You could be forgiven for thinking there are parallel universes

You could be forgiven for thinking there are parallel universes when experts speak about the state of Australian agriculture. The eternal optimists see nothing ahead but blue skies; the glass-half-empty brigade sees only doom and gloom. Clearly, the reality is somewhere in between.

Attendees at last week’s Global Food Forum in Sydney, organised by the Australian newspaper and the Visy Corporation, had the opportunity to assess what “in between” means.

Interestingly, the audience was almost entirely comprised of city-based ‘suits’ – scarcely an Akubra to be seen. This is a reflection of the growing interest in agriculture from the more traditional business and investment sectors – largely focused at this stage on the food sector, but with some trickle down already spreading into the farming sector. But that’s a conversation for another day.

Covering the forum, the Australian’s rural reporter, Sue Neales, wrote:

“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, meat works, 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.”

Somewhere in the middle of these extremes of opinion, experts are trying to work out how to maintain our industry’s potential to help feed and clothe the world. In a business-as-usual response, farmers are gamely attempting to return a decent profit in the face of increasingly vigorous competition from the emerging world, from our friends across the Tasman and, further east, those across the Pacific in South America.

Australian farmers are faced with a range of challenges beyond their control. They have to deal with the highest labour costs in the world; the perpetually high Australian dollar; and our government’s seeming inability to reach a free trade deal with China – despite the fact that the New Zealand/China FTA will be celebrating its sixth anniversary next week.

While the Australian dairy industry is moving ahead with higher prices and significant expansion, particularly in Tasmania, it is losing market share. The forum was told that since 2006 Australia’s share of the international dairy and milk market has dropped from 12 per cent to seven per cent, because that part of our industry has not kept pace with global productivity gains and has not always had its foot in the front door of the booming Asian markets. Who has? New Zealand.

If Australian dairy farmers want to meet their target of increasing production by 70 per cent by the year 2050, they will have to use much the same area of arable land that they have now and increase their output by an average 1.75 per cent a year, compounding. On my calculations, it is slightly less than that. At 1.75 per cent growth a year, you would reach 70 per cent after 30 years, but that’s dickering around the edges.

The dairy sector is actually improving its productivity per cow by 1.6 per cent a year. The beef industry has an annual productivity growth rate of 0.8 per cent. In the wool and sheep industries, the annual productivity gain is 0.1 per cent. The increase in the grain yield has slowed from 2.5 per cent in the last half of the 20th century to just one per cent now.

There is one great incentive to increase yields and productivity: higher profits. Some farmers would settle for even just a profit. If a farmer can see a chance for a return, they will do all in their power to grab it.

If we are to achieve even a small part of the potential that so many experts are identifying for agriculture, everyone involved from paddock to plate needs to be focusing on ensuring that farmers can do just that.
TFGA CEO Jan Davis’ Tasmanian Country column today