**2.3. Corporate farming**

Griffiths concluded that the indifference of farmers and their advisors toward the co-operative model could lead to a situation where farmers will have no access to the profits derived from

There can be no doubt that farmers and their co-ops operate in a highly unstable environment (Williamson, 1987). Bijman (2002) raised concerns about co-operative farming and found that many changes in the organisation of agrifood transactions have taken place, that consumers demand high quality products, more variety, and more convenience. Consumers have become concerned about food safety, production conditions, environmental protection, and animal welfare. These changes challenge farmer-owned co-operatives. How do co-operatives deal with the combined innovation in product and marketing? Where does innovation take place: at the level of the member company or at the level of the co-operative? Does the co-operative have the capability to carry out new activities? If so, do members have sufficient knowledge to control the managers executing these new tasks? Can members raise sufficient capital to make the necessary investments in innovation and marketing? Can co-operatives build

sufficient market power vis-à-vis large food processing companies and retailers?

Chaddad and Cook (2002) also raised concern regarding co-operatives. These organisations may be referred to as member-owned, however, when they depend on outsiders for financial support that ownership is lost because the financial contribution of the co-operative member‐ ship is small compared to the non-member contribution. Despite of the one-member, one-vote principle, non-members who are the major suppliers of capital usually determine the main priorities of the co-operative business. Oczkowski (2004) analysed agricultural bargaining cooperatives that negotiate, on behalf of member farmers, with food processors over price and

… the level of prices … depends upon the co-operative's relative bargaining strength. … Given the typical financial, physi‐ cal and human resources of investor-owned firms such as large food processors and the relatively small resources of farmer bargaining co-operatives, it is expected that members would be more impatient (less able to hold-out) in negotiations. Fur‐ ther there is a general expectation that farmers exhibit a relatively greater degree of risk aversion compared to the entrepre‐ neurial focused investor-owned corporate processor. The consequence of a low co-operative's bargaining strength are

In 2006, Oczkowski looked at structural changes necessary for co-operatives to survive: the effects of globalisation on agriculture cannot be ignored. He argued that the restruc‐ turing of the agricultural sector needs substantial amounts of additional capital which will lead to new co-operative forms. These forms would maintain some of the old tradi‐ tions and present viable alternatives to full demutualisation and conversion to the invest‐ ed owned form. Von Pischke and Rouse (2004) provided strategies for mobilising capital in agricultural co-operatives: restructure members' incentives in ways that work con‐ structively (in a commercial sense), and harmonise members' roles as users of the co-op‐

relatively low levels for co-operative objective values, and market and member prices (Oczkowski, 2004, p.16*).*

value-adding to the produce they supply.

280 Environmental Change and Sustainability

quantity for raw agricultural output. He flound that

erative with their role as investors providing the capital.

Corporate farming is another way of looking at the Australian farming industry. It must be mentioned that being part of corporate farming requires more capital than participating in cooperative farming and, looking at our definition of the family farm (i.e. ownership, place of residence, family's contribution to labour, family's responsibility for management, and the family's rural ethos or ideology), the concept may not quite fit. Since corporate farming in Australia is on the increase, it was decided to offer some thoughts on the system.

Corporate farming relates to the modern food industry. It encompasses the farm itself and usually a chain of agriculture-related businesses, including seed supply, agrichemicals, food processing, machinery, storage, transport, distribution, marketing, advertising, and retail sales. According to Tont, Halpin, Collins and Black (2003), corporate farms usually have a diverse group of shareholders/owners, the day-to-day management occurs at the property, but decisions are usually made at the corporation's headquarters. The scale of the properties, in terms of land occupied or in terms of production, tends to be high and there is very often a mixture of foreign and Australian ownership.

Clark (2008) published data on corporate farming in Australia. It generated 24% of agri‐ cultural production (combined revenue A\$9.4 billion), there are 1,806 corporate enterpris‐ es with revenue of more than A\$2 million. The number of corporate farms has increased by 55% between 2001 and 2006; but they represent only 1.5% of all farms. According to Clark (2008), family corporate farms represent 58% of these businesses. Family corporate farms are mainly found in the grain, pastoral and dairy industries; they are robust busi‐ nesses with good succession planning and can withstand production variability. The 42% of corporate-corporates, which are larger than the family-corporates, are dominant enti‐ ties in horticulture, cotton, pigs and poultry. Corporations are generally found in areas where there is ample irrigation water.

Considering the Australian small family farm with an annual income of between A\$5,000 and A\$94,000 (Australian Natural Resources, 2002), it is difficult to imagine how these families can enter the corporate sector as independent entity. Briton (2005) contemplated that "slowly but surely, the farm is being wrenched off the family farmer and integrated more closely into the corporate modus operandi of agri-business" (p. 28). And he quoted Phil Ruthven as saying "it is far better to swap fierce independence for mutual reliance and higher profitability – 40,000 viable farmers are preferable to 112,000 marginal ones" (p. 28). Compared to these attitudes, it is interesting to note that some states in the US have instigated constitutional provisions to counter corporate ownership (Institute for Local Self-Reliance, 2009): nine states place some restriction on corporate-owned farms, and two states have anti-corporate farming restrictions written into their constitutions. Supporters of the anti-corporate farming laws have argued that, in general, agriculture-dependent counties in states with anti-corporate farming laws fare better: they have less family poverty, lower unemployment and higher percentages of farms realising cash gains compared to agriculture dependent counties in states without such laws.

Anti-corporate farming laws do not exist in Australia and there are, as far as could be ascer‐ tained, no comparative Australian studies so far regarding the overall well-being of small farming families in an environment of corporate farming. However, it is assumed that small family farms are disadvantaged when corporate enterprises operate in the same location and within the same line of business.

In the following section, an old system is being reinvented, the commons.
