Urban Taskforce | Policy Agenda

Fact sheet: Housing and agriculture

26 February 2011

Urban development is no threat to our food supply. Farmers will often welcome opportunities for urban development, because it offers them the chance of a dignified retirement.


Urban growth does not threaten food supply


In 2007-08, approximately 54 per cent of Australia's total land area was managed by agricultural businesses Australias urban areas account for 0.2 per cent of the Australian land mass. In the highest impact scenario, even if 100 percent of future population growth is accommodated at current low residential densities Australias urban areas from 0.2 per cent of the Australian land mass to 0.4 per cent by 2050.

This kind of expansion cannot possibly if anything other than the most modest impact on agricultural production. Agricultural land uses contiguous to major urban areas (peri-urban, exurban) account for less than 3 per cent of land used for agriculture in the five most populous states. A selected review of literature indicates that there is great variation in the contribution that agriculture in peri-urban areas makes to local and state economies. Furthermore, arguments and misrepresentation of data is unintentionally misleading.


For example, recent debate has focused on the value of agriculture in the peri-urban areas of Sydney.

These are the facts:

  • Sydneys fruit and vegetable consumption would not be significantly affected by urban expansion.
  • 85 per cent of Sydneys vegetable consumption is supplied from outside the Sydney region.
  • Most vegetables produced in NSW come from the Murray and the Murrumbidgee regions, not Sydney.
  • Sydneys vegetable production accounts for 3.5 per cent of Australias production.
  • Sydney fruit production represents just 5 to 7 per cent of Sydney's total annual fruit consumption.
  • Sydney produces 1.2 per cent of Australia's total fruit output.

It is true that the Sydney region is said to supply a disproportionate share of some produce:

  • 100 per cent of the Sydneys Chinese cabbages and sprouts;
  • 80 per cent of fresh mushrooms;
  • 91 per cent of spring onions and shallots.

However, little evidence has been presented that land currently used for producing these limited range of produce is uniquely placed to provide this product. Its high likely that the product will continue to be provided from lands within travelling distance of the metropolitan region, wherever its boundary may be from time-to-time.

Economic viability is an issue for urban fringe farmers


Vegetable growers running small plots in edge of existing urban areas are facing viability problems. For example, in Sydney, their farms are small - an average of 2 hectares - compared with the national average of 33 hectares. The Australian Bureau of Agricultural and Resource Economics says that for every dollar invested, a large farm gives five times the financial return of a small farm.

The NSW Department of Primary Industries has previously flagged that there were issues with the water supply for Sydney-based vegetable farms. Many depend on farm dams and potable water supply via Sydney Waters network.

The value of local food production


Many people value local food production. But most people consider food ˜local if its produced in the same country. Larger farms operating away from urban areas can offer ecology of scale, which means the environmental footprint of their operations can be smaller per tonne of vegetables they produce. For example, larger agricultural farms connected to efficient transport systems can deliver produce at a lower carbon intensity than smaller farms.


The right of farmers to retire with dignity


Increased 'protection' for agriculture by restricting their use of farmers land may cost them a dignified retirement. Many farms struggle because it is hard for them to compete with larger, more efficient operations. If farmers are denied the opportunity to sell their land for urban re-development, they may not be able to exit from an unviable business. They may lose the chance to have a dignified retirement. New town planning controls cannot turn an unviable business into a viable one.

Reserving land for uneconomic uses


Planning authorities perceive themselves as protecting the community from the market. They often fall prey to the pitfall of seeking to stop the market doing from what it does without actually asking why the market is acting in a particular way, and whether the public interest is served by preventing the market from working. Some planning schemes go to great lengths to protect agricultural land. The desire by some planning authorities to protect agricultural activities is a misguided attempt to hold onto traditional agriculture subject to a dramatically changing industry within a regional and global context.



If agriculture in a given local government area is a viable and attractive industry, then its viability would not rely upon protection by way of a local environmental plan. Most of Australias agricultural industry is generally located well outside of the foreseeable areas of urban expansion. There is no shortage of agricultural land available within Australia to supply produce that meets our needs. The modern supply chain is no longer dependent on geographical proximity to urban areas. In fact, the only significant commercial opportunity for many Australian regions is agriculture, while many competing industries are willing and able to locate while areas on the fringes of the existing urban footprint.


For example, NSW's State Environmental Planning Policy (Rural Lands) 2008 says that it is "to identify State significant agricultural land for the purpose of ensuring the ongoing viability of agriculture on that land ... ". A planning schemes only power is to prohibit an activity, or to permit something that would otherwise be prohibited because of some other statutory instrument. The only way that a planning scheme can ensure the ongoing viability of a particular land use is by depriving the land owner of the power to use his/her land for another income generating purpose.


That is, a business might be regarded as available if it only gave a return on capital of, say, four per cent. However, there is a prohibition on any alternative income-earning activities on a parcel of land, the value of the land (a form of capital) is pushed down, therefore seemingly increasing the return to capital. While on paper this may look like an effort to make a business viable, it does so at the expense of making the land-owner and the surrounding community poorer than they need to be.


In this example, the planning scheme sets out a rural planning principle that says that proposed rezonings must consider the need for "the ... protection of opportunities for current and potential productive and sustainable economic activities in rural areas ...". It is unclear why economically sustainable agricultural enterprises must be protected by a law that prohibits land from being used for another purpose. If agriculture is a good business it will be viable irrespective of the zoning of land. On the other hand, if agriculture does not offer good returns to the land holder, a more viable business that creates more income for the landholder and the local community should be free to arise.


Another example of the attempt to protect agriculture is set out in the Draft Penrith Local Environmental Plan 2008. This plan sets out to prevent urban development on agriculture land, even as the councils own planning strategy says that "some agricultural producers in the region have experienced a range of economic pressures associated with changing commodity prices and markets, impacting on the viability of traditional farming." Attempts by planning authorities to limit the decline of agriculture in such locations are ineffective and undesirable.


Simply zoning land as primary production does not mean that local agriculture will remain. What it may do is leave land as vacant or underutilised and relatively unproductive. By taking such a protectionist approach to rural activities, planning authorities local landholders into marginal, unsustainable rural business. The local provisions relating to Mulgoa Valley in the Draft Penrith Local Environmental Plan 2008 further highlight the extent that councils will go to. They seek to introduce additional planning controls more onerous than provided by zoning. This clause includes an objective " to protect the agricultural capability of prime agricultural land in the valley".



There is also a requirement that before consenting to any development Council must be satisfied "... that the agricultural viability of holdings and potential of the land will not be adversely affected". This indicates that the Council has already made the assumption that it is able to judge the viability and potential of land. Councils are not in the position to make commercial judgements on agricultural viability and land potential.

Matters far outside the expertise of Council have an impact on the viability of business. Council is not in a position to consider these matters and should not seek to do so when making a determination of development proposals.


More information

For more information (and source details) please read our fact sheet:


Fact sheet: Housing and agriculture

2011 [  January February  |  March  |  April  |  May June  |  July  |  August  |  September  |  October November  |  December ]
2010 [  January  |  February  |  March  |  April  |  May  |  June  |  July  |  August  |  September  |  October  |  November  |  December ]
2009 [  January  |  February  |  March  |  April  |  May  |  June  |  July  |  August  |  September  |  October  |  November  |  December ]
2008 [  January  |  February  |  March  |  April  |  May  |  June  |  July  |  August  |  September  |  October  |  November  |  December ]
2007 [ All ]