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29/08/2023
Patience is a virtue, and while Covid proved a frustrating disruption for 2020 Nuffield Scholar Harry Kelly, it also afforded him additional insights into his research topic only time could have revealed.
Harry runs a diversified Angus beef, prime lamb, cereal and oilseed cropping, and dairy enterprise based at Caramut, in Victoria’s South West.
With a strong personal interest in growing his business, his research project focussed on how family farms can leverage institutional investment – namely corporate, international and high net worth individual funding – to collaboratively expand.
“It’s a topic that stemmed from my own business objectives to keep our business expanding and growing efficiently, particularly in the face of challenges such as increasing land prices.”
“Initially I was curious to explore how well Australian agriculture was placed in attracting funding from corporate investors or high net worth individuals, and how family farmers could tap into these resources in a partnership for growth.”
Harry launched his project four years ago now, and due to Covid he was unable to participate in much of the traditional international travel research component of his Nuffield Scholarship.
The delay did however provide additional time for analysis, which revealed some unexpected findings.
“Naturally when you analyse something over a longer period of time, particularly in something as cyclical as agriculture, the needle can shift, and in this case I ended up re-evaluating my whole concept.”
Harry’s Nuffield journey a windy path
When Harry really zeroed in on owner operator investment in ag compared with corporates, high net worth individuals and foreign investment, results suggested that while institutional investors were able to benefit from capital gains, owner operators were far more efficient on the operational side of business.
“While the investor appetite was there, the proof was in the pudding, and I found that many foreign investors were visibly struggling with the operational side of running a farm business – they could identify that it was a good investment, and purchased assets well, but couldn’t execute the best action on the ground.”
Conversely, owner operators had less access to capital for physical growth and placed proportionally less time and emphasis on the analysis surrounding capital expansion, but ran more efficient farms operationally.
“Over the past four years I’ve realised there is no silver bullet – there’s no perfect model where we can combine institutional asset investment with the invaluable human capital you tend to find on family run farms.”
“I still hold hope that there is a model out there where we can successfully combine the two – there’s so much money people would like to invest in ag, we just don’t have the right one size fits all model.
“I’ve also come to the conclusion that sometimes growth shouldn’t be an ag enterprise’s main focus, rather, balancing this driver with the need to keep on top of the operation and running it well should be.”
These are findings largely backed by Harry’s own experience, having purchased a dairy back from foreign investment in late 2021, with management initially retained by a local corporate.
“At the end of the day no one is going to look after your asset like you will, and since I’ve taken over the management of the dairy myself our deliverable outcomes have improved significantly – previously it was in the bottom 10 percent of farm performance, now we are seeing improvements in leaps and bounds and I wouldn’t be surprised if it’s not in the top 50 percent. However, there’s still a long way to go.”
He believed the past four years had also revealed the vulnerability of agricultural businesses, particularly with the current seasonal and market challenges, land values, input costs and interest rate pressures.
“It’s been a fascinating journey and my outcome has really sold itself as a story over recent years – there’s less corporate money flowing into ag, and some interesting trends when you put everything on a graph, so perhaps corporate investment is not something we should be relying on to grow our private enterprises after all?”
Harry presenting at the 2023 Nuffield Conference
Harry is currently in the final stages of writing his 10,000 word research report, and will present at the upcoming Nuffield Conference, to be held in Perth on September 11 – 13.
“I’m looking forward to presenting my findings, and hearing the research of my fellow scholars, and my favourite part of the conference is the ‘Where are they now’ segment showcasing what past scholars have done with their businesses and lives as a result of their Nuffield journeys.”
“Looking at what scholars are doing ten years on is fascinating, and I really enjoy hearing what scholars have achieved – how they farm, where they farm, if they still farm at all – and what impact Nuffield had on these decisions.”
While his research paper and presentation will mark the formal conclusion of his scholarship, Harry hopes that his Nuffield journey will never be complete.
“I once said I was a ‘2020 Nuffield Scholar’ and was corrected, I am a ‘Nuffield Scholar’, which I think has really opened doors and will continue to do so as long as I remain curious and passionate about continual improvement.”
“There’s still a world of opportunity in ag, and expanding family farm businesses so they’re viable for the next generation and I’ll continue to look at ways farmers can think out of the box when it comes to strengthening and growing their businesses.”
As a Rabobank sponsored scholar Harry said he was forever grateful for the opportunity, and for Rabobank’s commitment to strengthening the agricultural sector through the support of initiatives such as Nuffield.
“As a specialised agribusiness bank, I applaud Rabo for supporting all aspects of the ag industry – this is a bank that genuinely cares for the industry, it’s not just about lending money, it’s about championing farmers and community and providing them with the skills they need to grow a strong business and industry.”