The kids don't want to take over the farm: what's happening to the demographics of Victoria's wool industry?
Roger Wilkinson, Neil Barr and Komala Karunaratne
Centre for Land Protection Research, P.O. Box 3100, Bendigo Delivery Centre Vic 3554
Roger.Wilkinson@nre.vic.gov.au
Summary
In this paper we report on a demographic analysis of Victoria's wool producers over the last two decades, using data from the Australian Bureau of Statistics' Census of Population and Housing. Our research was done in response to concerns that the average age of Victorian woolgrowers is increasing, to answer the following questions:
- Is the average age of woolgrowers really increasing and by how much?
- Are many young people entering the wool industry?
- Is the ageing problem greater in some areas than others?
Our analysis confirms that Victoria's body of woolgrowers is increasing in average age from a median of 48 in 1986 to 51 in 1996, and reducing in number from 8832 in 1986 to 4651 in 1996. Both of these trends are explained by the same two phenomena. Older growers are staying in the industry, and younger growers are not entering to replace them. The extent of the problem differs regionally, with the median age increasing by more then 4 years in a 10-year period in some areas. The decline in entry of younger persons is partly in response to modest returns from wool, but mostly in response to cultural forces in the wider community. For the young, career and lifestyle opportunities in the city are much greater than on the farm. The occupational immobility of older woolgrowers is a rational choice, because leaving the farm would be unlikely to benefit them financially or emotionally.
Introduction
The 1990s were not kind to woolgrowers in Victoria, a state in the south east of Australia. Wool prices throughout the decade remained at historically low levels, resulting in low farm incomes (Martin 1998, p. 13). And the productivity growth of Australia's sheep farmers in the 1990s was lower than that of other broadacre industries (Knopke et al. 2000, p. 13). Several taskforces attempted to find the way for wool to get out of the doldrums, with little success (e.g., Wool Industry Taskforce 1996). Woolgrowers responded by diversifying into other agricultural industries such as prime lambs, cropping, and even bluegum trees where they could. However, in the specialist woolgrowing areas, alternatives to wool are few, so diversification was often not a realistic option. Many woolgrowers were able to maintain their incomes only through off-farm work.
These wool industry pressures combined with other, generic, pressures on rural youth all over the world to move to the city (e.g., Jackson-Smith and Barham 2000), to bring about a dramatic reduction in inter-generational transfer on woolgrowing farms in some areas (e.g., Curtis et al. 2000). This has resulted in a widespread perception that the average age of farm operators in Victoria's wool industry is increasing, coupled with a concern for what might happen to the industry if this trend continued. Because of our experience in rural demographic analysis (e.g., Barr 2001), we were commissioned by the Victorian Department of Natural Resources and Environment's wool team to test that perception. An understanding of the demographic trends will benefit those involved in the wider wool industry (both in extension and processing) and policymakers (both in natural resource management and structural adjustment in rural industries).
In this paper we report on a demographic analysis of Victoria's wool producers over the last two decades. There was no model to follow. American researchers (e.g., Gale 1996; Jackson-Smith and Barham 2000) had access to more detailed data than that available in Australia. And the only recent published Australian research (Haberkorn et al. 1999) presented only maps of median age of farmers across all agricultural industries. We attempted to answer these questions:
- Is the average age of woolgrowers really increasing and by how much?
- Are many young people entering the wool industry?
- Is the ageing problem greater in some areas than others?
This represents the first step in a research project to understand past demographic trends and model future trends in Australia's rural industries. The present paper is a summary of a larger report (Barr et al. 2002).
Method
We obtained data from the Australian Bureau of Statistics (ABS) for the Censuses of Population and Housing conducted in 1986, 1991 and 1996. At the time of writing, 2001 census data were not available. The data covered sheep farmers in Victoria, and were in the form of the number of people in each of several 5-year cohorts, broken down by various demographic characteristics. We analysed the data using the SPSS statistical software package and ArcView geographic information system software package. Because the data represent the whole population (and not a sample), and are in cohort form, statistical tests are not appropriate.
The data were aggregated to Statistical Local Area (SLA) level (in rural areas there are usually between one and three SLAs in a Local Government Area). SLA boundaries change in response to changing population distribution. In this paper 1996 SLA boundaries are used; data from previous censuses were re-aggregated to 1996 boundaries by the ABS. We report results only for those SLAs that contained 30 or more sheep farmers in 1996.
The categorisation of a person's occupation as a farmer is based upon a self-description question used in the census. Respondents are asked their major occupation within the preceding week. The self-description of farmer is potentially open to ambiguity. Changes in self-description could arise from a change in occupation, a change in off-farm income dependence or changes in self-image.
We report data for "sheep" farmers, rather than "wool" farmers because that is the most detailed data that we can get from ABS. The census category of "Sheep farming" means sheep only, and not sheep in combination with other industries such as cropping or beef. We consider that there is a close match between "sheep" farmers and "wool" farmers, because most lamb and sheep-meat production is a by-product of other types of farming, such as grain growing. In 1999–2000 only 12% of farms in Victoria that produced some prime lambs received more than 30% of their income from prime lambs (Connell and Hooper 2001, p. 1).
Results
The number of sheep farmers in Victoria reduced from 8832 in 1986 to 5986 in 1991 and 4651 in 1996. The reduction was most marked for young farmers (Figure 1). The period of great adjustment out of the wool industry between 1986 and 1991 resulted in the removal of farmers in all age cohorts. The reduction in sheep farmer numbers in Victoria between 1991 and 1996 was less marked, but the reduction in the number of sheep farmers aged between 25 and 34 between 1991 and 1996 was almost as great as that between 1986 and 1991. The number of older sheep farmers (65 and over) did not decrease between 1986 and 1996.
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| Figure 1: Age of Victorian sheep farmers |
We estimated median age by assuming a uniform age distribution in the 5-year age cohort that contained the median age. The estimated median age of Victoria's sheep farmers was 47.6 in 1986, 48.2 in 1991, and 50.5 in 1996. Estimates of the median age of Victoria's sheep farmers by SLA show that the oldest average age is in the central goldfields area (between Bendigo and Ballarat), and also the north-east, while the south-west (which contains the highest density of sheep) has a lower than average age structure (Figure 2).
The pattern of increasing age of sheep farmers appears to be occurring over almost all of Victoria's sheep producing areas. In the south-west the increase in median age over the 10-year period from 1986 to 1996 was generally less than 4 years. Ageing in the central goldfields has been greater, with an increase in median age of 4 years or more in most SLAs.
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| Figure 2: Median age of sheep farmers by SLA: 1996 |
We estimated entry rates to the sheep industry for the 5-year periods that preceded each census by assuming that anyone who called themselves a sheep farmer and had moved house in the preceding 5 years was a new entrant. Overall, entry rates to the Victorian sheep industry have declined markedly. The cause of the decline in the entry rate is a decrease in the entry of younger persons (Figure 3). Declines in the inter-censal period 1991–96 occurred only in age groups younger than 35. This decline in entry rates is in marked contrast to the Victorian dairy industry, a rural industry not in decline, where there was no evidence of a decline in entry rate over the period 1986–96.
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| Figure 3: Estimated entry to the Victorian sheep industry by age:1986–96 |
Discussion
The continuing decline in the number of younger persons entering wool production is partly in response to the modest returns of the wool industry, but mostly in response to cultural forces in the wider community. This decline does not seem to be related to medium-term movements in the price of wool, suggesting that young persons are responding more to long-term industry and cultural trends than to short-term market fluctuations. The trend will therefore not be reversed merely by a return to higher wool prices. The phenomenon of rural youth leaving home and moving to the city is widespread and long-standing. For young people, career and lifestyle opportunities in the city are much greater and more enticing than for their parents.
Despite prolonged periods of low wool prices during the 1990s, the wool industry was characterised by relatively slow adjustment out of the industry by middle-aged and older farmers. Reasons for this limited occupational mobility can be explained by the rational behaviour choices of Victoria's wool producers.
- Many wool producers are in later stages of their career. For many an attempt to change career would be a poor investment of their human capital. Their skills are in the sheep industry, many have limited formal education and few remaining years in which to capitalise on an investment in new skills.
- During the 1990s the regional job market offered little prospect of farmers improving their incomes. Those with off-farm work would be unlikely to improve their financial position by quitting the farm.
- For the many sheep farmers in mid or late career, the farm is the asset that can provide income security in retirement. With limited prospects of improving incomes by quitting farming, any decision to sell the farm during a period of low demand for woolgrowing properties (and thus low prices) would threaten retirement security. Many older farmers sensibly delay plans to sell land during periods of poor commodity prices.
- Older farmers whose children have decided not to enter farming as a career do not have an incentive to step aside from the farm to allow their children to take over its management. Their easiest course of action is to remain in farming for as long as they are healthy and able to enjoy it.
One outcome of these adjustment behaviours has been a gradual increase in the median age of wool producers. Over the past 15 years farmers born in the period 1946 to 1951 have remained the most populated age cohort in the Victorian wool industry. These 'baby boomer' farmers are approaching retirement age. It is unclear when they will retire and how their retirement will influence the structure of the wool industry.
The high average age of sheep farmers in the central goldfields area has implications for Victoria's natural resource management. Much of Victoria's recharge of saline groundwater occurs in this region. Environmental extension effort is concentrated there and policymakers are interested in future demographic trends among the area's farmers.
Conclusion
Analysis of the census data confirms that Victoria's body of woolgrowers is increasing in average age and reducing in number. Both of these trends are explained by the same two phenomena. Older growers are staying in the industry, and younger growers are not entering to replace them. The extent of the problem differs regionally, with the median age increasing by more then 4 years in a 10-year period in some areas.
Structural adjustment is a necessary component of any agricultural industry faced with a cost-price squeeze. Although good for the industry as a whole, adjustment imposes social costs on individuals faced with their own adjustment decision. Such costs are greatest for older farmers who are forced out of the industry by economic pressures. The form of adjustment that imposes the least social cost and causes the least dislocation is probably the decision made by young people about whether or not to enter the industry. This is the adjustment that is occurring in the wool industry in Victoria.
References
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