As a large animal vet in south-west Victoria in the 1990s, Chris Hibburt was a regular visitor to local dairy farms.
So, when he was looking for a local investment with three other partners, a dairy farm was the logical choice.
Chris was one of the first local corporate dairy farm owners in the region, and nearly 28 years later he still sees the benefits of the system.
“For our old and not so old dairy farm owners, getting out has been a potential challenge,” Chris, 66, who has recently finished his professional life as a vet and farm consultant, said.
“The issues of lifestyle, managing labour, and the amount of capital involved all become reasons for farmers to consider exit.
“Improved land prices means that selling has become an attractive option compared to leasing or having a sharefarmer.
“We are now seeing more corporate investors looking to buy these bigger farms.”
However, back when Chris and his partners first invested in a farm near Port Campbell in 1995, there were plenty of doubters.
“Since the emergence of the first corporate dairy farms in our region in the 1990s, there has been a cautious view from industry commentators and dairy farmers themselves, as to whether they would be around for long,” he said.
“Time has shown that in fact they are now a growing part of our industry and in some regions like Tasmania, they account for more than half the milk supply.”
Chris has seen many corporate farms come and go and said there was much to learn from how the good ones succeed.
He said one of the keys to success was having good corporate governance, underpinned by having a clear farm strategy agreed to by the owners.
“To be effectively implemented, it is important to have a management structure in place so that those with responsibilities are held accountable.
“As much as it is great to have lots of good ideas, if there are too many people telling the manager what to do, it won’t work.”
Chris said corporate farms could benefit in scale by improved procurement and the ability to negotiate a better milk price through volume of sales.
The administration is done by head office so there is less need for a hands-on manager to do more than handle the day-to-day operations.
However, Chris admits it is hard to replicate the dedication that an owner has for their own farm.
According to Chris, the key to having a well-run farm is to have a simple farming system.
“Design the farm to suit people and don’t expect people to work long hours,” he said.
“That may mean calving in summer and autumn when the days are longer and weather kinder on staff and animals, and afternoon milkings that do not eat into evenings makes for happier staff.”
Chris said having good communication at all levels, investing in the right infrastructure and treating people well were all prerequisites of a successful corporate farm.
“Everyone needs to have a back-up who can do their job so they can get away, especially the manager.”
One of the benefits of a corporate model is that funds can be made available for significant upgrades that would potentially take many years to pay off if done through borrowing and debt servicing.
“Spending wisely on infrastructure, new technologies and additional land can make a corporate farm a great place to work,” Chris said.
“Shareholders eventually get good returns when the farm is well run with happy staff who enjoy coming to work and treat the farm as their own.
“That will only happen with quality managers in place who are backed by investors who understand the industry.”
However, corporates don’t offer a place for owners to live and work.
“The staff have their jobs and they don’t want owners looking over their shoulders all the time,” Chris said.
“There are different models of corporate farming.
“Our model is towards family farming but it’s still a corporate farm owned by people who don’t operate on the farm. We’re nearby but none of us need to go to the farm very often.”
Chris said dairy farming was a long-term investment and the corporate model could be a rewarding experience for investors if done well, offering much more than a financial return and increase in value.
“In my farm consulting work, it has helped to have input in changing things on my own farm which allowed me to help others.”
The industry now sees corporate farming as a prominent part of investment.
“It comes down to who is going to buy the farm,” Chris said.
“Family farms that want to grow don’t necessarily have the ability to buy more farms.
“Having corporates in the market provides more buyers for farmers when they come to selling.”