Issue 3: Barriers to entry / expansion

In conjunction with the typically lower average and less secure income prospects in agriculture, there are a number of barriers39 that are limiting various industries and opportunities on the rural lands of the Clarence Valley. These are apparent in two main ways:

1. a lack of new entrants which places increased pressure on existing and older producers to continue working 2. an inability to expand farming operations to keep pace with ever increasing productivity needs to maintain viability

While the ability of rural land holders to commence or expand agricultural activities is interconnected with issues beyond the scope of Council’s immediate control, the following key and inter-related aspects of this issue were raised through consultation and research:

o Land price increases and subsequent affordability o Intergeneration progression and succession planning o Subdivision of land whilst retaining productive capacity

Monitoring and where possible the removal of barriers to entry and expansion can assist in maintaining viable and productive uses of rural lands to the benefit of the wider Clarence Valley community.

39 See for example https://www2.deloitte.com/au/en/pages/consumer-business/articles/farmingverge-workforce-crisis.html - accessed 19 November 2021 40 See https://www.realestateinvestar.com.au/Property/nsw/clarence+valley – accessed 11

November 21

3.1 Land prices and affordability

Rural land in the Clarence Valley varies considerably in price due to proximity to towns, coastal landscapes, geographical features and terrain. While the Clarence Valley enjoys lower median house and rental market prices than some surrounding council areas, house prices have still increased significantly in recent years, from a median house price of less than $320,000 in 2014 to around $485,000 at the current time, including 17.7% growth over the last two years40 .

Notably, growth in surrounding local government areas has typically been much higher, with the Richmond Valley LGA increasing by 19.1%, Coffs Harbour by 23%, Ballina by 32.8% and Byron Shire 60% over the same period. The growth in surrounding localities suggests that there may continue to be increasing price pressures on land in the area into the foreseeable future.

This increase in land value also extends to rural lands. A combination of increasing land value for agricultural pursuits is being exacerbated by the growing popularity of lifestyle farms and appetite for sea / treechange opportunities. This has been highlighted in the annual Rural Bank – Australian Farmland Values 2021 report41, and as shown in the historical graph below for NSW42 .

41 From ruralbank.com.au – accessed 11 November 21 42 Rural Bank – Australian Farmland Values (2021)

Figure 15: Rural land price increases

Increases have anecdotally increased into 2021, particularly as a consequence of the current pandemic, and placing greater pressure on the balance between farm viability and entry for new participants. The Rural Bank Report further identifies that “Although median price per hectare declined at region level there was strong growth recorded for a number of municipalities including Clarence Valley, Inverell, Kyogle, Port Macquarie-Hastings, Tamworth, Tenterfield and Walgett.”

Between 2015-2020, the Report identifies that rural land prices have increased substantially (compound growth of 9.2% in the Clarence Valley) compared with the longer 10 year growth rate (2.6%)43 .

Historically, land prices have not been such a significant barrier, with smaller farms being able to still produce acceptable incomes. As highlighted by responses to the initial project survey, few rural properties derive a majority of their household income from the land

43 Rural Bank – Australian Farmland Values (2021) (only 25% of respondents). Some industries, such as sugarcane, indicate that the need for larger farms to be economically viable, combined with the significant increase in land value, means that succession planning and the potential for new entrants is severely limited (refer to further discussion in the next two sub-sections).

As land becomes unaffordable in proportion to local farmer revenue, two outcomes can occur:

1. Market entrants become more limited to larger agricultural companies creating larger scale operations to establish efficiencies, or 2. Landowners from metropolitan areas with more disposable income purchase rural land as a lifestyle choice instead of for agricultural production.

As a result, there are fewer new farmers entering the agricultural sector due to magnitude of the growing initial investment required in buying rural land. There are also identified issues with succession planning as many farmers need to capitalise their land assets to enable retirement. This includes for younger family members, where concessional lots or similar may have previously provided an avenue for staying on the land or associated with the farm (this is further discussed below).

Even where a new entrant is able to acquire land, the continuing shift to greater technologies also means that there is often significant capital investment needed to facilitate ongoing income. Farming can be hard work, with more limited and variable income generated. This barrier can however be addressed through process of education,

engagement and collaboration with landholders (refer Issue 4 for more details). This combination means there is a significant barrier to entry into farming that do not typically apply to many other occupations44 .

3.2 Intergenerational progression

As outlined above, there is a current megatrend across Australia of young people leaving rural land to find work in urban or indoor settings45 or for more lucrative industries such as mining46 – whether by choice or barriers to entry.

Knowledge of rural land management and agricultural practices has historically been passed down from within families for generations. Consequently, as fewer young people stay on the farm, succession planning becomes more and more problematic. There are a number of contributing factors over the past 20 years leading to this move including:

o Increasing land prices o Lack of farming knowledge / literacy o Capital investment requirements o Physical demands of farm work o Lower than average income o Increased ease of online work / alternative incomes o Lack of infrastructure and support networks for young farmers

As per the list above, this multi-faceted challenge is beyond the scope of Council to resolve, though there is potential for influence in some more specific areas – such as the identified issues with boundary

44 See for example - https://www.farminstitute.org.au/farmers-are-getting-older-but-its-not-aproblem/ and https://www2.deloitte.com/au/en/pages/consumer-business/articles/farming-vergeworkforce-crisis.html - accessed 19 November 2021 adjustments associated with sugarcane farming (see further below). Other opportunities exist through positive reinforcement and valueadding to farm production through mechanisms such as farm gate trails and farmers markets, as well as on-farm diversification (e.g. accommodation, tours and tastings).

3.3 Subdivision to maintain productivity

Whilst historically there has been an ability to create small lots for children or retirement (concessional lots or similar), these provisions have progressively been removed as part of a State-wide approach due to legitimate concerns relating to land use conflict and fragmentation.

Now moving towards a generation since these changes, there is an apparent issue within sugarcane (and potentially other industries in the Clarence Valley) where the need for larger farms for productivity, an aging farmer workforce, and fewer younger generations taking up the industry mean that farms are being lost to other uses (e.g. macadamias or rural lifestyle purchasers. Particularly within sugarcane, this can result in incremental loss of production, and over time will risk the future of the industry (and the 1,000 direct and indirect jobs that are associated with it).

It is widely accepted within land use planning that subdivision which enables new dwelling entitlements to be created in rural areas will ultimately result in fragmentation and increase the likelihood of land use conflict. To counter these historical impacts, Council implemented a 10 year ‘sunset period’ in 2011 within which dwelling entitlements on undersized allotments must be approved (ending in December 2021).

45 Pathways into Agriculture (2016) – Mid North Coast NSW RDA 46 Farming on the verge of a workforce crisis - Agribusiness Bulletin (undated) – Deloitte

This process is likely to result in a spike in applications, but an eventual reduction in potential land use conflict points over time.

Whilst this process is supported, planning controls can also restrict the necessary growth and change of industries like sugarcane when they cannot be applied in a more flexible way. For example, an existing dwelling on a farm property could be subdivided from the residual lot (which could remain over the minimum lot size) that remains agriculturally productive. With appropriate buffers and a restriction on any dwelling entitlement for the residual lot (even when over the minimum lot size) this scenario may provide a balance between the risks of land use conflict (no new dwellings are created) and the potential loss of productive land (particularly when lost to lifestyle uses).

This concept in a simplified format is outlined in Figure 16. This scenario enables farmer A to capitalise some value in the land whilst potentially remaining on site in the short-term (living in a buffered existing dwelling on its own smaller lot). Farmer B has the opportunity to expand their farm (through lot amalgamation or with a restriction on dwelling entitlements on the residual lot of farmer A) to meet increased productivity needs at a reasonable cost (as there is no dwelling), whilst also retaining the extent of previously cropped land for the broader industry (i.e. assisting overall industry viability).

It is important to reiterate that the scenario would restrict any dwelling entitlement on the residual lot of farm A whilst providing an appropriate buffer to the existing dwelling. If this residual lot is not purchased by farm B, it may still be sold or leased to anther producer, but would not be available for residential use. It is envisaged that this may only be applicable to the RU1 Primary Production zone to ensure that other uses are not proposed on the residual lot and its economic value remains with agricultural production.

A B

RESIDUAL LOT (NO DWELLING)

B

PRODUCTIVE FARMLAND

EXISTING

A

BUFFER

PROPOSED

EXISTING DWELLING

Figure 16: Subdivision to facilitate important farmland retention

The choice to utilise this provision would remain with the landowner, resulting in no net addition of dwelling entitlements whilst reducing the loss of existing productive land. However, the importance of ensuring agricultural viability / retention of use remains for the longer-term due to the subdivision outcome, even where the resultant land parcels are sold.

The allowance to undertake this form of subdivision would be envisaged through an LEP amendment, potential to Clause 4.2B.

While there are recognised issues resulting from the legacy of fragmentation and concessional style lots, the impact of removing flexible approaches may have greater impacts as the value of land for lifestyle reasons (i.e. with a dwelling) outweighs the values for agricultural production. This is particularly acute within the context of

the loss of land mapped on the Far North Coast Farmland Map as many of these areas coincide with high land values in coastal growth locations.

It is further acknowledged that whilst minimum lot sizes play a significant role in many of the issues identified, changing the lot size would not be expected to resolve this issue. As identified in the DPI Agricultural Land Use Planning Strategy Options Paper, “the minimum lot size for rural land is often a reflection of historical policy and is not based on evidence. Achieving the minimum lot size does not guarantee that the land will continue to be used for agriculture as the size of the lot may be unsuitable for the particular farming method. Moreover, there is some evidence that minimum lot sizes can also be too large – too small to be viable businesses but too large for effective hands on management.”

RELATED RURAL LANDS STRATEGY RECOMMENDATIONS

Note: the recommendation numbers relate to those presented in the Rural Land Strategy document for ease of reference.

Facilitate effective land use planning for rural areas

Recommendation 5: Review subdivision controls to facilitate agricultural production whilst minimising the establishment of new dwelling entitlements in the RU1 zone The rising value of some rural land is being driven by its value for residential rather than agricultural use. This recommendation seeks to avoid rural land identified primarily for agricultural use (i.e. within the RU1 zone) becoming more highly valued for residential use and lost to ‘rural lifestylers’. This is achieved by allowing the subdivision of rural land without dwelling entitlements being created and thereby reducing the barriers to agricultural expansion.

Elevate the importance of rural lands within Council and the community

Recommendation 8: Establish an ‘Sustainable Agricultural Officer’ within Council

This will assist Council to work more closely with producers and rural land holders to identify and support appropriate opportunities for diversification of use, particularly within the RU2 zone, whilst also linking these where possible on ongoing productive use of the land (for environmental or agricultural purposes).

Engage with government and industry to leverage support

Recommendation 17: Provide a range of programs, training and education opportunities for rural landowners and the broader public

Breaking down barriers to entry can be achieved through engagement, collaboration and training opportunities for new and existing rural landholders. For example, specific programs can be developed around engagement of new entrants, succession planning and opportunities for alternatives to land purchase (e.g. leasing, co-operatives etc).

Recommendation 18: Strengthen opportunities for rural tourism and recreation

Enabling carefully planned diversification opportunities within the rural lands’ context, for example complementary tourism and recreational activities, was well supported through the project survey and

discussions. Such use can provide a greater range of interests for younger farmers and rural land holders, creates opportunities for greater and more stable revenue and may assist in transition of traditional farm businesses within rural lands context.

Develop supporting infrastructure that enables opportunities

Recommendation 22: Consider opportunities for, and where viable develop an ‘Agricultural Hub’ to benefit a wide spectrum of rural activities, and

Recommendation 23: Establish a basis for industry specific and shared infrastructure opportunities

The development of carefully planned shared infrastructure can be utilised to facilitate collaborative arrangements that may assist in reducing the cost of entry to agricultural production and create a supportive network of suppliers and producers.