Who is the report targeted at?
The report is targeted at farm families who are considering diversifying, as well as Governments and other regulatory bodies to provide a greater understanding of the social implications of diversifying enterprise activities on a family farm. It is hoped this information also will be used by policy and decision makers.

Background
In 2002, RIRDC published “Costs and benefits of diversification: whole farm case studies” by Campbell White & Associates and Professor Alan Black (Campbell White & Associates and Black 2002). While focussing primarily on the financial costs and benefits of diversification, the research also examined and recorded the experiences of farming families which had embarked upon such courses of action.

After examining their key messages, questions still arose inviting further examination, namely:

• Are economic considerations the primary driver for farm families diversifying?
• Who is involved in the decisions about diversification?
• What do farm families regard as a successful diversification? This project aims to add to the current knowledge on farm diversification in Australia by focussing on the farming family unit to ascertain their drivers, decision making processes, motivation, information needs and common traits.

Objectives
The specific research objectives were to:

1. Gather and record the definition/s of diversification by Australian farming families.
2. Explore the criteria of what constitutes successful diversification in one region of rural Australia (north-eastern Victoria).
3. Develop an understanding of any trends that inspire diversification and gain insight into the different market segments and their information needs for diversification.
4. Explore the demographic characteristics of farming families who diversify, define which, if any, traits they have in common and what the primary motivation/s for diversification were.
5. Identify the different roles that family members may play in the decision-making process leading to diversification.

Methods Used
After an initial literature review to further scope and define the project, semi-structured interviews were conducted with 25 farm families in North East Victoria. Farm families were eligible for participation in the study if:

• their main farm was located in North Eastern Victoria
• they were a family-owned farm, not a corporately-owned business
• they had introduced a new enterprise into their business that was not traditionally practiced in the region (anything other than cattle, sheep or cropping).

Results
Farm enterprise diversification has been defined in many ways but, in the context of this report, it has been defined as the addition of another stream of farm-based income to supplement (or eventually replace) the existing source/s.

Diversification at the farm level generally excludes simple land use change (eg. changing from growing carrots to emus) but rather refers to the addition of an enterprise (eg. growing carrots and emus). From a landscape perspective, land use change at the farm level may be regarded as diversification when the entire property is considered. With reference to the term ‘diversification’ the inclusion of off-farm income and the use of the definition “traditional” enterprises should also be examined carefully.

An understanding of the general trends relating to diversification is difficult to attain, particularly in light of the different definitions used when researching diversification internationally. The general sentiment in the literature was that the number of farms choosing to diversify is increasing (Martin et al. 2000; McElwee and Warren 2003; Chaplin et al. 2004), however there was no statistical data available to back this up.

In Australia, the Australian Bureau of Statistics (ABS) does not collect data in a form that enables diversification information to be easily extracted. In addition, the ABS does not collect data about activities such as aquaculture or farm forestry in the Agricultural Census (from where information about farming enterprises is generally gained). Therefore, it is almost impossible to quantify records of the numbers and types of diversifications within farming enterprises.

Emergent themes
A number of key themes and common traits relating to the subject were identified from the interviews with the 25 farming families which had embarked upon diversifying their farm enterprises. These themes and traits included the following:

• Among the drivers encouraging diversification were: creating opportunity for family involvement (children, siblings and partners), lifestyle choices and spreading financial risk.
• Successful diversification for the farming families surveyed included a positive mix of financial and social outcomes.
• The advantages of diversification included: spreading risk, increasing interest in the farm, the challenge of a new business, learning new skills, understanding where personal strengths lie, having new experiences, meeting new people and being a part of new networks.
• A range of disadvantages was discussed by farm families in this study and placed into two categories: increased workloads with subsequent less ‘free’ time, and the difficulties associated with marketing and distribution, principally through unfamiliarity.

As a group, the farm families interviewed for this project could be described as involved and passionate about what they do. They appear to have a high tolerance for debt and, possibly as a result of this, frequently had more than one diversification. These farming families are lifelong learners and usually favoured learning through networks and other informal channels, although most had taken part in some formal training courses.

All the farm families interviewed were very knowledgeable about their businesses, with the majority having conducted significant research into their chosen activities. Generally these families were also very aware of their own strengths, weaknesses and needs. There appeared to be a very strong partnership mentality among the family units, with all members equally involved in decision making. Perhaps most importantly the rewards and frustrations of being a primary producer and entrepreneur were shared.

Recommendations
Prior to embarking upon diversifying the farming enterprise activities, there are recommended checklists available from a variety of sources to ensure all aspects have been considered to prevent potential financial losses and stress. These criteria also provide a fuller understanding of issues associated with diversification from the personal, local, regional and legislative perspectives.

Recommendations from the interviewees to other farming families when considering diversification were to:

• take into account life stage/s
• estimate the workload involved in your chosen diversification
• spend some time with your family discussing your tolerance for risk and debt
• consider investing off-farm as well to provide a reduction in vulnerability to market fluctuations
• spend some time understanding the priorities of your family
• research and network with other farmers and business people already engaged in this activity
• consider whether the diversification complements and/or integrates with your existing business.

Recommendations for Government from the author were to:

• collect statistics on diversification to develop an informed understanding of the process
• not recommend diversification as the only option for structural adjustment issues
• consider the way diversified farms are serviced by Department extension staff as most farm families see their diversified farms as one integrated business and not a sum of its component parts
• guarantee water access and quality for farms so farming families will be prepared to invest in the infrastructure and labour requirements of a diversified farm.

A recommendation for Government from interviewees was to:

• increase the number of knowledgeable Department on-ground staff to provide up-to-date information on new and emerging crops and (farming) industries.

Ultimately, there is a manifest desire for rural and regional communities to become more profitable and even reverse the trend of population decline. To achieve this, Governments and other regulatory bodies need to have a wider understanding of the economic, social and environmental implications of the process of diversifying a family farming enterprise and it is hoped this information will be used to inform decisions made on rural policy and service delivery.

Site map Contact us Feedback Links Disclaimer Privacy Statement

Last updated: November 2007
Copyright RIRDC
http://www.rirdc.gov.au/reports/HCC/07-156sum.html