A director of Grass Farms Australia (GFA), Mr Daniel and his company provide management for investors in a range of broadacre farms, some purchased outright and about “20 to 30” under leasehold agreements.

GFA’s interests in wool, beef, lamb, mutton, cotton and grains amount to a combined $300 to $400 million in assets.

Mr Daniel’s “get big” message relates to both farm size and management.

“Farm size is too small to capture economies of scale,” he says, noting that national farm debt has risen from about $20 billion to $40 billion in the past few years.

“One way or another, farms need to be reaggregated.

“First-class farm and business management skills are scarce, and where they exist, they are underutilised because of small farms.

“A big sheep property has 10,000 sheep; a big cattle farm has 600

to 700 cows. That’s a weekend job.”

Mr Daniel’s view of a profit-generating manager is more of a white-collar executive than a blue-collar worker; somebody who may have responsibility for at least 50,000 dry sheep equivalents, but who leaves the grunt work to labourers and manages within strict business systems that provide accountability to investors.

“But how are we going to get the best people if we can’t pay them enough?” Mr Daniel asked.

“How can we pay them enough if we don’t have business structures that spread costs across lots of units? It’s not going to be possible.”

His answer is for family farms to aggregate land, or management, but preferably both, and that requires new sources of capital.

He wants to see a new relationship emerge between agriculture and capital, where farms aren’t constrained to the capital that the land produces, but can reach out – like GFA – to the world’s largest source of money, the private investment community.

From The Land, June 26, 2008.