about by changing social attitudes. Over the past thirty years there have been major shifts in social values within agricultural communities in Australia. These changes have been documented by Bryant (1999). Bryant described three shifts in social belief structures which lead to land managers shaping new understandings of their roles as a farmer. These changes will have a significant influence upon the future patterns of structural adjustment in Australian agriculture.
The first major shift has been from a view of oneself as a farmer towards a more urban occupational identity. Farm managers increasingly are likely to see themselves less as a farmer than as a manager with skills that have much in common with other business managers outside agriculture. This is in part an outcome of the shift towards off-farm work and in part a response to the promotion of a more managerial view of farming through industry, education and government organisations. It is not unreasonable to speculate that we may see a decline in the traditional perspective that ?farming isn?t a job, but a way of life?, and that this may change the pattern of farm exit decisions made by Australian farmers as well as the way farm businesses are managed. Current evidence is that younger farmers are more likely to conduct sophisticated business planning (Tanewski, Romano, & Smyrnios 2000). The increasing capacity of the agricultural sector to interact with the urban world, the greater demands for sophisticated business management and production skills will further change the traditional agrarian values of the Australian farm community. The second social change identified by Bryant is what she has called ?the centrality of the market in constructing the self?. This shift is seen in the trend for increasing numbers of farmers to consider their value in terms of strategic decision making on the farm, rather than their ability to undertake physical labour in an outdoor setting. This reflects trends towards the use of the language of managerialism and entrepreneurship within the wider community. As this trend continues, farm managers will less and less see themselves as farming for the way of life, and more and more construe their farming activity as a search for business profit and market opportunity, or construe their farm as a residence.
Rural youth and the march of modernity: A related social values shift is the lessening attractiveness of agriculture as a career destination for younger rural Australians. This can be seen both in the decreasing entry of younger persons to agriculture and in the continuing lowering of entry scores for tertiary agricultural courses (link to Entry to agriculture information). This loss of interest is not strongly related to the fluctuations in commodity prices, but reflects the impact of modernity upon the rural youth population (Gabriel 2000). This is the major factor contributing to the increasing average age of Australian farmers and is leading to new forms of later age agricultural entry and inter-generational transfer. These changes have the potential to create patterns of farm gentrification in some closer settled agricultural regions. These changes also have the potential to accelerate the shift towards less traditional farming identities. There is a strong likelihood of this phenomenon being accelerated by changes in the age structure of the non-farming community (see the following section on the demographic progression of the baby-boomer generation).
Changing gender relationships: The final social change identified by Bryant is a shift in gender relationships on the farm. Fewer and fewer farm women identify with the traditional role of ?farmer?s wife? and increasingly are likely to identify as a joint farm manager or as having an occupational life separate from the farm business. It has been estimated that women number 40 per cent of farm business partners and 32 per cent of the farm paid workforce. Many women work off the farm to support farm family living standards. This trend is a reflection of social trends beyond agriculture and has been well documented by a number of Australian researchers. (Alston 1995; Argent 1999; Gaurnaut, Rasheed, & Rodriguez 1999; Nelson 1999; Oldrup 1999).
The change in womens? roles in wider society over the past 30 years has had some profound impacts upon the process of structural change in agriculture. One of the most obvious implications has arisen from the entry of women into the workforce outside farming. This has greatly increased farm family dependence on off-farm income earned by women. It could be argued that this has in some areas reduced the pressure for structural change in agriculture by removing the imperative to increase income through farm business expansion.
The change in womens? roles extends beyond the workplace into family and relationship expectations. De-traditionalisation of marriage relationships is a feature of the modern Australian farm family. Just as in urban Australia, womens? expectations of marriage relationships are greater than they were a generation ago. The alternatives to continuing in an unsatisfactory marriage are more socially acceptable than a generation ago (Wolcott 1999). Marriage as an economic contract has been replaced by marriage as an emotional relationship, recognition of the crucial role healthy relationships play in personal wellbeing (Weston 1999). Fewer women on farms are today willing to endure what they consider to be an unsatisfactory relationship or family lifestyle (Dempsey 2001). In a study of farm families in the early 90?s, farm womens? lack of satisfaction with the marriage and family relationships was the greatest predictor of farm business failure. This was more important than farm size or profitability (Barr 1999). Thus farm adjustment patterns were, in part, being driven by pressures for relationship adjustment within families. The result in the locality under study was a shift in the pattern of adjustment from consolidation towards churning and fragmentation. The implication of this is that the successful farm business management team today has a greater need to develop the skills of communication and teamwork within the household than may have been the case a generation ago.
The development of the careers for women over the past generation has increased the difficulty of the modern young farmer in finding a partner. The need to consider dual careers in relationship establishment may lead to new patterns of migration as aspiring farmers seek to accommodate the needs of potential partners who do not wish to adopt the traditional role of farm wife. There is anecdotal evidence of decisions to exit farming or move farm location to improve the chances of finding a partner. The premium that must be paid to purchase a farm within commuting distance of major centres in part reflects the proximity to employment for embers of the farm household.
De-traditionalisation of national cuisines: De-traditionalisation is not just a phenomena of Australian agriculture. It is a force in urban Australia and in the societies with whom we trade agricultural commodities. Traditional patterns of food consumption and purchase are changing as lifestyles changes, affluence increases and food availability improves. In Australia this has contributed to the growth of the market power of supermarkets in the food sector (Piggott, Griffith, & Nightingale 2000). The Centre for International Economics modelled the implications of population growth and increasing affluence upon the commodity demands of our major trading partners (LWRRDC 1997). The results suggest a significant shift in the relative demand for various agricultural products. The greatest increases in demand will be for cotton and horticultural products. There will be much smaller increases in demand for cereals and beef. The modelling suggested that there was even the potential for a long term decline in demand for wool. Cotton and horticulture are major users of irrigation water. These demand patterns would increase the value of water to the Australian agricultural economy, increasing the competition for the resource within agriculture and between agriculture and both environmental uses and urban water supply. The result will be accelerated adjustment of the irrigation sector as less efficient water users respond to market signals regarding the value of water.
The demographic progression of the baby boomer generation: The first of the ?baby boomer? generation reached the early retirement age of 55 in 2001. The retirement of this generation will peak between 2010 to 2015. This progression will have a significant impact on the structure of the Australian labour market (Access Economics 2001). Demand for labour will remain relatively constant, while labour supply will slow and eventually decrease as a result of declining fertility driven by changing social values (Weston & Qu 2001). The resulting shortage of labour will mean agriculture will need to compete against improving employment prospects for younger members of farm families. It is also possible that the increase in the number of retired superannuants will boost the current trends towards the development of amenity farm landscapes. Agriculture has its own baby boomer generation. But farm retirement strategies differ from those of salaried and waged employees. A significant number of farmers continue to farm well beyond the age of 65. We have attempted to model the impact of farmer retirement on the demographic structure of agriculture based upon evidence of farm entry and farm retirement behaviour in the period 1986-96. The modelling suggests that by 2021 it is conceivable there will be a decline in farmer numbers of between 40 and 60 per cent. There is also the potential for the average age of farmers to rise by another three years. Within the next 20 years a large proportion of rural properties will change ownership. The impact this change in property ownership will have on Australian farming is unclear. Given the detraditionalisation of farming, the changing expectations of farm transfer and reducing attractiveness of the farm lifestyle to many young rural people, we can expect that the farm population will be considerably different from today?s farm population.
Broader environmental factors
Fossil fuel dependency and biomass production: Some Australian futures researchers believe fossil fuel dependency will be one of the greatest pressures for change in Australian agriculture in twenty years time (Foran 2000). Modelling of Australian energy demand and supply over the next fifty years suggests there may be a rapid turnaround in the balance between supply and demand some time after 2025 (Foran 1998). This would impose major costs upon the current agricultural production and food distribution systems. One outcome may be the growth of a bio-fuel industry to supply feedstocks for ethanol or methanol production (Foran & Mardon 1999). Such a change would radically alter some landscapes and social structures.
Climate change: Increases in the concentrations of carbon-dioxide and methane in the atmosphere are well documented. It is considered likely that this will change climate, particularly rainfall and temperature. Whilst the nature of these changes at a regional level is still the focus of much research, there has been some analysis of the potential impacts of these changes on both agricultural systems and the natural resources which support these systems. There might be significant shifts in frost-free areas, high chill zones, pest infestation zones and areas of adequate rainfall for cropping (Howden, Reyenga, & Meinke 1999).
Catchment plan implementation: Increasingly, catchment communities are working with governments to develop catchment plans. A major focus of catchment plans is changed land use, with an emphasis in many areas upon increasing both tree cover and the area of perennial pastures. Increasing tree cover, if achieved through industrial plantation development, will have major impacts upon the social and economic structure of some rural communities. Evaluation of the social impact of plantation development in south-west Victoria has shown that there will be significant reduction in the demand for labour over the next 20 years (Petheram et al. 2000). Although the sowing of perennial pastures is an innovation more compatible with existing farming systems, it is not clear that success in this venture will not be without the potential for generating its own social impacts upon the structure of farming.
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