For Eyre Peninsula farming families, wealth is often concentrated in land, livestock, and equipment. While agriculture has delivered strong returns over decades, relying on a single industry exposes families to commodity price swings, climate uncertainty, and succession challenges. This guide explores diversification strategies to build resilient, multi-generational wealth.
Introduction: The Concentration Challenge for Eyre Peninsula Farmers
Many Eyre Peninsula farming families have built substantial wealth over generations—land values have appreciated steadily, modern equipment represents significant capital, and the region’s mixed grain and sheep operations have proven resilient. Yet for most farming families, 80-90% of their wealth remains tied up in the farm itself.
This concentration, while understandable given agriculture’s historical success, creates vulnerability. The Eyre Peninsula’s agricultural output was valued at $801 million in 2020/21, with cereal crops alone accounting for over $520 million. Farmland prices have more than doubled over the past decade, with the average price per hectare of Australian broadacre farmland increasing from $4,088 in 2014 to $9,429 by 2023—a 130% appreciation that has built significant equity for farming families.
Yet this wealth is largely illiquid and exposed to a single industry’s volatility. Diversification—the strategic process of spreading wealth across multiple asset classes—offers farming families a pathway to reduce risk, create flexibility, and build resilient, multi-generational wealth. This article explores why diversification matters for Eyre Peninsula farmers, practical off-farm investment strategies, and how to balance on-farm reinvestment with building wealth beyond agriculture.
Why Diversification Matters for Farming Families
Concentration risk—having the majority of family wealth tied to a single industry and asset class—is the primary challenge facing Eyre Peninsula farming families. While farmland has proven to be a sound long-term investment, holding 80-90% of wealth in agricultural assets exposes families to several interconnected risks:
Agricultural-Specific Risks
- Commodity price volatility: Grain and wool prices fluctuate with global supply and demand dynamics. Australian wheat, barley, and sheep meat values are subject to international market forces, with prices sometimes swinging 30-40% between seasons based on global crop production, currency movements, and geopolitical events.
- Climate and weather risk: The Eyre Peninsula experiences highly variable rainfall—from 600mm annually in Port Lincoln to just 270mm west of Penong. Drought, frost, heatwaves, and flooding can devastate seasonal income. ABARES research indicates that climate variability from 2001 to 2020 reduced average broadacre farm profits by 23%, or about $29,200 per farm.
- Input cost pressures: Fertiliser, fuel, and chemical costs can spike unexpectedly, eroding profit margins even when commodity prices remain stable.
- Illiquidity: Farmland cannot be quickly converted to cash. If a family needs capital for health emergencies, aged care, or other unexpected expenses, selling farmland takes months or years and may force liquidation at unfavourable prices.
- Succession complexity: Dividing farmland fairly among multiple children is challenging. One child may want to continue farming while others seek their inheritance in cash, creating financial pressure to sell the farm entirely.
Regional Context
The Eyre Peninsula’s farming landscape is predominantly grain and sheep—both sectors subject to seasonal and market cycles. Mixed farming operations provide some built-in diversification compared to monoculture, but both enterprises ultimately depend on similar weather patterns and share exposure to agricultural input costs and export market dynamics.
Historically, South Australian farming families have experienced significant volatility. During drought years, farm incomes can plummet, while good seasons can deliver record profits. The Eyre Peninsula Cooperative Bulk Handling initiative was formed specifically to address cost pressures and improve growers’ competitiveness—highlighting the ongoing challenges farmers face in optimising returns.
Diversifying wealth beyond farming doesn’t mean abandoning agriculture—it means building financial resilience so farming families can weather downturns, maintain lifestyle flexibility, and create options for the next generation.
The Case for Off-Farm Investments
Building wealth outside agriculture provides farming families with benefits that complement, rather than compete with, the farm business:
Key Benefits of Off-Farm Wealth
- Income diversification: Investment dividends, rental income, and interest provide cash flow even during poor farming years. When grain prices fall or drought reduces yields, off-farm investment income continues, helping families meet living expenses and maintain farm operations without forced asset sales.
- Risk reduction: Financial assets like Australian shares, international equities, and bonds are not correlated with farm commodity prices or Eyre Peninsula weather patterns. Modern Portfolio Theory demonstrates that combining assets with imperfect correlations reduces overall portfolio risk without sacrificing long-term returns.
- Liquidity: Shares and managed funds can be sold within days if cash is needed. This liquidity provides a financial buffer for unexpected expenses, opportunities to purchase neighbouring land, or funding children’s education without selling farmland.
- Retirement flexibility: Retirees can transition out of active farming while retaining investment income. Off-farm investments provide passive income streams that don’t require daily physical labour, allowing older farmers to step back gradually while maintaining financial security.
- Succession simplicity: Financial assets are easily divisible among heirs. One child can inherit the farm while siblings receive equivalent value in shares or managed funds, avoiding the difficult dynamics of forcing land sales or creating complex shared ownership arrangements.
Overcoming Farmer Psychology
Many Eyre Peninsula farmers are understandably cautious about “the sharemarket.” Farming families have built wealth through land—a tangible, productive asset they can see, touch, and directly control. By contrast, shares and managed funds can feel abstract, volatile, and risky.
However, this perception overlooks an important reality: farmland itself carries significant risk. Land values can decline, as evidenced during the 1990s rural recession. Commodity prices are volatile, and climate variability creates income uncertainty. The difference is that farmers are intimately familiar with agricultural risks and have developed strategies to manage them—while financial market risks feel unfamiliar.
Academic research on portfolio diversification demonstrates that diversified portfolios combining multiple asset classes produce more consistent, less volatile returns over time than concentrated holdings in a single asset class. For Eyre Peninsula farming families, combining farmland (stable, inflation-hedging, productive) with shares and bonds (liquid, income-producing, uncorrelated with agriculture) creates a more resilient overall wealth position than either asset class alone.
Investment Options for Farming Families
Eyre Peninsula farming families have access to a range of investment options suitable for building wealth beyond agriculture. Each offers different characteristics in terms of risk, return, liquidity, and complexity:
Australian Shares
Australian shares provide ownership in publicly traded companies listed on the Australian Securities Exchange (ASX). Blue-chip companies—large, established businesses like the major banks, BHP, Woolworths, and Wesfarmers—offer relatively stable dividends and exposure to the broader Australian economy.
Importantly, Australian dividends often include franking credits—tax credits representing the corporate tax already paid by the company. For farming families with high taxable income, franking credits reduce the overall tax burden on investment income. Farmers can also gain exposure to agricultural sectors they understand, such as Elders, Incitec Pivot (fertiliser), or GrainCorp.
Over the past 30 years, Australian shares have delivered an average annual return of 9.8%, including dividends. Since 1900, the Australian share market has returned an average of 13.0% per annum.
International Shares
International shares diversify beyond the Australian economy, providing exposure to global growth in sectors like US technology, European industrials, and Asian consumer markets. This geographic diversification reduces reliance on Australian economic performance and allows farming families to participate in global innovation and growth trends.
Exchange Traded Funds (ETFs)
ETFs are low-cost investment funds that track market indices, such as the ASX 200 (Australia’s top 200 companies) or global share indices. ETFs offer instant diversification across hundreds of companies with a single investment, transparency in holdings, and low management fees—typically 0.10-0.30% annually. This simplicity makes ETFs attractive for farming families seeking diversified exposure without selecting individual shares.
Managed Funds
Managed funds employ professional investment managers who actively select and manage investments on behalf of investors. While fees are higher than ETFs (typically 0.5-1.5% annually), managed funds suit hands-off investors who prefer delegating investment decisions to professionals with expertise in asset selection and market timing.
Fixed Interest and Bonds
Bonds are debt securities issued by governments or corporations that pay regular interest. They offer lower volatility than shares, predictable income, and capital preservation characteristics. Bonds balance equity risk in a diversified portfolio, providing stability during sharemarket downturns.
Commercial Property (Off-Farm)
Investing in retail, office, or industrial property—either directly or via Real Estate Investment Trusts (REITs)—provides rental income and diversification from agricultural land. Commercial property has different drivers than farmland, responding to urban economic activity, population growth, and business demand rather than weather and commodity prices.
Cash and Term Deposits
Cash and term deposits offer capital security and liquidity but typically deliver returns below inflation over the long term. They are useful for emergency reserves and short-term savings but insufficient as a long-term wealth-building strategy.
Asset Class Comparison
| Asset Class | Risk Level | Long-Term Return Potential | Liquidity | Income Type | Complexity |
|---|---|---|---|---|---|
| Australian Shares | Medium-High | High (9-10% p.a.) | High (days) | Dividends + Capital Growth | Medium |
| International Shares | Medium-High | High (varies by region) | High (days) | Dividends + Capital Growth | Medium |
| ETFs | Medium-High | High (tracks index) | High (days) | Dividends + Capital Growth | Low |
| Managed Funds | Medium | Medium-High | Medium (3-7 days) | Distributions + Capital Growth | Low |
| Bonds/Fixed Interest | Low-Medium | Low-Medium (3-5% p.a.) | Medium-High | Interest | Low-Medium |
| Commercial Property | Medium | Medium (6-8% p.a.) | Low (months) | Rent + Capital Growth | High |
| Cash/Term Deposits | Very Low | Low (2-3% p.a.) | Very High | Interest | Very Low |
| Farmland (reference) | Medium-High | Medium-High (varies) | Very Low (years) | Farm Profit + Capital Growth | High |
The CARE Investment Philosophy
Eyre Financial Services employs the CARE Investment Philosophy to construct resilient, diversified portfolios:
- Core: Stable, diversified holdings forming the portfolio foundation (typically Australian and international shares, bonds)
- Active: Tactical adjustments responding to market conditions and opportunities
- Reserves: Cash buffer for liquidity needs and opportunistic rebalancing
- Enhanced Returns: Growth assets targeting higher returns (may include property, alternatives)
This framework balances stability with growth potential, ensuring farming families have both reliable income and long-term capital appreciation while maintaining access to liquidity when needed.
Practical Strategies for Eyre Peninsula Farmers
Building off-farm wealth requires systematic, disciplined strategies tailored to farming families’ unique circumstances—seasonal income, variable cash flow, and asset-rich but cash-constrained positions. The following strategies have proven effective for Eyre Peninsula farmers:
Strategy 1: Regular Off-Farm Contributions
Set aside a fixed percentage of annual farm profit—typically 10-20%—for off-farm investment. During good years, this discipline ensures surplus cash builds long-term wealth rather than being absorbed by lifestyle inflation or marginal on-farm expenditures. Even modest contributions compound significantly over decades.
Example: A farming family earning $200,000 profit in a good year contributes $30,000 (15%) to a diversified investment portfolio. Over 20 years, assuming 8% average annual returns, this strategy repeated annually grows to over $1.4 million in off-farm wealth.
Strategy 2: Superannuation Maximisation
Superannuation offers significant tax advantages for farmers. Concessional (before-tax) contributions are taxed at just 15%, compared to marginal tax rates up to 47%. Farming families in high-income years can make substantial concessional contributions (up to $30,000 annually), building tax-effective retirement wealth.
For farmers aged 55+ selling farm assets, small business CGT concessions allow up to $1.78 million per person to be contributed to superannuation tax-free under the 15-year exemption—a powerful retirement planning strategy.
Eyre Financial Services’ SMSF (Self-Managed Superannuation Fund) expertise helps farming families structure superannuation strategies that align with farm succession and retirement goals.
Strategy 3: Debt Recycling
Once farm debt is substantially reduced or eliminated, consider borrowing against accumulated farm equity to invest in income-producing assets like shares or commercial property. The interest on this investment debt may be tax-deductible (consult your accountant), while the investments generate dividends, franking credits, and long-term capital growth.
This strategy allows farming families to maintain farm ownership and operations while leveraging equity to build diversified wealth—effectively putting “lazy equity” to work.
Strategy 4: Sell Non-Core Farm Assets
Many Eyre Peninsula farms accumulate surplus land, underutilised equipment, or non-core assets over generations. Selling these assets and reinvesting proceeds into diversified portfolios can improve overall wealth efficiency without impacting core farm productivity.
Example: A family sells 200 hectares of lower-quality grazing land for $500,000 and invests the proceeds in a balanced portfolio of Australian shares, international shares, and bonds. This converts an illiquid, low-return asset into a diversified, income-producing portfolio.
Strategy 5: Income Splitting with Spouse
Distribute investment income to the lower-earning spouse to reduce family tax burden. If one spouse is actively farming while the other earns minimal income, structuring off-farm investments in the lower-income spouse’s name (or via a family trust) can significantly reduce the marginal tax rate on investment income.
Strategy 6: Transitional Diversification Towards Retirement
As farmers approach retirement (typically ages 55-65), gradually shift wealth from farm assets to liquid investments. This transition might involve:
- Selling parcels of land while retaining the core farming operation
- Leasing out farm operations while maintaining land ownership
- Progressively reducing livestock numbers and cropping hectares
- Building investment portfolios that generate retirement income
This gradual transition allows farming families to step back from physical labour while maintaining income and preserving capital.
Case Study: The Smith Family Farm—Diversifying Over 10 Years
Background: In 2015, the Smith family’s wealth was 90% farmland/equipment, 10% superannuation and cash. Total family wealth: $3 million.
Strategy Implemented:
- Contributed 15% of annual farm profit to diversified investments (Australian shares, international ETFs, bonds)
- Maximised concessional superannuation contributions during high-income years
- Sold 150 hectares of non-core land in 2018, reinvesting $400,000 into managed funds
- Debt-recycled $200,000 against farm equity in 2020 to invest in commercial property REIT
Results (2025):
- Total family wealth: $4.2 million
- Asset allocation: 60% farm (land/equipment), 30% investments (shares/managed funds/property), 10% superannuation/cash
- Off-farm investments generate $45,000 annual income (dividends, distributions), providing cash flow buffer during lower farming years
- Improved succession flexibility—two children farming, two children to inherit off-farm investments
Balancing On-Farm Reinvestment with Off-Farm Diversification
Eyre Peninsula farming families face a natural tension: should surplus capital be reinvested in the farm (new equipment, land expansion, technology upgrades) or diversified off-farm?
The Case for On-Farm Reinvestment
Reinvesting in the farm can deliver strong returns through:
- Productivity improvements: Modern machinery, precision agriculture technology, and improved infrastructure increase yields and reduce costs
- Economies of scale: Expanding land holdings can improve efficiency and spread fixed costs
- Competitive positioning: Keeping pace with neighbouring farms’ technology and productivity prevents falling behind
For young, growing farming operations with opportunities to expand and improve productivity, on-farm reinvestment often delivers the highest returns.
Recognising Diminishing Returns
However, once a farm reaches maturity—well-equipped with modern machinery, optimal size for the family’s labour and management capacity, and efficient operations—the marginal return on additional on-farm investment declines.
Purchasing a fourth harvester when three are sufficient, or expanding by 100 hectares when the existing operation is already stretched for management time, may deliver lower returns than diversifying off-farm. Research on agricultural investment emphasises the importance of evaluating marginal returns on capital.
A Balanced Approach
Eyre Peninsula farming families can adopt a balanced framework:
- Growth Phase (younger farmers, expanding operations): Prioritise on-farm reinvestment to build productivity, scale, and efficiency. Allocate 70-80% of surplus capital to the farm, 20-30% to off-farm diversification.
- Mature Phase (well-established farm, optimal scale): Shift toward off-farm diversification once the farm is well-equipped and productive. Allocate 40-50% of surplus capital to off-farm investments, 50-60% to maintaining and incrementally improving the farm.
- Pre-Retirement Phase (ages 55+): Prioritise off-farm diversification to build liquid retirement assets. Limit on-farm investment to essential maintenance and efficiency improvements.
- Target Allocation: Maintain a target that no more than 60-70% of total family wealth remains in the farm by retirement age, ensuring sufficient liquidity and diversification.
Cash Flow Management
During good farming years, surplus cash provides opportunity to diversify. During challenging years, off-farm investments can be drawn upon to smooth family income and maintain farm operations without forced land sales. This complementary relationship between on-farm and off-farm wealth creates resilience.
Eyre Financial Services’ budgeting and cash flow planning helps farming families develop frameworks for allocating capital between on-farm reinvestment and off-farm diversification based on their specific circumstances, farm lifecycle stage, and financial goals.
Tax Considerations for Farming Families
Off-farm investments generate tax implications that farming families must understand and plan for strategically:
Dividends and Franking Credits
Australian shares typically pay dividends with franking credits attached. These tax credits represent the 30% corporate tax already paid by the company. For farming families with high taxable income (common during profitable years), franking credits reduce the effective tax rate on dividend income.
Example: A farming family receives a $7,000 fully franked dividend, which includes $3,000 in franking credits (total assessable income: $10,000). If their marginal tax rate is 45%, they owe $4,500 tax on the $10,000, but the $3,000 franking credit reduces this to $1,500 net tax payable—an effective tax rate of 21% on the grossed-up dividend income.
Capital Gains Tax (CGT)
When selling investments (shares, property, managed funds) at a profit, Capital Gains Tax applies to the gain. However, if the investment has been held for more than 12 months, Australian residents receive a 50% CGT discount—meaning only half the capital gain is added to taxable income.
Example: A farming family purchases $100,000 of shares and sells them three years later for $150,000. The $50,000 capital gain receives a 50% discount, so only $25,000 is added to taxable income. At a 45% marginal rate, CGT payable is $11,250—an effective CGT rate of 22.5%.
Negative Gearing
If borrowing to invest (e.g., debt recycling strategy), interest expenses may be tax-deductible if the investment is income-producing (shares paying dividends, rental property). This can reduce taxable income in the early years when investment debt is highest, effectively lowering the after-tax cost of building an investment portfolio.
Superannuation Contributions
Concessional (before-tax) superannuation contributions are taxed at just 15%, regardless of the contributor’s marginal tax rate. For farming families in high-income years (marginal rates of 37-47%), contributing to superannuation via salary sacrifice or personal deductible contributions creates immediate tax savings.
Example: A farmer earning $180,000 makes a $20,000 deductible superannuation contribution. This reduces taxable income to $160,000, saving $8,400 in tax (at 42% marginal rate including Medicare levy). The contribution is taxed at 15% in super ($3,000), resulting in a net tax saving of $5,400.
Structuring Investments Tax-Effectively
How investments are held—personal name, family trust, Self-Managed Superannuation Fund (SMSF), or company—significantly impacts tax outcomes:
- Personal name: Simple, but investment income taxed at full marginal rates
- Family trust: Flexibility to distribute income to family members in lower tax brackets, asset protection benefits, but setup and compliance costs
- SMSF: Tax-effective (15% on contributions and earnings, 0% in pension phase), but locked until preservation age (typically 60) with contribution caps
- Company: Flat 30% tax rate, but less flexible for distributing income
Most Eyre Peninsula farming families benefit from a combination: superannuation for long-term retirement wealth, a family trust for flexible income distribution, and personal holdings for simplicity.
Professional Tax Advice Essential
Given the complexity of investment taxation, farming families should work closely with qualified accountants and tax advisors. Eyre Financial Services includes CPA expertise through Naomi Durdin, FCPA—combining accounting, tax, and financial planning qualifications to deliver holistic advice that aligns investment strategy with farm business structure and family circumstances.
ATO guidance on investment income, CGT, and superannuation provides authoritative information, but personalised advice ensures strategies are tailored to each family’s unique situation.
The Role of Professional Advice for Farming Families
Investment strategy, tax planning, superannuation, and estate planning for farming families is complex—requiring alignment between farm business operations, seasonal income patterns, family succession goals, and long-term wealth building.
Why Farming Families Need Specialised Advice
Financial planners with agricultural expertise understand dynamics that generalist advisors may overlook:
- Seasonal income variability: Strategies must accommodate years of high profit followed by drought or low commodity prices
- Asset-rich, cash-poor dynamics: Farming families often hold substantial equity but limited liquidity
- Succession complexity: Balancing fair inheritance among farming and non-farming children while preserving farm viability
- Long-term time horizons: Farmland is typically held for generations, requiring wealth strategies aligned with multi-decade perspectives
Generic investment advice designed for salaried professionals with predictable income often fails to address farming families’ realities.
Eyre Financial Services: Local Agricultural Expertise
Eyre Financial Services offers unique advantages for Port Lincoln and Eyre Peninsula farming families:
- Agricultural understanding: Naomi Durdin owns a farm and intimately understands Eyre Peninsula farming operations, seasonal cash flows, and succession challenges
- Combined qualifications: Naomi holds FCPA (Fellow Chartered Accountant), Financial Advisor, and SMSF Specialist credentials—providing integrated tax, accounting, and investment advice
- Holistic approach: Eyre Financial Services integrates farm business planning, personal wealth strategy, superannuation, tax structuring, and succession planning into cohesive, aligned strategies
- Local knowledge: Understanding of regional farming conditions, market dynamics, and community connections specific to the Eyre Peninsula
The Eyre Financial Services team combines professional qualifications with personal farming experience, providing Port Lincoln and Eyre Peninsula families with advice grounded in both technical expertise and practical agricultural reality.
Conclusion: Building Resilient, Multi-Generational Wealth
Eyre Peninsula farming families have built substantial wealth through dedication, skill, and resilience in one of Australia’s most productive agricultural regions. Farmland remains a cornerstone of family wealth—providing livelihoods, identity, and tangible connection to the land.
However, concentrating 80-90% of family wealth in a single industry and asset class exposes families to unnecessary risk. Diversification—systematically building wealth beyond farming through Australian shares, international equities, bonds, managed funds, and superannuation—reduces volatility, creates liquidity, and strengthens long-term financial security.
The goal is not to abandon farming but to complement it. A diversified wealth strategy allows farming families to:
- Weather commodity cycles and climate variability without financial distress
- Fund retirement without forced land sales
- Provide equitable inheritance for all children, farming and non-farming alike
- Maintain lifestyle flexibility and financial independence
- Build multi-generational wealth that extends beyond a single generation’s farming career
Even modest steps—investing 10-15% of annual farm profit off-farm, maximising superannuation contributions, or selling non-core assets to build diversified portfolios—compound significantly over decades. A farming family contributing $20,000 annually to investments earning 8% average returns accumulates $915,000 over 25 years.
Professional advice tailored to farming families’ unique circumstances—seasonal income, asset concentration, succession goals—ensures strategies align with both farm business realities and long-term wealth objectives.
For Eyre Peninsula farming families committed to preserving their agricultural heritage while building financial resilience, diversification offers a path forward—balancing respect for farming’s past with preparation for the family’s future.
Frequently Asked Questions
Q1: How much of our farm wealth should we diversify into off-farm investments?
There’s no one-size-fits-all answer, but a common guideline is to aim for no more than 60-70% of total family wealth concentrated in the farm by the time you approach retirement. This leaves 30-40% in liquid, diversified investments (super, shares, property) to provide flexibility, income smoothing, and succession options. Younger farming families might start with 90% farm / 10% off-farm and gradually shift the balance over 20-30 years. The key is to start early and contribute consistently—even $10,000-$20,000 per year compounds significantly over decades.
Q2: Isn’t investing in shares riskier than owning farmland?
Both asset classes carry risk, just different types. Farmland is subject to commodity price volatility, climate/drought risk, and illiquidity (can’t sell quickly). Shares experience market volatility and can lose value in downturns—but over the long term (10+ years), diversified share portfolios have historically delivered strong returns with liquidity advantages. The key is not to compare individual assets, but to assess total portfolio risk. A mix of farmland (stable, tangible, inflation-hedge) and shares (liquid, income-producing, diversified) is less risky than either alone. Professional advice helps determine the right balance for your risk tolerance and goals.
Q3: Should we invest through our personal names, a family trust, or our SMSF?
Each structure has advantages and trade-offs. Personal ownership is simple, but income is taxed at marginal rates (up to 47%). Family trusts offer flexibility to distribute income to family members in lower tax brackets and asset protection benefits, but have setup and compliance costs. SMSFs provide a tax-effective environment (15% on contributions and earnings, 0% in pension phase), but super is locked until preservation age and has contribution caps. The best structure depends on your age, income, family situation, and goals. Many farming families use a combination: super for long-term retirement wealth, trust for flexible family income, personal ownership for simplicity. Eyre Financial Services can help design the optimal structure for your farm and family.
