Troubled by lies, damned lies, and statistics, Neil Lane was stirred to write about the average age of Dairy Farmers in Australia ... or perhaps he is just feeling sensitive about his age.
Neil puts the case that the much publicised "aging dairy farmer population" is something of a myth. Whilst there is some indication of a marginal increase in the age of dairy farm owners, that increase is not the significant issue. There is a need to account for increasing life expectancy and to look at the average age of people living and working on farms.
Now read on ...
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One of the opinions that gets trotted out when the milk price and profits are low, is that the dairy industry is in crisis due to its aging population. Here are a few facts to start the discussion:
The available data on dairy farmer age is shown in the chart below (with thanks to Joanne Bills - Manager Strategy & Knowledge for Dairy Australia)
A cursory look at the numbers suggests that if the dairy farming population is ageing, it is at a relatively slow pace - approximately 3 months per year.
According to the Australian Bureau of Statistics, Australia's population, like most western countries, is ageing due to lower fertility rates and longer life expectancy. From June 1989 to June 2009 the median age in Australia increased from 32 to 37 years old. It could be argued therefore that the average age of an Australian dairy farmer is increasing at a lower rate than that of the general population.
According to the Australian Government Actuary, the life expectancy of an Australian male or female born in 1940 was between 65 and 70 years. By 1960 life expectancy had risen to 68 - 75 years. People are living longer and that means the average age of land owners is very likely following this pattern.
What the data does show is that Australia has a relatively old dairy farming population. But then that does depend on your definition of old - after all, you're only as old as the woman (or man) that you're feeling. My point is that for the past 20 years the average age of Australian Dairy farmers has been relatively stable at 52 +/- 2 years. I'd argue that this is a sustainable situation given the increases in life expectancy.
What the statistics don't show is the portion of decision making that the owner of the business shares with the next generation - be they family, worker, manager, or sharefarmer. If for example the decision making on a farm is shared between a 60 year old and a 30 year old then it could be argued that the average age of the farmers is 45 years old.
The average farm size is somewhere around 250 cows with approximately $2 million of capital invested. For an average equity position of 50-65% then the net worth of the owners is $1.0-1.3 million. Is it any surprise that the average age of farmers is somewhere around 50 years old (or at least the average age of the person who owns the majority of the assets). The dairy industry provides a great opportunity to build this type of wealth but the reality is that it takes time to accumulate. Family partnerships with mum and dad owning most of the assets are common (and have been for generations).
The most important question that should be asked is what proportion of farm businesses have a succession plan in place. Does the next generation (family or not) have clear transition path into ownership? If a sound succession plan exists then the age of the farmer is largely irrelevant. The future is secured and dairy farming will continue under the control of the next generation.
Editors note:
An interesting topic of discussion Neil. To the issue of succession I would add the question - what proportion of farm businesses have a neighbour with a succession plan? Land and cows will not be lost to dairy if those that stay can grow by gradual acquisition. And btw, wouldn't it be great to age at 3 months per year like dairy farmers do!