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.