Barnaby: Agriculture policy
2014.3.29
Agriculture Minister Barnaby Joyce says agriculture policy needs to be similar to defence: sustainable and long-lasting.
Cargill MD Philippa Purser during a panel discussion at The Global Food Forum in Sydney. Picture: Nikki Short Source: News Corp Australia <>
The rise of the corporate farmerBarnaby: Agriculture policy to lastThe good, the bad and reality
TWO distinctly different views of Australian agriculture emerged from the high-profile Global Food Forum held in Sydney this week, organised by The Australian and the Pratt family’s Visy Corporation.
One scenario painted the Australian farming and food scene as the world flavour of the month; with investment bankers and local real estate companies being inundated daily with offers and glittering deals to buy Aussie farms, meatworks, water rights, almond orchards and land by everyone from the richest man in Russia to Canadian pension funds and secretive Chinese quasi-government companies.
The second perspective had Australian agriculture as mired in red and green tape; beset with ailing, ageing or lacking infrastructure; bogged deep in drought and debt; and faced with whingeing farmers quitting the industry in frustration as profits and commodity prices failed to keep pace with high land values and soaring costs.
Between these partially accurate views was the more sober reality: Australia’s agricultural sector is neither dazzling nor moribund but is still struggling to work out how best to realise the potential food boom within its undoubted reach.
Equally true were the many mentions, particularly from keynote speaker, Coles chief executive Ian McLeod, and Cargill’s boss Philippa Purser, of how on many measures of global competitiveness in producing food - wage rates, productivity, free trade deals and red tape - Australia was losing out to rival behemoth exporters New Zealand and Brazil.
For example, since 2006 Australia’s share of the booming international dairy and milk market has dropped from 12 per cent to just 7 per cent, as national dairy production - at least its export slice - has failed to keep pace with global productivity gains and fast-expanding Asian markets.
Much of Australia’s loss has been New Zealand’s gain, led by its highly successful home-grown Fonterra company.
But during the fascinating, heated and oft-lofty debates about foreign ownership, infrastructure and Australia’s high-wage production costs - and the grounded farm talk added by leading producers such as cattlemen Graeme Acton of the Acton Land and Cattle Company, and Georgina Pastoral’s Peter Hughes - three key elements of the challenge were often dwarfed in the forum’s machinations.
The first was the enormous size and scale of the task ahead of Australia’s agricultural and farm sector, and how best to achieve it.
To increase Australia’s food production by 70 per cent by 2050 will require Australia’s 135,000 farmers to increase their output - from probably only a slightly larger area of arable or irrigated land - by 1.75 per cent every year, compounding, for the next 35 years.
That is no mean feat when even the highly technological dairy sector is improving its productivity per cow by just 1.6 per cent annually.
Meanwhile the beef industry has a productivity growth rate of just 0.8 per cent, according to the Australian Bureau of Agricultural Economics, while the wool and sheep sector is dawdling along, achieving a minimal growth rate of just 0.1 per cent.
The story in the cropping industry is more mixed. While crop yields on average grew by an encouraging 2.5 per cent for wheat, barley and other grain crops between the 1950s and 2000 - largely as a consequence of dwarf wheats and the so-called green revolution in plant breeding - yield increases have slowed to less than 1 per cent in recent years.
But as the many farmers at the Global Food Forum repeatedly emphasised, not one producer will put an extra cow or sheep on their land, or grow another hectare of wheat, if the profits are not there.
And that was the second element missing somewhat from this week’s debate; how to make returns to producers better and their businesses more profitable.
For as the dairy industry is discovering at its peril, unless farmers are producing the required level of milk supply to meet the booming demand for milk powders and infant formula from China, it doesn’t really matter how many companies are battling it out on the sharemarket to win control of a milk-processing company such as Warrnambool Cheese and Butter, if the milk flow is not there to realise the potential profits on the horizon.
That realisation has finally hit home this year to companies such as Murray Goulburn, Lion, Bega and Fonterra; a change that has seen milk prices paid to farmers in export-focused Victoria and Tasmania soar from below 35c a litre last year to 50c-a-litre plus.
Enough certainly to encourage many dairy farmers to expand their herds; perhaps helping attain the required twin jumps in food production and farm profitability that could help make Australia a food bowl of the future for Asia or, as Purser put it so well on Wednesday, a delicatessen for China.
In the beef industry, Australia’s third-largest meat processor, Darren Thomas of Thomas Foods International, believes it is inherent on abattoir owners and exporters to better share their profits throughout the supply chain with farmers.