Sentimentality in Farming

A recent blog by Sam Trethewey on sentimentality in farming certainly got the agricultural twitterverse into a frenzy.  Sam’s basic point was that sentimentality amongst farmers clouds their business decision making and makes them slow to adjust to modern commercial farming realities.  Many farmers hold on to land bequeathed to them over generations for too long, Sam contends, and some of them even hold their hand out to the Government to keep them afloat. 

While I agree that sentimentality, can cloud business decisions, I would not necessarily agree with all that Sam Trethewey said.  The fall in commercial farm numbers suggests that many farmers do overcome this sentimentality and do manage to sell their properties and move on to other lives. 

Many businesses have made plenty of money when sentiment is pushed aside.  There is no better example than that of Wesfarmers.  The former farmer’s cooperative showed no sentiment in divesting rural businesses and certainly has shown no sentiment towards farmers as suppliers to their supermarket businesses. 

The right amount of sentimentality can be a good thing for farmers.  It drives them to maintain their properties and leave them in better shape than they found them.  It motivates them to expand their business so that they have something to pass on to future generations rather than just a mountain of debt and an unproductive property.  Some sentimentality can give a longer term focus and the implementation of environmental projects which take a long time to produce an economic benefit. 

A key point in Sam’s blog is that a lack of business acumen among farmers clouds business decision making.  All of us should improve our business skills and be clear about why we are doing what we are doing.  It is obvious that many primary producers accept a very low return on the assets they have employed and a very low return on their own labour.  It is up to each individual farm business to determine how they can improve returns on their capital and labour. 

While some primary producers see the Government handouts to other industries and want to claim some of the action for themselves, most producers just want a fair go from Governments rather than a handout.  Sentimentality can be an Achilles heel for many producers but it can also give compassion and a sense of responsibility.  Like everything it is a matter of getting the balance right.  

Barnaby's Blueprint

Barnaby Joyce is keen to leave his mark on Australian agriculture and so has initiated his review of competitiveness of the sector.  While there can be doubts as to the wisdom of another review, there is no doubting that Mr Joyce has a passion for Australian agriculture and a strong vision for what the sector can become. 

The scope of the white paper and the background information does give an insight into the thinking of the Minister and the Government more widely.  This is a clear focus on improving returns at the farm gate and achieving fair returns through the value chain.  The fact that improving returns to farmers is a key objective of the process is encouraging. 

The other terms of reference are also important.  The need to improve skills and training is explicitly acknowledged.  The need to improve the regulatory environment for primary producers is also considered.  Market access, the capital requirements of the sector and the contribution of agriculture to regional economies are also important topics which will be considered.  The involvement of the Prime Minister is also encouraging and shows the industry is being taken seriously at the highest level. 

The process announced by the Minister has been criticised by many as being just another review.  The previous Government developed their own “Food Plan” last year.  Let’s face it no-one was ever going to take seriously a plan for agriculture from the previous Government who were content to shut down the northern cattle industry to satisfy a noisy minority. 

A key element of the vision from Barnaby Joyce is development of agriculture in northern Australia.  The north of Australia does indeed have great potential to expand and contribute significantly to the goal of doubling agricultural output.  Generally the rhetoric from politicians is never matched by actions when it comes to developing the north.  It remains to be seen whether this flurry of activity will be any different. 

The Government does not need to wait for the results of the review to take action.  There are a number of key areas where action can be undertaken immediately such as continuing to secure free trade agreements, investing in infrastructure and reducing red tape. 

There is little doubt that Australian agriculture can expand significantly and can meet the objective of doubling production by 2050.  The role of all three levels of Government is to create an environment which encourages this growth.  This means there is plenty of fodder for future blog posts.  

What #hadagutful means to me

Watching my industry colleagues rally in Fremantle gives me a sense of pride that so many support our industry while at the same time gives me a feeling of guilt that I am not there in support.  Being more than 2000 kilometres away and with 20,000 cattle to look after, it made it a bit difficult to get there. 

While the rally was going on and I was firing off tweets, it gave me time to reflect on the issues at stake and exactly what #hadagutful means.  The expression #hadagutful captures the feelings of most producers extremely well and its frustrations in these areas:

·         That an industry can be shut down overnight. 

·         That two years later the industry is still suffering from the fall-out of that decision. 

·         That all the efforts to improve animal welfare are ignored. 

·         That alternatives to live export which are glibly expressed by industry opponents are accepted by many in the media and by politicians.

·         That all the care of animals before and during live export is ignored. 

·         That cattle production in the rangelands of Australia is one of the most environmentally benign forms of food production. 

Judging by the support from other farmers not directly reliant on live export and from a number of people who are not farmers themselves, the response indicates a wider resonance with rural Australia.  Farmers are generally sick of being treated like second class citizens.  They are sick of being at the mercy of supermarkets and their discounting wars. 

The old saying "the darkest hour is the hour before dawn" may be appropriate.  The big turn out at the rally and the even bigger turn-out on social media shows that farmers are no longer content to be the political pawns of various politicians. 

I certainly don’t feel like I am owed a living or want a hand-out from the Government like some large companies in Australia.  All I want is to receive a fair go, something we have not received from any level of Government.  Primary producers in Australia can do their bit to feed the world if only we are allowed to.  

Community Perceptions of Agriculture

Community perceptions of agriculture have never been more important as consumers try and understand more about where their food comes from.  Consumers want to buy products that say something about them.  They want to know that products have not damaged the environment, that animal welfare is paramount. 

The contrast of community perceptions of Australian agricultural sector with other sectors of the economy is certainly intriguing.  Research conducted by Readers Digest suggests that farmers are highly regarded in terms of trustworthiness. 

Indeed consumers can have complete contempt for an organisation but still utilise its services.  A relevant example to the agricultural sector is the perception of the supermarket industry.  In Australia and around the world, the major supermarket chains are held in contempt by consumers (give references) but still widely used by the same consumers.  I personally have not been in a supermarket that has no people in it despite all the negative perceptions. 

A consideration of the professions at the bottom of the most trusted list shows that they do not seem to be adversely affected by negative perceptions.  Very few people choose to sell their house without the services of a real estate agent.  People still consume plenty of stories from media outlets despite negative perceptions of journalists. 

The Four Corners episode on the Indonesian cattle industry resulted in substantial publicity subsequent to the program and a Walkley award for the journalist, Sarah Ferguson.  An episode on the manufacture of clothing and mistreatment of workers in Bangladesh generated much less publicity and will no doubt not result in another Walkley award for the journalist involved. 

The conclusion that you can draw from all this discussion is that community perceptions of agriculture are important but perceptions of other sectors are much less important.  What the sector should do about community perceptions is probably worthy of another blog post.  

Spy Scandal in Indonesia

Just when the Northern Cattle Industry thought that we may have turned the corner, along comes a scandal which threatens the recovery of the industry.  The scandal this time is in the form of espionage where Australia is accused of intercepting the mobile phones of senior officials in the Indonesian Government. 

What has all that got to do with cattle producers in the north of Western Australia?  Very little is the answer, but it still seems the northern cattle industry could be the collateral damage if the relationship between Australia and Indonesia continues to sour and retaliation takes the form of lower beef and cattle imports. 

The cattle industry in the north of Australia continues to rely heavily on live exports and will continue to do so for the foreseeable future.  There is a processing facility under construction in the Kimberley region of Western Australia.  Initially at least this facility will source cattle that are not suitable for the live export trade. 

The live export trade plays to the relative strengths of both Australia and Indonesia.  In the north of Australia, we have the comparative advantage of in breeding cattle.  With access to a variety of by-products, Indonesia has advantages in feeding cattle.  Low labour costs in Indonesia means that they can process cattle very cheaply compared to Australia. 

The contrast with breakdowns in diplomatic relations with other countries could not be more stark.  The spat with China over comments made by the Foreign Minister does not result in any threats of trade retaliation. 

While the Australian cattle industry should continue efforts to diversify markets, the Indonesia will remain very important for the foreseeable future.  

Station Pets

With nearly one million acres of land to kick around on, it gives us plenty of opportunity to keep a few pets.  Indeed it is certainly one of the joys of station life to have plenty of pets of various shapes and sizes.  

The obligatory pets of course are of the canine variety.  We have a little boxer called Taylor (after Taylor Swift although she is much cuter).  

We have a peacock called Fowl.  He is a refugee from Sandfire Roadhouse and enjoys playing with the chooks.  Speaking of chooks we have plenty of them who in addition to being pets also provide us with eggs.  

No station would be complete without a few horses to ride on.  With most mustering now carried out by helicopter, the horses are for recreational purposes.  

One of our more interesting pets is our pet camel "Chewy".  She was rescued as a calf and brought to the homestead. She now wanders about and looks after the poddy calves.  Research has shown that cattle can gain a benefit from grazing with camels.  Camels are ruminants like cattle and generally have a broader spectrum of bacteria in their rumen allowing them to more fully digest plant material.  These bacteria can pass to cattle if they drink from the same trough or graze in close proximity.  So it is obvious that Chewy is much more than a pretty face.

There is also the odd unusual pet like Charlie – the black headed python. 

And last but certainly not least are our cattle herd.  With about 15,000 to choose from, there are always some friendly ones amongst them.  

Superannuation Industry

It is somewhat ironic that the Federal Government of Paul Keating which undertook the Hilmer review of Competition Policy also introduced the policy of compulsory superannuation. 

The Hilmer reforms drove policy reforms through a number of sectors including agricultural industries with reforms to statutory marketing authorities.  A new Regulatory regime was introduced with substantial reforms to the Trade Practices Act.  While the Hilmer reforms are generally regarded as a success in increasing competition throughout the economy and therefore contributing to higher economic growth, a number of industries managed to escape the reforms. 

The Hilmer report was released in 1993, not long after the commencement of compulsory superannuation for all Australians in July 1992.  The introduction of superannuation is rightly regarded as one of the great achievements of the Hawke/Keating Government. 

Despite the success of compulsory super, it has created a massive gravy train, secured by Government mandate to financial industry professionals.  It is great industry to be in where this money just rolls in every month for the industry to invest and skim the cream off the top.  And what is more the Government has legislated an increase in the level of super from 9 percent to 12 percent by 2020. 

The fees generated for now massive pool of superannuation funds is about $30 billion annually and growing steadily.  Market competition has obviously failed to generate the competitive marketplace necessary to reduce these fees so the Government must step in. 

It must be a great business to be in where the money literally rolls in the door every month and you get to clip the ticket on all of it.  If ever there were an industry that had lost its social licence (whatever that is) then this would be it.

Northern Australia

It is great to see comments and policy announcements from the coalition about developing the north.  The policy announcements recognise the enormous potential in northern Australia in a range of industries.  

There are numerous industries that could prosper in the north - agricultural pursuits, mining, tourism, medical services to high end consumers in Asia and no doubt other industries that we have not thought of yet.  This will create benefits to the entire nation in addition to the people who live there.  This will create benefits to the entire nation, in addition to the people who live there. 

It is a choice whether Australia captures the opportunities available for northern Australia.  The opportunities will not materialise for the nation, rather it will take effort to capture them. 

 In the past Government policies and actions about northern Australia have never matched the rhetoric.   It has been all too easy to talk about the opportunities and not take the hard decisions necessary to capture the opportunities.  Indeed many Government policies in the past have negative consequences for industry development in the north – the suspension of the live cattle trade to Indonesia being a prime example. 

The decisions required of Government will be difficult especially given the state of Federal Government finances currently.  The investment required to capture the opportunities available to northern Australia will be substantial due to the large geographical area involved.  A major requirement of Governments will be investment in infrastructure which is likely to be extremely costly. 

Despite that there is some low hanging fruit that an incoming Government could pick.  Reinvigorating existing industries will obviously require less initial investment and give an almost immediate return.  My own industry, the northern cattle industry could be reenergised by improving trade relations with Indonesia. 

I hope that the latest round of political rhetoric translates into action on the ground as soon as possible.  

Darkest Hour

The darkest hour is the hour before dawn.

I have always liked that saying for the hope that it brings.   I don't think that it is actually true and that the darkest hour is generally sometime in the middle of the night.   Never mind, I like the saying and I will stick to it.  

I interpret the saying to mean that when everything is at its bleakest, better times are just around the corner.  It certainly feels that things are at their bleakest at the moment and hope there are improved times ahead. 

The parlous state of the beef industry in Queensland has garnered media attention recently with cattle selling for as little as twenty dollars recently.  In a similar situation but for different reasons are fruit growers in Victoria who have had their contracts cancelled by SPC and are faced with the agonising decision of whether to pull out their trees.  

In my industry, the northern cattle industry, we currently have no markets for our cattle.  At a time of the year when we should be at our busiest, it is a waiting game to see whether cattle markets can be re-established.  The most frustrating thing is knowing that the people on the ground want and need what we produce but politicians get in the way to stop trade happening. 

There is plenty to be positive about when it comes to Australian agriculture such as increased demand from key markets in Asia and rising demand from agricultural products generally.  There have been some positive signs for other farming groups.  Dairy farmers have recently been the recipient of price increases for the coming season.  Good opening rains have been received in much of the winter cropping areas around Australia. 

I am just hoping for some positive news here to get the northern beef industry back on track.  

Cattle in Indonesia or people in Bangladesh?

What is more important - cattle in Indonesia or people in Bangladesh?

My industry - the cattle sector in the north of Australia - has been rocked by animal welfare abuses in export markets, notably Indonesia and Egypt.  These incidents were truly shocking to all those involved in the sector.  The response of the industry to these incidents was swift and involved investing more into animal welfare in these markets.  

To participants in the industry like me the response of the Australian Government to the problems seemed to be completely disproportionate to the magnitude of the issue.  To completely close the trade overnight crippled a successful industry in addition to offending an important trading partner and close neighbour.  

The contrast between the response to animal welfare problems in Asia and human rights abuses could not be more stark.  Recently a factory in Bangladesh collapsed killing more than 1000 people making it the worst industrial accident since the Bhopal disaster in India nearly 30 years ago. The factory collapse was the result of shoddy building standards and overcrowding in the building. 

The factory in Bangladesh produced cheap clothing enjoyed by consumers in affluent countries including Australia.  Judging by the reaction to animal welfare abuses, you would have expected a bigger reaction to this disaster and demands to rectify the situation.  After all human lives were involved and not just the lives of  farm animals.  The expected reaction would have involved a boycott of similar products made in Bangladesh or at the very least, the boycott of the companies involved, some of which were well known international brands.  And it is not as if the factory collapse was an isolated incident.  It was merely the latest in one of a string of incidents.  

To say the reaction in Australia and around the world to these incidents is muted would be the understatement of the decade. They barely create a ripple in the Australian media and no calls for blacklists from Green Party politicians.  

Of course any such boycott would not have been welcome in a desperately poor country such as Bangladesh.  The workers in such factories are no doubt grateful for whatever meagre wages they are paid.  Instead the industries involved should do a similar thing to the Australian livestock industry - work with the local companies to improve their standards. Isolating countries such as Bangladesh or even industries within the country is likely to be counter productive.  

Positive Media for Livestock

It is easy to get downcast in the livestock industry.  Not only do you have to cope with low prices, high costs and increasing Government regulation, but there are also ridiculous claims from environmentalists that livestock production is bad for the environment. 

It is always good to see positive media about the sector when it comes along.  Once piece of media that has gained a lot of traction recently is the video by Allan Savory on the potential to reverse desertification in the world’s grasslands through the use of livestock.  Not only can there be food production from now degraded areas, economic and political stability can be improved in areas prone to violence. 

Allan Savory also mentions the role of regenerating grasslands and its positive effects on reversing the global warming.  The video challenges much of what is regarded as conventional thinking – that livestock production adversely affects the environment and that less is better.  To those of that produce livestock in the rangelands it confirms what we already know.  That is running livestock in the rangelands is one of the most environmentally benign forms of food production.  The rangelands are teeming with life and capable of producing large amounts of food. 

Further Reading

Allan Savory: Grassland ecosystem pioneer.  http://www.ted.com/speakers/allan_savory.html

The Farming Gene

I think we all have the farming gene in us somewhere.  For many people the gene is latent and remains that way for their whole life.  In others who live in towns and cities it may manifest itself through people growing fruit and vegetables in their backyard along with a few chooks.  Some people exercise their farming gene by visiting friends and relatives who live on rural properties. 

For farmers the “gene” is fully expressed through daily activities as they go about producing food and fibre.  Often the farming gene can reveal itself when someone marries a farmer.  Traditionally this happened when a woman from the city married a farmer and moved to the bush.  Now there are many men who follow their wives back to farms that may have been in the family for generations. 

On our property in Northern Australia, we often see expression of the farming gene when a backpacker comes to the station with no experience in handling livestock and takes to it like a duck to water.  Of course we encourage expression of the farming gene as much as we can by on the job training and encouragement. 

The farming gene also becomes evident in jobs around the homestead such as feeding the poddy calves or tending the chooks.  Again people with little or no experience in dealing with animals soon have a real connection with the animals in their care. 

Despite most people becoming further and further removed from their food production, the farming gene means that everyone could get back to some form of food production without too much trouble.  

Improving Productivity

At a recent ABARES conference in Canberra it was noted that the rate of productivity growth in Australian agriculture had been declining.  This would affect the ability of Australian farmers to be competitive in export markets particularly with the strong Australian dollar. 

Productivity improvements are essential for Australian agriculture as input costs always rise faster than the prices farmers receive for their output.  The response of one city based Fairfax columnist to this decline in productivity was that the blow torch should be applied to the sector by both Federal and State Governments.  Rationalisation in the sector should be accelerated in the author’s opinion so that productivity can be enhanced by those producers that remain capturing economies of scale.  Drought relief would be done away with so that only the most efficient producers survive any dry period. 

What the author seems to forget is that the industry has had a blow torch of extreme ferocity applied to it over the past five or so years.  All farmers have suffered as a result of the stronger Australian dollar with most individual sectors having their own unique problems. 

Dairy farmers have had to battle milk discounting, horticulturalists with cheap imports, farmers in the Murray Darling Basin have the prospect of major water reform hanging over them.  In my own sector, the Federal Government has brought the industry to its knees through its ban on exports to Indonesia. 

The reality is that rationalisation has been occurring in the sector for about 100 years.  We do not need the Government making it any harder for primary producers than they are already doing.  Rationalisation will continue to occur at a steady pace.  This allows those exiting the industry to do so with dignity and allows service industries around the sector to adjust also. 

The author also fails note the huge assistance paid to farmers in other countries who compete with Australian agricultural exports in international markets.  In addition to this, large subsidies are paid to other sectors of the economy such as the automotive industry.  Other sectors are the beneficiary of Government regulations such as the financial services sector which benefits from the mandated contribution to superannuation for all Australians. 

So what can be done to reverse the productivity decline?  Some are noted in the Fairfax article including encouraging foreign investment and recommitting to public investment in agricultural research.  Some other key areas are missed including easing the regulatory burden place on farm businesses and reducing the level of sovereign risk faced by the sector.  

The Amazing Dung Beetle

One of the great advantages of living in the middle of nowhere is that you can marvel at the wonders of nature.  There is nothing like seeing a big red kangaroo skip away against the backdrop of a Kimberley thunderstorm. 

It is not just majestic creatures like kangaroos that capture my attention, the humble dung beetle is also an incredible animal in its own way.  Consider how the dung beetle goes to work on the pile of dung shown in the photo below, in this case from a horse. 

In only a few short hours it is converted into basically a powder as shown in the photo below.  This makes life a lot more pleasant for everyone and every animal in their surroundings, importantly reducing the breeding ground for flies in addition to the aesthetic benefits. 

It seems there is a lot more to the dung beetle than meets the eye.  Dung beetles are one of the few animals that use the stars to navigate.  Included in this exclusive club with dung beetles are some birds, seals and humans.  As reported in a recent edition of The Economist, it seems that dung beetles navigate by being able to identify the cluster of stars that forms the Milk Way. 

Further Reading

Stars in their eyes.  How dung beetles navigate.  The Economist, January 26^th – February 1^st 2013, p67. 

  

Hilmer Report 20 Years On

It seems that 20 year anniversaries are often widely celebrated.  One 20 year anniversary this year which will probably not receive much attention this year is the Hilmer report into competition policy in Australia. 

The Hilmer report had the agricultural sector firmly in its sights and in particular statutory marketing authorities.  Since the release of the Hilmer report, most of the marketing arrangements viewed as anti-competitive have been removed.  The only on remaining to my knowledge is the regulation of potato marketing in Western Australia. 

While the reduction of regulation in industries such as dairy and eggs had commenced before the release of the Hilmer report, competition policy increased the momentum for change.  For a number of producers in these industries, the move to deregulation was extremely difficult with large numbers exiting these industries in the years that followed it. 

Reduction in regulation in other agricultural industries has also occurred for other reasons.  An example is the removal of the single desk marketing arrangements for wheat marketing which occurred after the Iraq wheat scandal. 

In other sectors of the economy, competition policy has produced mixed results.  There have been a number of success stories, an example being the telecommunications sector where increased competition has benefited consumers. 

A number of other industries have emerged virtually unchanged despite the blow torch being applied in the Hilmer report and in subsequent inquiries.  It remains a mystery why Governments around Australia can find the political courage to deregulate agricultural industries but refuse to take action on industries such as taxis and pharmacies. 

In some industries competition has lessened with the obvious being supermarkets where the two players dominate.  A key component of the Hilmer reforms were changes to the Trade Practices Act and the creation of the Australian Competition and Consumer Commission in part to address anti-competitive practices.  Despite these changes we have a situation where Woolworths and Coles continue to increase their market share.  While it could be argued that consumers have benefited from lower prices, the longer term benefits are less certain.  The increase in home brands by the major supermarket brands will ultimately lessen competition. 

The provision of cheap milk may benefit consumers in the short term, but the longer term effects are less certain.  It could result in less fresh milk being available to consumers as farmers exit the industry and greater reliance on UHT milk. 

The changes introduced from the Hilmer report are essentially irreversible.  It would be very difficult if not impossible to reintroduce statutory marketing authorities that previously existed.  What should happen now is that competition should be extended to other areas of the economy.  

Opportunities in Asia

The recent Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) conference in Canberra highlighted some of the difficulties that Australian producers will have in capturing opportunities in Asia.  The forum noted that Australian farmers face a range of challenges in the next few years including a high Australian dollar and increased competition from countries in South America and Eastern Europe. 

The analysis was in sharp contrast to the much of the commentary over the past few years with focus being on an impending food crisis and what a struggle it will be to feed a world population of nine billion people by 2050.  There have been various predictions of huge increases in food prices as demand soars in Asia with limited additional land available to meet the demand for more food. 

Instead of forecasting soaring food prices, ABARES are predicting a much more modest increase in prices out to 2050.  In fact, the medium term price outlook is subdued despite the increased demand from Asia. 

The ABARES analysis confirms what most producers, who are generally sceptical by nature, have believed for a long time.  That is that there will be no “free kicks” from increased demand in the Asian region.  Any opportunities that arise from growing populations and incomes in Asia will require hard work on the part of Australian producers and marketers.

Productivity improvements will underpin the ability of Australian producers to capture opportunities that arise in coming years.  Improvements in productivity are the way that farmers have coped in the past with falls in output prices and rising input costs and will no doubt continue to be in the future. 

The Government must play its role in encouraging productivity improvements.  A key area is in fostering investment in the sector by creating a healthy investment environment which addresses sovereign risk issues. 

The Government must also play its role by ending subsidies to unproductive industries, improving trade relationships with our Asian neighbours and improving infrastructure.  Other important areas for Government are ongoing investment in research and development and reducing the regulatory burden placed on business. 

Australian farmers have proved themselves to be innovative in the past and can meet the challenges that the Asian century will bring.  The Government changes required to meet these challenges are not onerous and will likely benefit the wider economy in addition to the agricultural sector. 

Tropical Cyclone Rusty Aftermath

It has been a busy few weeks on the Plains with the passing of Tropical Cyclone Rusty.  There was plenty of activity in the lead up to the cyclone with all the preparations for its arrival.  In the aftermath of the cyclone there was plenty of cleaning up to do. 

Cyclones are a unique animal for many producers in Northern Australia.  The rainfall they bring is nearly always welcomed and in some cases is desperately needed.  However, they are often feared for the destruction they can wreak. 

 

After following his progress for over a week, Tropical Cyclone Rusty left us with no real damage and plenty of rain.  In the five days before Rusty arrived and after he left we had around 275mm of rain which is approximately 65% of our annual average rainfall.  There were plenty of branches off trees around the homestead but apart from that no damage that we have found yet. 

It was a different story only a few hundred kilometres away from us where the cyclone crossed the coast.  Here the cyclone left a trail of destruction around the homestead and around the rest of the property. 

Reminders of Tropical Cyclone Rusty will be with us for a while yet.  As you can see in this photo the water that landed on the property will take a long time to subside. 

Global Food Forum

A recent advertisement for a global food forum caught my attention recently.  The conference is being organised by The Australian newspaper with an impressive line-up of speakers including the Chief Executive Officer of News Limited, Kim Williams and the former Governor-General Michael Jeffery.  The heads of a few food manufacturing companies are on the speaker list together with the odd politician, journalists and bankers. 

The notable omission from the speaker list is of course those involved directly in food production – a farmer or two.  It is difficult to imagine any other industry where those directly involved in the subject concerned are not involved in the conference.  Can you imagine a medical conference without doctors on the speaking list or a legal conference without a lawyer being involved?  Perhaps a media conference without a newspaper editor or executive on the speaker list, or a mining conference without a miner? 

Only a few of the speakers appear to have a background in agricultural science or agricultural economics which is also surprising. 

So why is it that farmers do not get a seat at the table for a conference talking about food production and opportunities for Australian food production?  There are a host of reasons for this including: 

·         Farmers are not good at blowing their own trumpets and telling their story to the wider community. 

·         Farming is incorrectly perceived as a low technology profession. 

·         The lack of political clout that farmers wield and thus attention paid to the sector by Governments. 

·         That Australia has always produced a large amount of primary produce relative to its population size and will continue to do so. 

It is good to see such a conference taking place in Australia and that it involves a number of high-profile individuals speaking about the food industry.  It is just a shame that the integral role farmers play in food production is not considered to be that important. 

FURTHER READING

Lyndsey Smith (2013)  The Most Powerful People in Food:  Not Farmers.  http://www.realagriculture.com/2013/02/the-most-powerful-people-in-food-not-farmers/

 

Never a dull moment

Just when you think things are quietening down, I received an email from a meteorologist about a forthcoming cyclone.  Such is the information available to meteorologists now he was able to tell me that a cyclone was likely to affect us in about one weeks’ time.  This prediction was as a result of looking at a Tropical Low that was sitting more than one thousand kilometres from us. 

It is now a few days later so preparations are now on in earnest.  Being on the most cyclone prone coast in Australia preparations for cyclones are well rehearsed.  These involve the following activities: 

-          Tying down the windmills around the property

-          Tying down the sheds

-          Putting all the vehicles undercover

-          Cleaning up around the homestead so that there is no debris lying around.

With these activities underway we sweat on every update from the Bureau of Meteorology.  Updates are currently coming at six hourly intervals – these will increase to three hourly intervals as the cyclone intensifies and comes closer to the coast. 

Cyclones are a mixed blessing in Northern Australia being welcome for the rain they bring but being feared for the destruction they deliver.  The best we can hope for is rain and not too much wind.  With this cyclone expected to be severe (ie. category 3, 4 or 5), that looks to be a forlorn hope.

Commodity Prices Below Cost of Production

A news item on ABC Rural caught my attention recently reporting that the price for watermelons had fallen below the cost of production.  The story pointed out the obvious difficulties for producers. 

A more newsworthy story I felt would have been if the price of an agricultural commodity had risen above the cost of production.  Watermelon producers like other horticultural producers have been battling cheap imports from Asian countries.  These countries have the obvious advantage of cheap labour and generally far less regulation including environmental regulations such as withholding periods for herbicides. 

The strength of the Australian dollar has also been a significant issue for all primary producers.  In the case of horticultural producers, it makes imports cheaper and exports much more difficult. 

Primary producers in other parts of the world have assistance from their Governments in the form of tariffs, import quotas and direct payments to help their farmers cope with these competitive pressures.  No such good fortune exists for the Australian producer.  Not only is there no assistance from Governments in Australia, in many cases there is outright obstruction of primary producers. 

 

In my own industry, the cattle industry in the north of Australia, the industry has been brought to its knees by various Government policies including the ban on live exports to Indonesia.  -

Australia is a country with mountains of regulation.  With three layers of Government, industries such as agriculture face the prospect of drowning in all the regulation.  In some cases, companies benefit from regulations such as the Australian Stock Exchange where competition from other players is limited through Government regulation. 

Back to the topic of this post and farmers receiving below the cost of production for their output.  What can be done about this?  I certainly would not advocate for subsidies or import quotas like farmers receive in other countries. 

However, there are a host of policies that would make agricultural industries more competitive including:

-          Commitment to publicly funded research

-          Removing long-term assistance for other industries.

-          Reducing the excessive amount of Government regulation.

-          Encouraging investment in Australia by addressing sovereign risk issues rather than discouraging it. 

-          Addressing the excessive market power of the major supermarket chains. 

I could keep going on and on with policy suggestions, but what we need initially is Governments at all three levels to acknowledge that there is a problem and commit to doing something about it. 

My Country

“I love a sunburnt country, A land of sweeping plains, Of ragged mountain ranges, Of droughts and flooding rains.”

The famous lines from Dorothea Mackellar’s poem “My Country” often runs through my head as I drive around the property.  We do not have any mountain ranges here, but we do have plenty of sweeping plains. 

The strange thing at the moment we seem to have flooding rains and droughts at the same time.  Below is a photo taken at the northern end of the property in the last few days showing a few calves enjoying the green grass. 

 

Incredibly the photo below was taken just one day later showing a fire which had started as a result of a lightning strike.  This was taken towards the southern end of the property where obviously much less rainfall had been received. 

 

Flooding rains are a part of the landscape up here – between Broome and Exmouth in Western Australia is the most cyclone prone coastline in Australia.  Unfortunately droughts are also part of the scene up here as they are for all of Australia.  However, It is very unusual to have both events seemingly occurring at the same time. 

No Competition for the Australian Stock Exchange

While seemingly unrelated to the activities of a pastoralist in Northern Australia, the article did capture my attention.  It is yet another example of efficient lobbying of the Government gets the desired outcome for a particular company.  In this case the ASX will not face the sort of competitive pressures that the rest of us in business face on a daily basis. 

It never ceases to amaze me that Governments of all political persuasions are happy for certain industries to face the blow torch of competition but other more favoured industries do not.  In the agricultural sector the winds of competition blew through many years ago with the dismantling of statutory marketing authorities and removal of other competitive restrictions such as the export monopoly on wheat held by the former Australian Wheat Board. 

There remains a few favoured companies and industries where politicians appear too afraid to expose them to full competition.  ASX is one such company which retains this piece of legislative impediment to competition to help it generate profits for its shareholders.  Sectors such as the car industry continue to be beneficiaries of Government largesse in many different ways. 

In other sectors without the good fortune of Government protection we have to battle on as best we can. 

Getting Agriculture on the Political Agenda

With two election campaigns underway in Western Australia, one for a state election in March 2013 and the Federal election scheduled for September 2013, it promises to be a long year of promises.  For the farm sector, this often means rhetoric from both sides of politics usually relating to capturing opportunities that will arise in the Asian century. 

Various farm lobby groups including the National Farmers Federation have called for agriculture to be put higher on the national agenda.  Most farmers I have spoken to would agree with this sentiment but what does it actually mean and what policy outcomes will result? 

Many in the rural sector feel completely disenfranchised at the moment.  Issues such as the live export ban, the ramifications of which are still being felt by those in the industry, and the milk discounting saga have many feeling disillusioned as well as under pressure financially. 

Here in Western Australia, the State Government (through a National Party minister) put up pastoral lease rents by up to 700 per cent and with our local Government continuing to put rates up and providing no services, we have copped it from all angles. 

Politicians are quick to throw around phrases like “Australia becoming the food bowl of Asia” but are much slower to put in position policies that may assist the sector.  Indeed many of the policies put in place recently will make it harder for Australia to become the food bowl of Asia – consider the mistrust of Australia by Indonesia as a result of the live export ban. 

Getting Agriculture back on the political agenda really means that rural Australia will not be forgotten by our political leaders.  When decisions are taken the consequences of these decisions are fully considered and not taken to appease minority groups.  In addition, the ramifications of actions need to be thought through.  Cheap milk from supermarkets may be good for consumers in the short term, but the long term consequences will be fewer dairy farmers and more expensive milk. 

There are many policy decisions that could be taken by all three levels of Government that would increase confidence in the sector and demonstrate that agriculture is back on the political agenda.  These include:

·         Better engagement with trading partners including Indonesia

·         Commitment to publicly funded agricultural research

·         Restriction on the market power of the supermarket duopoly

·         Reduction in Government charges. 

·         Reduction in Government regulation. 

·         Commitment to training. 

The list could go on and on, however, the reality is that it will be difficult to achieve a higher profile for agriculture given the minimal voting power of farmers.  To achieve the higher profile we need effective lobbying from representative groups including the National Farmers Federation, supported by strong membership of the various organisations.  In addition, there needs to be actions at the grass roots from individual primary producers. 

In the end all most farmers want is a “fair go” from Government at all levels – we are not getting that at present.